2011 (9) TMI 796 - AT - Income Tax

Application for granting approval u/s 80G - Director of Income-tax(Exemptions) has made an observation that the activities of the assessee society are that of sale of tickets and renting of hall - Held that Tickets are sold because some of the cost has to be borne by the public, as organising of such programmes involves heavy amount of cost - Decided in favor of the assessee

Summary

Issues involved:
- Rejection of application for approval under section 80G of the Income-tax Act, 1961 by the Director of Income-tax(Exemptions)
- Determination of whether the activities of the assessee society qualify as charitable in nature
- Consideration of whether the activities promoting classical music and dance in Tamil Nadu amount to advancement of objects of general public utility
- Evaluation of whether the assessee trust is eligible for approval under section 80G of the Act

Analysis:
The appeal before the Appellate Tribunal ITAT, Chennai pertains to the rejection of the assessee's application for approval under section 80G of the Income-tax Act, 1961 by the Director of Income-tax(Exemptions) in Chennai. The Director rejected the application, citing that the activities of the assessee society, which included the sale of tickets and renting of halls for cultural programs, did not qualify as charitable in nature under the amended definition of section 2(15) related to the advancement of objects of general public utility. The Tribunal heard arguments from both sides, with the assessee engaging in organizing cultural activities in Chennai, particularly focusing on promoting classical Carnatic Music and dance forms of South India. The Tribunal noted that the people of Tamil Nadu have a deep connection to music and dance, considering these activities as integral parts of the cultural life in the region.

The Tribunal emphasized that the activities undertaken by the assessee trust were aimed at advancing the objects of general public utility, especially in the context of preserving and promoting traditional music and arts. It highlighted that the public's support was crucial for the perseverance and advancement of such cultural forms, indicating that contributions made to organizations like the assessee trust should be viewed as contributions for a public cause. The Tribunal also noted that the assessee trust was registered under section 12A of the Income-tax Act, 1961, and was not engaged in profit-making activities or diverting surplus funds for personal use.

In its assessment, the Tribunal disagreed with the Director's observation that the activities of the assessee society primarily involved selling tickets and renting halls for cultural programs. It recognized that the main activity of the society was organizing cultural programs, for which halls were rented to accommodate the events, and tickets were sold to cover some costs incurred in hosting such programs. Consequently, the Tribunal concluded that the assessee trust qualified for approval under section 80G of the Income-tax Act, directing the Director of Income-tax(Exemptions) to grant approval to the assessee. As a result, the appeal filed by the assessee was allowed, with the order pronounced on September 12, 2011, in Chennai.