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Issues:
1. Whether the auditorium and sathram owned by the petitioner are liable to be taxed under section 66 of the Kerala Panchayat Act. Analysis: The petitioner, a society registered under the Travancore-Cochin Literary, Scientific and Charitable Societies Registration Act, claimed exemption from tax under section 72 of the Panchayat Act for income derived from letting out the auditorium and sathram for religious and charitable purposes. The Government contended that the income was not exclusively used for charitable purposes, therefore not eligible for exemption. The auditorium, used for purposes like marriages and dramas, was found to be unrelated to public worship, thus not falling under the exemption clause. However, the sathram, rented to pilgrims and others, was considered eligible for exemption under sub-clause (c) of section 72(1). The Government's argument that the entire income from the buildings was not used exclusively for charitable purposes was challenged by the petitioner. The appellate authority noted that the income from the sathram was utilized solely for charitable purposes, contrary to the Government's contention. The court emphasized that the quantum of rent charged was irrelevant; the crucial factor was whether the income was being used for charitable purposes. The petitioner's engagement in religious and charitable activities, such as providing free food and conducting religious discourses, demonstrated the charitable nature of their endeavors. The court cited the test laid down in CIT v. Andhra Pradesh State Road Transport Corporation to determine charitable purpose, focusing on whether the predominant object of the activity was charitable or profit-oriented. The court found that the petitioner's activities were primarily religious and charitable, with income being reinvested to enhance these activities. The court set aside the Government's order and directed a reconsideration, emphasizing the need for a thorough examination of the petitioner's charitable activities and income utilization. The Government was instructed to dispose of the matter expeditiously within three months. In conclusion, the judgment delved into the intricate balance between income generation, charitable activities, and tax exemption eligibility under the relevant statutory provisions, emphasizing the charitable nature of the petitioner's activities as a crucial factor in determining tax liability exemption for the auditorium and sathram.
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