9911796707
|
Home
Issues involved:
The judgment relates to the income-tax assessment year 1975-76 and involves three questions of law referred by the Income-tax Appellate Tribunal regarding the charitable status and taxability of income derived by a trust. Question 1: The first issue was whether the trust qualified as a charitable trust and if the income derived was not assessable as business income. The trust in question was established under a will dated October 20, 1918, for the development of a choultry for the Vysya community. The trust was registered under the Societies Registration Act on December 5, 1967, as Arya Vysya Kalyana Nilaya Sangam. The Income-tax Officer assessed the income for the assessment year 1975-76, contending that the trust was for the benefit of a particular religious community and thus not exempt under section 11 of the Income-tax Act. However, the Appellate Assistant Commissioner and the Income-tax Appellate Tribunal held that the trust had already been in existence prior to the Act and qualified as a charitable trust, thus exempt from taxation. Question 2: The second issue raised was whether the letting out of the building by the trust involved the earning of income and if the trust was carrying on an activity for profit. The Revenue argued that the trust was carrying on an activity for profit by letting out properties, which would disqualify it from exemption. However, the Tribunal ruled that letting out properties by a public charitable trust did not amount to an activity for profit, citing relevant Supreme Court decisions. Question 3: The final issue was whether the rental income derived from the property held in trust was fully for charitable purposes. The Tribunal affirmed that the income derived by the trust was indeed for charitable purposes, thus qualifying for exemption under the Income-tax Act. In conclusion, the High Court of Andhra Pradesh ruled in favor of the assessee on all three questions, affirming the charitable status of the trust and the non-taxability of its income. The court rejected the Revenue's arguments regarding the trust coming into existence only upon registration under the Societies Registration Act and the activity for profit in letting out properties. The court directed the Revenue to pay the assessee's costs.
|
