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TMI Blog2012 (6) TMI 499X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax Act. - , the income by letting out the kalyana mandapam as income from the property is also binding on the Revenue and it is not now open to the Revenue to take a different view. - TC(A). Nos. 109 to 112 of 2005 - - - Dated:- 28-6-2011 - CHITRA VENKATARAMAN MRS., JANARTHANA RAJA P. P. S., JJ. JUDGMENT Mrs. Chitra Venkataraman J.- 1. The following substantial question of law is raised by the Revenue in respect of the above tax case appeals for the assessment years 1986-87, 1987-88, 1988-89 and 1990-91 : "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in holding that the assessee-society was exempt under section 5(1)(i) of the Wealth-tax Act in respect of its assets consisting of the land and buildings comprised in the kalyana mandapam owned by it ?" 2. The assessee herein is a registered society, registered as a trust under section 12A of the Income-tax Act, 1961. The objects of the assessee-trust, as seen by the bye-laws, are as follows : (i) education and relief of the poor including medical aid, (ii) the intellectual, physical, social, moral and cultural advancement of the united Gowda S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al as against this order before the Income-tax Appellate Tribunal. Following the decision of this court in the assessee's own case reported in CIT v. Samyuktha Gowda Saraswatha Sabha [2000] 245 ITR 242 (Mad) the Tribunal rejected the appeals filed by the Revenue. Hence, the present appeals by the Revenue. 5. Learned standing counsel appearing for the Revenue has filed written submissions before this court, contending therein that the Tribunal went wrong in following the decision of this court and that the assessment under the Income-tax Act did not conclude the issue under the Wealth-tax Act. Commenting on the correctness of the decision of this court in the assessee's own case reported in CIT v. Samyuktha Gowda Saraswatha Sabha [2000] 245 ITR 242 (Mad), he submitted that this court had merely passed a summary order, without any finding, holding that the income derived therein was not business income and that the property was let out only to fulfil the objects of the trust. Learned standing counsel placed heavy reliance on the decisions reported in CIT v. Halai Nemon Association [2000] 243 ITR 439 (Mad), Director of Income-tax (Exemptions) v. AVM Charities [2010] 323 ITR 27 (Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from kalyana mandapam was not business income, since the activity was not a business activity. She also pointed out to the intimation notice given under section 143(1) of the Income-tax Act in respect of the assessment years 1989-90 and 1990-91 and submitted that in respect of the following years too, the assessment had been made accepting the case of the assessee that the income from kalyana mandapam was only income from property and not business income, to reject the claim of exemption under section 5(1)(i) of the Wealth-tax Act. Referring to the decision of this court reported in Director of Income-tax (Exemptions) v. Willington Charitable Trust [2011] 330 ITR 24 (Mad) she pointed out that the income from the property held in trust was business income. Even otherwise, this court had held that when a business income was used towards the achievement of the object of the trust, when a business income was used towards the achievement of the object of the trust, it would be incidental to the achievement of the object of the trust, notwithstanding the profit and gain involved therein. She further pointed out that in the background of the said facts, this court held that the assessee w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, as it stood then, reads as follows : "5. Exemptions in respect of certain assets.-(1) Subject to the provisions of sub-section (1A) wealth-tax shall not be payable by an assessee in respect of the following assets, and such assets shall not be included in the net wealth of the assessee- (i) any property held by him under trust or other legal obligation for any public purpose of a charitable or religious nature in India : Provided that nothing contained in this clause shall apply to any property forming part of any business, not being a business referred to in clause (a) or clause (b) of sub-section (4A) of section 11 of the Income-tax Act in respect of which separate books of account are maintained or a business carried on by an institution, fund or trust referred to in clause (22) or clause (22A) or clause (23B) or clause (23C) of section 10 of that Act." 11. It is not denied by the Revenue that the decision of this court accepting the decision reported in CIT v. Samyuktha Gowda Saraswatha Sabha [2000] 245 ITR 242 (Mad) relating to the assessment years 1977-78, 1978-79 and 1979-80 as well as for the assessment year 1987-88 in T. C. No. 901 of 1995, holding that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income from the marriage halls and auditoriums as business income. The assessment years therein relate to 1995-96 to 1998-99, 2000-01, 2002-03 and 2005-06. The assessee claimed exemption under section 11 of the Income-tax Act and the same was rejected by the Assessing Officer, holding that the assessee was carrying on a commercial activity which was not incidental to the object of the trust as required under section 11 of the Income-tax Act. Hence, the exemption could not be granted. The Revenue also took the plea that the assessee had not complied with the provisions contained under section 11(4A) of the Act requiring maintenance of separate books of account in respect of its income assessable under the head of business. On appeal before this court by the Revenue, this court applied the decision reported in Asst. CIT v. Thanthi Trust [2001] 247 ITR 785 (SC) and pointed out that on facts, when a business income was used towards the achievement of the object of the trust, it would be incidental to the achievement of the object of the trust, notwithstanding the profit and gain involved therein. 13. As regards the provisions of section 11(4) and 11(4A) of the Income-tax Act, this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e object of the trust, it thought it fit to remit the matter to find out the extent to which the income was applied to the achievement of the object of the trust that the claim of the assessee under section 11(4A) of the Income-tax Act for exemption could be considered. Thus, a reading of the judgment does not, in any manner, say anything in conflict with the earlier decision. Thus, in understanding the relevancy of the said decision, one cannot lose sight of the facts prevalent in the said decision and in the present decision. 15. The proviso to section 5(1)(i) was inserted by the Finance Act, 1985, with effect from April 1, 1986 ; thereafter substituted by the Direct Tax Laws (Amendment) Act, 1987, with effect from April 1, 1989, and again restored by the Direct Tax Laws (Amendment) Act, 1989, with effect from April 1, 1989. It is stated that the substitution had not come into force. The proviso to section 5(1)(i) seeks to exclude the assets forming part of any business. However, this exclusion will not apply to the business referred to in clause (a) or (b) of section 11(4A) of the Income-tax Act in respect of which separate books of account are maintained or that the busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsistent plea that the income from the letting out of the kalyana mandapam was income from property and it has maintained separate books of account to evidence the application towards the charitable objects. Going through the records, admittedly, the Income-tax Officer, in the income-tax proceedings, accepted the assessee's case that the income was from property and that the assessee was entitled to exemption under section 11 of the Income-tax Act. Given the fact that the assessee is a trust and the income from the letting out of the kalyana mandapam was treated as income from house property and the trust was held to be qualified for exemption under section 11 of the Income-tax Act, we have no hesitation in holding that the assessee's case falls for consideration under section 5(1)(i) of the Wealth-tax Act, qualifying for grant of exemption from the Wealth-tax Act. In so considering the claim, it is not necessary to consider whether the assets could be held as business assets to go for further considering the application of section 11(4A) of the Income-tax Act. 18. There is absolutely no dispute on the proposition of law that the provisions under the Income-tax Act and the Weal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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