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TMI Blog2013 (12) TMI 947X X X X Extracts X X X X X X X X Extracts X X X X ..... rrying any activities of profit" were omitted from this definition by the Legislature - Therefore, after such omission, the element of profit cannot be excluded from the definition "charitable purposes" u/s 2(15) of the Act - As per section 10(22) - Income of any activities cannot be exempted unconditionally if such institution also exists for deriving of profit - Such institution can claim exemption u/ss. 11 and 12 as element of profit is not excluded by the Legislature - As per Section 11 in order to claim exemption such institution must apply 75% of its income for charitable purposes. The surplus if any has to be invested in specified bonds - Because some profit has been earned by an assessee trust registration u/s. 12AA cannot be denied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TA NO.1967/Hyd/2011 dated 24.08.2012, have set-aside the said order of the DIT(E) and remitted such matter back to the file of the DIT(E), Hyderabad, for deciding the same afresh, after examining the documents and giving opportunity to the assessee. The relevant observations made by the Hon'ble Tribunal, in this regard, in para-5 at page 3 of their said order, are reproduced as under: As it appears the DIT(E) has not made any enquiry to satisfy himself about the object and genuineness of the trust. We therefore set aside the order passed by the 'DIT(E) with a direction to re-examine the issue afresh after considering the documents produced before him by the assessee and after making such enquiry as may be deemed necessary. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wo objects, are primarily meant for the benefit of only the members of the society. Further, as may be noticed, there is no reference to generating any income from such activities as referred to in those objects. However, as seen from the copies of accounts of the assessee society, furnished for different accounting years, it has shown income under the head 'programme revenue' in each such year. This income comprises receipts under different heads and clarifying about the nature of such programme revenue, and also filed written submissions as under: 2. Programme revenue: Receipts from various programs conducted by the section and following chapters during the year. The program details are as follows: 1. MTT/AP/EMC Chapter: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r an institution carries on activity which is not in accordance with its objects, then, it would not be eligible for registration u/s 12AA of the Act. 8. After discussing the case as above, the DIT(E) held that since in the instant case, such activity of deriving income under 'programme revenue' on the part of the assessee society, is not as per its objects, as stated in the Memorandum of Association, it cannot be granted registration u/s 12AA of the Act and hence, registration sought u/s 12AA of the Act is refused to the above society. 9. Aggrieved, the assessee is in appeal before us. 10. The assessee has raised as many as 9 grounds of appeal, the sum and substance of which is against the action of the DIT(E) in rejecting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or historic interest, and the advancement of any other object of general public utility: Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity: Provided further that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is twenty-five lakh rupees or less in the previous year;' 13. So, the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on commercial basis then income of such activity cannot be exempted from taxation. However, such institution can claim exemption u/ss. 11 and 12 as element of profit is not excluded by the Legislature. The reason is obvious because of financial affairs of such institution are well controlled by the provisions of sections 11 and 13 of the Act. Section 11 clearly provides that in order to claim exemption such institution must apply 75% of its income for charitable purposes. The surplus if any has to be invested in specified bonds. Further, exemption can be denied if the provisions of section 13 are violated. Therefore, if there is any violation of either section 11 or section 13, then, the profits of such institution would be taxable. Further ..... X X X X Extracts X X X X X X X X Extracts X X X X
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