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TMI Blog2015 (11) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... transactions were made only for the purpose of extending its charitable activities with more resources. Retaining land which is not required for the purpose of the assessee’s trust will not help the assessee to comply with its objects in a constructive manner. Therefore, prudently the assessee trust has realized maximum revenue from the sale of the excess land, and utilized the same for complying with the main objects of the assessee trust viz., Education. Hence as held by the Ld. CIT (A), the transaction of the sale of the land by the assessee in a wise manner by applying commercial prudence is only an activity which is incidental to the main objects of the assessee. Therefore, the view of the Ld. CIT (A) that the proviso of Section-2(15) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was completed U/s.143 (3) of the Act on 31.03.2013 & 24.02.2014 by treating the income derived from sale of land as business income of ₹ 1,62,76,519/- & ₹ 44,23,266/- respectively. 4. During the course of assessment proceedings, it was noticed by the Ld. Assessing Officer that the assessee had disclosed an amount of ₹ 1,62,76,519/- and ₹ 44,23,266/- as profit on sale of land for the assessment year 2010-11 & 2011-12 respectively. On query, the assessee has replied for both the assessment years as follows:- A.Y 2010-11 "2… ( in pursuance of its objectives, the assessee purchased 71.89 Acres of land in survey No.601,607,611 and 598 in Nellore Bit-II, Nellore during the years 1986-87 for starting medical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trust wholly for charitable purposes since the assessee abandoned the plan of setting up medical college and old age homes. Since then the assessee endeavored to dispose of the property and utilize the proceeds in the charitable activities of the assessee and true to the plan has been applying the sale proceeds from sale of plots to the charitable activities every year. It is therefore submitted that "sale of plots of land" was not out of the property held under trust wholly for charitable activities nor was it treated as capital asset by the assessee. Kind attention is invited to the Balance Sheet wherein the "Land for Sale" has been shown separately and not as part of Fixed Assets. For the reasons it is submitted that Section 11A is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y selling the plots of the approved layout during the period 2004-05 to 2009-10. (v) The assessee had itself admitted that the sale of the plots do not constitute charitable activity because they were sold with profit motive. (vi) Purchase of land, obtaining approval for promoting layout and sale of the same is not a charitable activity as provided U/s.2(15) of the Act, when the main objects of the trust are relief to the poor, education, medical relief etc., (vii) The frequency of the transaction made by the assessee by selling plots in the layout is in the nature of business and therefore falls within the definition provided in Section-2(13) of the Act viz., an adventure in the nature of trade and commerce. 5. For the afore stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue which were to be utilized for the purpose of the trust. (vii) There were no findings by the Ld. Assessing Officer that the profits were diverted for non-charitable activities. 7. With the above observations, the Ld. CIT (A) held that as long as the trust carries out charitable activities the exemption cannot be denied to the trust. 8. Before us, the Ld. A.R. reiterated his submissions made before the Revenue on either occasion as follows:- a) The Assessee Trust is constituted in the year on June 25th 1986 and is registered under section 12A(a) of the Income Tax Act. b) The principle object of the Assessee trust is to provide Medical relief for the needy, running of educational institution, supply of drinking water and other c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s categorically held that the assessee is engaged in charitable activity as defined in section 2(15) of the Act and has confined its addition only to issue relating to the sale of the immovable asset. 9. Ld. D.R vehemently argued in support of the order of the Ld. Assessing Officer and further submitted that the promotion of residential layout and sale of the same by plotting plots thereby deriving gain from real estate transactions cannot be construed as a charitable activity and therefore any income arriving out of the same should be taxed in the hands of the assessee trust under the head "income from business". 10. We have heard both the parties and carefully perused the materials available on record. It is apparent from the facts of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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