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TMI Blog2019 (12) TMI 439X X X X Extracts X X X X X X X X Extracts X X X X ..... he objects of the Trust. By applying income from kuri business for charitable purposes, the assessee cannot say that its prime object is to give relief to the poor. In our opinion, the CIT(E) is justified in setting aside the assessment order as erroneous and prejudicial to the interests of the Revenue with a direction to the Assessing Officer to redo the same after giving sufficient opportunity of being heard to the assessee. Appeals of the assessee is dismissed. - IT Appeal Nos. 435 And 436 (COCH.) Of 2019 - - - Dated:- 25-9-2019 - Chandra Poojari, Accountant Member And George George K, Judicial Member Shantam Bose, CIT (DR) for the Respondent. ORDER Chandra Poojari, These two appeal by the assessee are directed against the different orders of the CIT(Exemptions), Kochi dated 29/03/2019 passed u/s. 263 of the I.T. Act and pertain to the assessment years 2014-15 and 2015-16. 2. Since the issues involved in these two appeals were common, they were heard together and are being disposed of by this common order. 3. The facts of the case are that the assessment was completed u/s. 143(3) of the Income Tax Act, 1961 on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zed by the trust for the purpose of achievement of object of the trust would be incidental to the object of the trust. It was submitted that the then Assessing Officer found that the income generated from kuri business had been utilized for charitable purpose and assessments were completed allowing the application of income u/s. 11 of the Act. According to the Ld. AR, as per Section 11(4A) states that Sub-section (1) or Sub-section (2) Sub-Section (3) or Sub-Section (3A) shall not apply in relation to any income of a trust or an institution, being profits and gain of business, unless the business is incidental to the attainment of the objectives of the trust or, as the case may be institution and separate books of accounts are maintained by such trust or institution in respect of such business. The Ld. AR relied on the judgment of the Apex Court held in the cases of CIT v. Andhra Chamber of Commerce [1965] 55 ITR 722 (SC) that only the predominant object for which the organization was created is alone to be considered for the purpose for determining whether the nature of activities fall within the scope and ambit of 'charity'. Further, in Commissioner of Sales Tax v. Sai P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstitution, and separate books of accounts are maintained such trust or institution in respect of such business . 4.1 On the plain reading of the provisions of Section 11(4A), two things are abundantly clear. That: (a) The Trust can carry out business which is only incidental to the attainment of its objectives; and (b) If the Trust carries out any business activity which is not incidental to the attainment of its objectives, then such income is taxable. 4.2 In the case of the assessee-Trust, the CIT(E) found that predominant objectives are relief of the poor. Thus, running a Kuri business is in no way incidental to the objects of the Trust. It was observed that even if the profit/surplus from the Kuri business are entirely utilized for the objects of the Trust, however, running of Kuri business itself comes either under the category of business which is not incidental to its activities or qualifies to be advancement of any public utility . 4.3 Now coming to the question of incidental business, for an educational trust, the CIT(E) was of the view that receivable incidental business could be running of stationery store, canteen, or eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udgments of the Supreme Court and High Court: 1. Parashuram Pottery Works Co. Ltd. v. ITO 106 ITR 1 (SC) 2. CIT v. Excel Industries Ltd. 219 Taxman 379/358 ITR 295 (SC) 3. Ideal Publications Trust v. CIT 305 ITR 143 (Ker.). In view of the above circumstances of the case, it was submitted that the order of the CIT(E) may be set aside. 6. The Ld. DR relied on the order of the CIT(E). 7. We have heard the Ld. DR and perused the record. Section 263 of the Income-tax Act seeks to remove the prejudice caused to the revenue by the erroneous order passed by the Assessing Officer. It empowers the Commissioner to initiate suo motu proceedings either where the Assessing Officer takes a wrong decision without considering the materials available on record or he takes a decision without making an enquiry into the matters, where such inquiry was prima facie warranted. The Commissioner is well within his powers to treat an order as erroneous on the ground that the Assessing Officer should have made further inquiries before accepting the wrong claims made by the assessee. The Assessing Officer cannot remain passive in the face of a claim, which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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