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TMI Blog2023 (8) TMI 1107X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure of depreciation is ignored, then the fact that the assessee was carrying out purely commercial activities is proved to the hilt. Also, drawing support from the judgment of Ahmedabad Urban Development Authority [ 2022 (10) TMI 948 - SUPREME COURT] letting of Dharmashala for commercial activities by the assessee as observe that as the letting of Dharmashala for commercial activities by the assessee, as claimed by the AR was its lifeblood for sustaining its activities of running the Dharmashala, but the same being in the nature of business or services in relation to a business, for cess or fee/charges; therefore, the receipts garnered from such activities would be hit by Section 2(15) of the Act. Thus lower authorities who had rightly declined the assessee s claim for exemption u/s. 11 - Decided against assessee. - Shri Ravish Sood, Judicial Member For the Assessee : Shri Sunil Kumar Agrawal CA For the Revenue : Shri Satya Prakash Sharma, Sr. DR ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee trust is directed against the order passed by the CIT(Appeals)-1, Raipur, dated 11.07.2017, which in turn arises from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Nil. Return of income filed by the assessee trust was processed u/s. 143(1) of the Act. Subsequently, the assessee's case was selected for scrutiny assessment u/s. 143(2) of the Act. 3. During the assessment proceedings, it was observed by the A.O. that the assessee trust had received an amount of Rs. 15,89,163/- from the business of running a Dharamshala. The A.O was of the view that as the assessee, which was registered as a charitable trust, was carrying out activities that were in the nature of advancement of any other object of general public utility, had garnered business receipts of Rs. 15,89,163/- which was more than threshold amount of Rs. 10 lacs (as was applicable during the year under consideration) as contemplated in 2nd proviso to Section 2(15) of the Act; therefore, its activities mentioned above were not to be held as having been carried out for charitable purposes. Accordingly, the A.O. referred to the provisions of Section 2(15) r.w.s. 13(8) of the Act, and declined the assessee s claim for exemption u/s. 11 of the Act and brought its surplus of Rs. 2,20,247/- to tax. 4. Aggrieved the assessee carried the matter in appeal before the CIT(Appeals) bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Director Rajiv Gandhi Siksha Mission, (6) Special Projects (7) Sindhu Cultural Firms (8) Asha Ventures (32) Jai Enterprises (36) National Steel Sales Corp (50)Jyoti Roadlines (51)Sunderlal sons (63) SVS Pharmaceutical Distributors (67) Ashok Jewellers (72) Nandan Steel Power Lt (79) Joint Director Dist Office Panchayat Social 'Welfare (85) Bank of India (87) Jagdamba steel tubes (97) Jai enterprises (105), Jyoti Roadlines (121) Moti logistics (122) Manoharlal Suryavanshi sons (123) Mahaveer Sarees (127) Jagdish Prasad Gajanand Co (135) Arland Agencies (146) Iron Junction (160) MAT University (169) Chhattisgarh Prantiya Yuva Agrawal Sammelan. Out of the remaining names, many are prima facie identified as well to do persons of the society. There is no material to suggest that any of these persons is in the category of poor or needy person. Therefore the arguments of the appellant are not established. Since the trust's activities are being conducted on commercial lines and receipt during the year has exceeded Rs 10 lakhs therefore I find the action of the AO as justified. The assessment order is upheld and grounds of the appellant assessee trust are rejected. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tunity with an orientation towards self help and dignity of labour. (h) To promote, sponsor, undertake and assist rural development activities in any manner what so ever in any area or field selected for the purpose. (i) To organizes sponsor, promote, establish, conduct, undertake and or support scientific, industrial and /or social research in any manner what so ever in any field. (j) To give awards and assistance by way of cash or otherwise to individuals, institutions or companies for the promotion and advancement of the objects of the trust. (k) To conduct or assist research in and promotion of medical science in its various branches viz. Ayurved, Unani, Homeopathy, Allopathy, Naturopathy and other similar and allied lines. (l) To arrange, organize or hold, conduct and/or assist in organizing or conducting or holding exhibitions, entertainment shows, conferences, seminars, lectures and meeting for the furtherance, promotion and advancement of the objects of the trust, (m) To give donations, subscriptions or contributions to any public charitable, trust, institutions of fund. (n) To establish and support professorships, fellowships, lectureships, scholarship ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 ten lakhs rupees or less in the previous year. On a perusal of the aforesaid statutory provisions, it transpires that the legislature, in all its wisdom, had provided that advancement of any other object of general public utility shall not be a charitable purpose if it involves the carrying on of any activity like 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. At the same time, the Second proviso to Section 2( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd loss account, the assessee trust was left with a minuscule surplus of Rs. 2,20,247/-, I cannot find favor with the said claim. Nothing is discernible, much less evidenced based on supporting material which would reveal that the booking/ancillary receipts collected by the assessee from the aforesaid commercial activities were nominally above cost. On the contrary, if the notional expenditure of depreciation of Rs. 8.55 lacs is ignored, then the fact that the assessee was carrying out purely commercial activities is proved to the hilt. Also, drawing support from the judgment of the Hon ble Supreme Court in the case of ACIT (E) Vs. Ahmedabad Urban Development Authority, (2022) 329 CTR 297 (SC), I may herein observe that as the letting of Dharmashala for commercial activities by the assessee, as claimed by the Ld. AR was its lifeblood for sustaining its activities of running the Dharmashala, but the same being in the nature of business or services in relation to a business, for cess or fee/charges; therefore, the receipts garnered from such activities would be hit by Section 2(15) of the Act. 12. Thus, in terms of my observations above, finding no infirmity in the view taken ..... X X X X Extracts X X X X X X X X Extracts X X X X
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