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TMI Blog2024 (2) TMI 918X X X X Extracts X X X X X X X X Extracts X X X X ..... 18. Similarly, for the assessment year 2017-18, the assessee filed return of income on 10/10/2017 declaring Nil income. The case was selected for scrutiny and notice u/s 143(2) of the Act was issued on 10/08/2018 and assessment order passed u/s 143(3) of the Act vide order dated 15/12/2019. For these assessment years, the assessee claimed exemption us/ 11 of the Act. However, the AO denied the exemption by observing that the assessee is not performing any charitable activity within the meaning of sec. 2(15) of the Act and he considered the contribution received from MYMUL as income of the assessee from 'other sources' by denying exemption u/s 11 of the Act. 4. The assessee carried appeal before the NFAC, New Delhi. The NFAC, New Delhi observed that the assessee covered in the 4th limb of sec. 2(15) of the Act i.e advancement of any other objects of "general public utility" and assessee is entitled for exemption u/s 11(1) of the Act on gross receipts consisting of contribution received from MYMUL, hence it is not to be considered as 'income from other sources'. Further, for assessment year 2016-17, the NFAC, New Delhi observed that the amount incurred by the assessee is of Rs. 11,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatutory fee, etc.). This is emphasised in the negative language employed by the main part of section 2(15). Therefore, the idea of a predominant object among several other objects, is discarded. The prohibition is relieved to a limited extent, by the proviso which carves out the condition by which otherwise prohibited activities can be engaged in by charities carrying out objects of general public utility. The conditions are: (a) that such activities in the nature of trade, commerce, business or service (in relation to trade, commerce or business for consideration) should be in the course of "actual carrying on" of the object of general public utility and (b) the quantum of receipts from such activities should not exceed 20 per cent. of the total receipts. Both parts of the proviso : (i) and (ii) (to section 2(15)) have to be read conjunctively, given the conscious use of "or" connecting the two. This means that if a charitable trust carries on any activity in the nature of business, trade or commerce, in the actual course of fulfilling its objectives, the income from such business, should not exceed the limit defined in sub-clause (ii) to the proviso." 10. Further, he submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of producers and employees of the Societies and to decide the other matters regarding mutual interest of the members. f. To take up rural development programmers, all the activities supplemental to the above objectives g. If the milk producer/Member dies to give financial assistance from the Trust to the husband/wife of his/her family. h. If the milk producer/cows of the Member dies accidentally or if dies from other reasons, to provide insurance facility." 13. It is to be noted that at the time of granting approval u/s 12AA competent authority was of aware of fact that the assessee has catering the needs of particular class of public and accordingly, approval authority found that objects of the trust constitutes "charitable purpose" within the meaning of 2(15) of the Act. The objects listed in the above trust deed have been continuously and consistently carried on by the assessee from year to year and there was no dispute on these facts by the AO. On the other hand, only objections of the AO is that the above objects carried on by the assessee is not beneficial to the public at large or for whole mankind in society. In our opinion, this is not the requirement of sec. 2( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e remand report from the AO. The ld.AR relied on the judgment of Karnataka High Court in the case of Director of Income-tax Vs. Sri Ramakrsihna Seva Ashsram 357 ITR 731, wherein held that - "The word "corpus" used in the context of the Income-tax Act, 1961, is to Ye Understood, in the context of capital, as opposed to an expenditure. If a voluntary contribution is made with a speck direction, it shall be treated as the capital of the trust for carrying on its charitable or religious activities. Then such an income falls under section 11(1)(d) and is not liable to tax. Therefore, it is not necessary that a voluntary contribution should be made with a specific direction to treat it as corpus. If the intention of the donor is to give that money to a trust to keep in trust the account in deposit and utilize the income there from for carrying on a particular activity, it satisfies the definition part of the corpus. The assessee would be entitled to the benefit of exemptions from payment of tax. to view of the language employed in clause (d) of sub-section (1) of section 11, the requirement is that the voluntary contributions have to be made with a specific direction. The lair does not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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