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TMI Blog2015 (6) TMI 1272X X X X Extracts X X X X X X X X Extracts X X X X ..... , in such event, probably it could be said that such activity to be incidental to the objects of education/medical relief etc., of the assessee trust. In the given case before us the Kalyana Mandapam is a distinct and separate asset specially designed to conduct such commercial activity. Looking at the nature of this activity conducted by the assessee trust, it can be considered only as a commercial activity of the assessee trust. Further the case laws relied by the assessee would not be applicable to the case of the assessee, because Section-2(15) of the Act was subsequently amended. In the case Gujarat Industrial Corporation [ 2010 (12) TMI 672 - ITAT, AHMEDABAD ] it has held that the word includes occurring at section 11(4) means that there is a reference of property or business of a trust which is a business undertaking in addition to the other properties of the trust. In this given case before us, the community hall or marriage hall whatever may be called is the asset of the separate business of the assessee which falls apart from the other charitable activities conducted by the assessee. Therefore considering the facts and circumstance of the case, we do not find it necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registered u/s. 12A of the Act, filed its return of income for the assessment year 2010-11 on 28.09.2010 declaring taxable income as NIL. The case was taken up for scrutiny and assessment was completed U/s. 143(3) of the Act on 15.03.2013 wherein the Ld. Assessing Officer disallowed the claim of depreciation amounting to Rs. 10,16,21,019/- because the cost of asset was already allowed as application of income and the claim of depreciation would amount to double deduction. On appeal, it appears that the Ld. CIT(A) allowed the claim of the assessee aggrieved by which the Revenue is in appeal before. The Ld. Assessing Officer had also held that the income received from the community hall owned by the assessee to be income taxable under the head 'income from business' and denied the benefit of section 11, because this activity of the assessee did not amount to be for charitable purpose. On appeal, the Ld. CIT(A) confirmed the order of the Ld. Assessing Officer against which the assessee is on appeal before us. Assessee's Appeal 4.1. Ground - Denying the benefit of Section-11 of the Act for the income derive from community hall owned by the assessee. During the assessment pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fits as per the objects of the Trust. The A.R denied that there is any commercial activity carried on continuously and systematically in using the community Hall by a person by application of material, labour or skill with a view to earn profits to fall within the meaning of 'Business'. The character of the rental receipts are only to be considered under 'income from house property'. 12. As seen from the Income and Expenditure Statement for the year ended 31.03.2010, the income is represented as by 'Voluntary donation Receipt'. In the case of the Community Hal, it is a Kalyana Mandapam, fully air-conditioned and is given on hire/rent for marriages etc. The claim of community hall by the appellant is not acceptable for the following reasons: (a) The community Hall is not given for charity or for any social cause for the general public. (b) The Kalyana Mandapam is exclusively given for marriages and also for High Level Consumer Exhibition. The assessee collects a pre-determined fee for hiring the Hall and also collects extra amounts for giving on rent the furniture, utensils (Kitchen) and also collects fee for Electricity Charges depending on the lighting and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;s multiple activities are to provide relief to the poor, medical relief, providing education and for advancement of any other object of general public utility. Section 2(15) of the Act has undergone drastic change by the Finance Act 2008 with effect from 1/4/2009. Prior to that Section 2(15) of the Act stood as follows. Section-2(15): Charitable purpose includes relief of the poor, education, medical relief and the advancement of any other object of general public utility The amended provisions of section 2(15) by the Finance Act, 2008 w.e.f. 1.4.2009 reads as follows:-- Section-2(15): Charitable purpose includes relief of the poor, education, medical relief [preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Education 43711158.49 11 Sri Ramakrishna Institute technology Education 110273682.00 12 Sri Ramakrishna Pharmacy Medical science 192177279.89 13 Sri Ramakrishna advance traning institute - 905561.00 1322523946.55 The Ld. Assessing Officer has categorized the receipt from community hall as business activity or at the most related to General public utility and not related to medical/education or relief to the poor. The Ld. CIT(A) has also given a finding that:-- i) The community hall is not given for charity or any social cause for the general public. ii) The community hall is being used as Kalayan Mandapam exclusively for marriages and also for high level consumer exhibition. iii) The assessee collects pre-determined fee for hiring the hall and an extra fee for providing other amenities such as furniture, kitchen utensils. iv) Electricity charges are also collected depending upon the usage of lighting facilities and air conditioning provided. From the above it is apparent that running of the community hall by the assessee is not an activity relatable to education, medical relief, and relief to poor as provided under the Act. At the most, it can be stretched to be an activity for adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperties of the trust. In this given case before us, the community hall or marriage hall whatever may be called is the asset of the separate business of the assessee which falls apart from the other charitable activities conducted by the assessee. Therefore considering the facts and circumstance of the case, we do not find it necessary to interfere with the order of the Revenue. Revenue's Appeal 5.1. Ground - Allowing the benefit of depreciation against the asset the cost of which is already allowed as application of income. On this issue, we have already categorically held that depreciation will not be allowable while claiming exemption U/s. 11 of the Act in the case The Anjuman-E-Himayath-E-Islam in ITA No. 2271/Mds./2014 vide order dated 02.06.2015. The relevant portion of the order is reproduced herein below for reference:-- The assessee Trust had claimed depreciation on the assets as application of income in the return of income. The Ld. Assessing Officer opined that the claim of depreciation by the assessee would amount to double deduction because the entire cost of asset has already been claimed as application of income in the year in which the assets were purchased. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o tax under sub-section (3). As only the income disclosed by the account will be eligible for exemption under section 11(1), the permitted accumulation of 25 per cent will also be calculated with reference to this income. 4. Where the trust derives income from house property, interest on securities, capital gains, or other sources, the word income should be understood in its commercial sense, i.e., book income, after adding back any appropriations or applications thereof towards the purposes of the trust or otherwise, and also after adding back any debits made for capital expenditure incurred for the purposes of the trust or otherwise. It should be noted, in this connection, that the amounts so added back will become chargeable to tax under section 11(3) to the extent that they represent outgoings for purposes other than those of the trust. The amounts spent or applied for the purposes of the trust from out of the income computed in the aforesaid manner, should be not less than 75 per cent of the latter, if the trust is to get the full benefit of the exemption under section 11(1). 5. To sum up, the business income of the trust as disclosed by the accounts plus its other income comp ..... 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