| The Tax Publishers2020 TaxPub(DT) 0836 (Jp-Trib) : (2020) 205 TTJ 0435 INCOME TAX ACT, 1961
Section 2(15), Proviso, 11
In the absence of profit motive activity of preparing Prasad on behalf of devotees and after offering to the God, distribution thereof to devotees visiting temple, general public as well as students of various schools as Midday Meal was clearly a charitable activity and could not be termed as trade, commerce or business and, therefore, denial of exemption under section 11 & 12 was not justified especially when surplus arose only due to cancellation of sawamani pre-booked by some devotees.
|
Charitable trust - Exemption under section 11 - Assessee had been carrying out activity of preparing Prasad as per request of devotees, offering the same to Balaji and thereafter Prasad was being distributed to the devotees, general public and students of various schools -
Assessee society registered under section 12AA was engaged in the activity of making/buying and selling of Prasad/Sweets to devotees of Balaji of Mehandipur. On going through income and expenditure account of assessee, AO noticed that total receipts from sale of Prasad was Rs. 17,63,47,527 as agianst total purchase of materials of Rs. 13,23,88,744 and as a result of purchase and sale of Sweets/Prasad, assessee had shown profit of Rs. 4,36,26,588. Thus, AO held held that assessee was dealing in buying and selling of Sweets/Prasad being a commercial activity and it had nothing to do with charitable activity and, therefore, assessee was not entitled to exemption under section 11 in view of proviso tos ection 2(15). Assessee submitted that only cost was charged from devoitees booking Sawamani and it was not sold to any other person. Thus, activity of assessee tust had no commercial instinct. Assessee further explained that though Sawamani was booked on cost to cost basis but because of cancellation, surplus arose to assessee. Held: In the absence of profit motive activity of preparing Prasad on behalf of devotees and after offering to the God, distribution thereof to devotees visiting temple, general public as well as students of various schools as Midday Meal was clearly a charitable activity and could not be termed as trade, commerce or business. It was a consistent activity being performed by assessee for last several years and AO had undisputedly accepted the same as charitbale in nature and allowed benefit of sections 11 and 12. Accordingly, no exemption could be denied during the year under consideration.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2012-13
INCOME TAX ACT, 1961
Section 13(1)(c)(ii) Section 13(2)(g)
 SUBSCRIBE FOR FULL CONTENT
|