SHREE JOGESHWARI ESTATE PATEL MITRA MANDAL, MUMBAI V. DIT (EXEMPTION), MUMBAI

ITA 267/MUM/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 72018 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 19-11-2013
• Assessment Year: 2012-2013
• Appeal Filed On: 09-01-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P K SAHU; GIRIJA DAYAL
• Assessee Lawyers: A H DALAL
• Keywords: Gift; Charitable institution
• Section: 80G; 12A; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E , MUMBAI BEFORE SHRI D. KARUNAKARA RAO , ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER ITA NO. 267/M/2013 ASSESSMENT YEAR: 2012 - 13 M/S. SHREE JOGESHWARI ESTATE PATEL MITRA MANDAL, 2/12, GRO UND FLOOR, BHAGVAN RAJA NAGAR, PATEL ESTATE ROAD, JOGESHWARI (WEST) MUMBAI 400 012 PAN: AABTS5337H VS. DIRECTORATE OF INCOME - TAX (EXEMPTION), 6 TH FLOOR, PIRAMAL CHAMBERS, PATEL, MUMBAI 400 012 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI A.H. DALAL, A.R. REVENUE BY : SHRI GIRIJA DAYAL, D.R. & SHRI P.K. SAHU, D.R. DATE OF HEARING : 20.11 .2013 DATE OF PRONOUNCEMENT : 31.12.2013 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT A PPEAL HAS BEEN FILED BY THE ASSESSEE - TRUST AGAINST THE ORDER DATED 29 .1 1 .201 2 OF THE DIRECTOR OF INCOME TAX (EXEMP.), MUMBAI (HERE IN AFTER REFERRED TO AS DIT(E) ), PASSED U/S.12AA OF THE INCOME TAX ACT, 1961 READ WITH RULE 17 A OF THE INCOME TAX RULES , R EJECTING THE APPLICATION OF THE ASSESSEE FOR R EGISTRATION AS A CHARITABLE TRUST . 2. THE LD. DIT(E) WHILE DECLINING THE REGISTRATION TO THE ASSESSEE - TRUST HELD THAT THE ACTIVITIES OF THE INSTITUTION WERE NOT MOTIVATED BY A S PIR I T OF GENUINE CHARITY BUT IN FACT WERE BUSINESS OR COMMERCIAL ACTIVITIES. WHILE HOLDING SO, THE LD. DIT (E) OBSERVED THAT THE OBJECTS OF THE TRUST INCLUDE ACTIVITIES OF CELEBRATION OF GANESH U TSAV AND NAVRATRI UTSAV WHICH WERE RELIGIOUS ACTIVIT IES OF THE TRUST AND THE SAME WERE NOT P ERMISSIBLE FOR GRANT OF REGISTRATION AS ITA NO.267/M/2013 M/S. SHREE JOGESHWARI ESTATE PATEL MITRA MANDAL 2 CHARITABLE INSTITUTION. FURTHER , THE APPLICANT TRUST HAD SHOWN NAVARATRI UTSAV I NCOME OF RS. 2 , 19 , 853/ - , RS. 3 , 83 , 366/ - AND RS.5 , 98 , 302/ - DURING THE FINANCIAL YEARS 2009 - 10 TO 2011 - 12 WHICH SEEMED TO BE TAINTED WITH C OMMERCIAL MOTIVE. THE APPLICANT HAD NOT SUBMITTED ANY EVIDENCE OF CONDUCTING THE COOKING CLASSES AND EVEN T HE SAID ACTIVITY COULD NOT BE SA ID TO BE CHARITABLE ACTIVITY. EVEN THE APP LICANT HAD EARNED INCOME OF RS. 6 , 00 , 317/ - , RS.7 , 26 , 209/ - , AND RS.6 , 52 , 205/ - DURING FINANCIAL YEARS 2009 - 10 TO 2011 - 12 BY RENTING OF UTENSILS AT CONCESSIONAL RATES WHICH INDICATES THAT THE SAME WAS MORE OF A COMMERCIAL THAN CHARITABLE ACTIVITY. HE FURTHER OBSERVED THAT THE SANATORIUM BEING RUN BY THE ASSESSEE AT LONAWALA WAS IN FACT A GUEST HOUSE BEING RUN BY THE ASSESSEE FOR COMMERCIAL PURP OSES. HE FURTHER OBSERVED THAT A SANATORIUM LITERALLY IS AN ESTABLISHMENT FOR TREATING CHRONIC DISEASES OR CONVALESCENTS. HOWEVER , THE ASSESSEE WAS NOT PROVIDING ANY MEDICAL FACILITY TO THE VISITORS. FROM THE RECORDS IT ESTABLISHED THAT THE ASSESSEE IN F ACT WAS RUNNING A GUEST HOUSE IN THE GARB OF SANATORIUM. 3. BEFORE US, THE LD. REPRESENTATIVE OF THE ASSESSEE HAS CONTENDED THAT THE ASSESSEE TRUST HAD BEEN REGISTERED WITH THE CHARITABLE COM MISSIONER IN THE YEAR 1967. EARLIER THE REGISTRATION OF THE TRUST UNDER SECTION 12A OF THE INCOME TAX ACT WAS REJECTED BY THE DIT(E) ON THE GROUND THAT THE ASSESSEE - TRUST WAS FORMED FOR THE BENEFIT OF THE PATEL COMMUNITY AND THEREFORE ITS OBJECTS WERE HIT BY SECTION 13(1)(B) OF THE ACT FOR TAKING CARE OF A PARTICULAR COMMUNITY. THE MATTER TRAVELLED TO THE TRIBUNAL AND THE F BENCH OF THE TRIBUNAL UPHELD THE ORDER OF THE DIT(E) DISMISSING THE APPEAL OF THE ASSESSEE VIDE ORDER DT.30.11.2006 PASSED IN ITA NO. 6565/M/2003. HE HAS FURTHER SUBMITTED THAT THEREAFTER THE ASSESSEE TRUST AMENDED ITS CONSTITUTION IN THE MEETING HELD ON 2.4.2012 AND FILED A CHANGE REPORT WITH THE CHARITY COMMISSIONER. HE HAS FURTHER BROUGHT OUT OUR ATTENTION TO THE REVISED OBJECTS OF TH E TRUST COPY OF ITA NO.267/M/2013 M/S. SHREE JOGESHWARI ESTATE PATEL MITRA MANDAL 3 WHICH HAS BEEN PLACED AT PAGE 7 OF THE PAPER BOOK FILED BY THE ASSESSE E . THE RELEVANT PORTION/OBJECTS CLAUSE IS EXTRACTED AS UNDER: 4. OBJECTS : A ) THE EXPRESSION CHARTABLE PROPOSES IN THIS CONSTITUTION SHALL ALWAYS BE CONSTRUED AS EXCLUDI NG ANY PURPOSE OF A RELIGIOUS NATURE AND IT IS INTENDED AND DECLARED THAT THE WORDS CHARITABLE PURPOSES OR CHARITABLE OBJECTS IN THIS CONSTITUTION SHALL BE CONSTRUED AND SHALL MEAN AS NOT INCLUDING ANY PURPOSES OF A RELIGIOUS NATURE. PROVIDED THAT TH E INCOME AS WELL AS THE CAPITAL SHALL BE APPLIED ONLY TOWARDS PUBLIC CHARITABLE PURPOSES AS AFORESAID AND ANY ACCUMULATION OF INCOME SHALL ALSO BE MADE AND DEEMED TO BE MADE FOR APPLICATION TO SUCH PUBLIC CHARITABLE AS AFORESAID. B ) PROVIDED FURTHER THAT N OTWITHSTANDING ANYTHING HEREINBEFORE OR HEREINAFTER CONTAINED INCOME AS ALSO THE CORPUS OF THE TRUST FUND SHALL BE APPLIED AND BE APPLICABLE ONLY TO OR FOR SUCH PUBLIC CHARITABLE PURPOSES ONLY AND WITHIN SUCH TERRITORIES ONLY AND SUBJECT TO SUCH CONDITION OR LIMITATION IF ANY AS MAY FROM TIME TO TIME BE LAID DOWN IN THE INCOME TAX ACT 1961 OR ANY OTHER ACT GOVERNING TAXATION OF INCOME AS WILL ENSURE OR MAKE THE TRUST HEREBY ESTABLISHED AND ITS INCOME AS ELIGIBLE FOR EXEMPT FROM TAXATION UNDER THE INCOME TAX ACT 1961 AND ANY REPLACEMENT OR RE - ENACTMENT THEREOF OR MODIFICATION THEREOF OR UNDER ANY SUCH ACT GOVERNING TAXATION OR INCOME FOR THE TIME BEING IN FORCE IN INDIA. AND FURTHER SO THAT TRUST HEREBY ESTABLISHED SHALL BE ONE TO WHICH THE PROVISION OF SE CTION 80G OR ANY OTHER SUCH OR SIMILAR PROVISION IN THE INCOME TAX ACT 1961 AND OF ANY REPLACEMENT OR REENACTMENT OR MODIFICATION THEREOF FOR THE TIME BEING IN FORCE SHALL APPLY AND THE INTENTION IS THAT ANY DONATION THERETO RECOGNIZED AS ELIGIBLE FOR EXEM PTION OR RELIEF FROM TAX AS REGARD TO THE DONOR UNDER INCOME TAX ACT, 1961, THE GIFT TAX ACT 1958 AND THE EXPENDITURE TAX ACT, 1957 AND ANY SUCH OR SIMILAR LEGISLATION FOR THE TIME BEING IN FORCE IN INDIA. C ) THE MAIN AIM OF THE MANDAL IS TO PROMOTE COOPER ATION AMONGST PUBLIC AT LARGE AND CR5EATE AN AWARENESS AMONG THEM AND TO ELEVATE SOCIAL , VALUES AND EDUCATION LEVEL AMONGST THE GENERAL PUBLIC AND TO PARTICIPATE IN NATION BUILDING WORK AND TO EXTEND HELP TO POOR PEOPLE (MALE AND FEMALE) AND TO SPREAD EDU CATION AMONGST THEM. ITA NO.267/M/2013 M/S. SHREE JOGESHWARI ESTATE PATEL MITRA MANDAL 4 D ) TO CELEBRATE NATIONAL AND CULTURAL FESTIVALS (UTSAV) EVERY YEAR. E ) TO EXTEND MEDICAL HELP TO THE GENERAL PUBLIC AT LARGE. F ) TO GIVE EDUCATIONAL HELP TO BOYS AND GIRLS & MAKE ARRANGEMENT FOR THEIR PROGRESS IN EDUCATION. G ) RELIEF O F POVERTY IN SUCH MANNER AS THE MANAGING COMMITTEE MAY THINK. H ) TO PURCHASE, CONSTRUCT TO TAKE ON RENT A MULTIPURPOSE HALL WITH OR WITHOUT GUEST HOUSE AND TO MAINTAIN THE SAME FOR USE AT GENERAL PUBLIC FOR VARIOUS PURPOSES AS THE MANAGING COMMITTEE MAY DE CIDE FROM TIME TO TIME. I ) ESTABLISHMENT ACQUISITION AND MAINTENANCE AND SUPPORT TO HOSPITALS, DISPENSARIES MATERNITY HOMES, SANATORIUM, RESEARCH CENTERS, LABORATORIES, MUSEUM, STUDY CENTERS, MEDICAL COLLEGES AND MEDICAL SCHOOLS. J ) GRANTS OF SUBSCRIPTION AND DONATIONS TO HOSPITALS, DISPENSARIES, CONVALESCENT HOMES, ASYLUMS, NURSING HOMES AND OTHER PUBLIC INSTITUTION FOR ADMINISTERING MEDICAL RELIEF UPON SUCH TERMS AND CONDITIONS AND FOR SUCH PERIOD AS THE MANAGING COMMITTEE MAY THINK FIT. K ) TO ACQUIRE MOV ABLE AND IMMOVABLE PROPERTIES FOR PROVIDING PREMISES AT CONCESSIONAL RATES TO THE POOR FOR MARRIAGE AND OTHER FUNCTIONS. L ) CREATION, MAINTENANCE, SUPPLY OF OR SUPPORT TO GARDENS, GYMNASIUMS, PHYSICAL CULTURE CENTERS AND OTHER MEANS OF ADVANCEMENT OF HEALTH AND HYGIENE. M ) AT THE TIME OF NATURAL CALAMITY IN THE COUNTRY OR ANY STATE OF THE COUNTRY LIKE EARTH QUAKES, DRAUGHT OR MEDICAL NECESSITY OF ANY DISEASE, TO COLLECT FUNDS OR MATERIAL FROM THE PEOPLE TO HELP THE AFFECTED PEOPLE. N ) ADVANCEMENT OF ANY OTHER OBJECT OR GENERAL PUBLIC UTILITY, NOT INVOLVING THE CARRYING ON OF ANY ACTIVITY FOR PROFIT, AS THE SAID MEMBERS MAY THINK FIT AND IN SUCH MANNER AND FOR ONE OR MORE OF ITA NO.267/M/2013 M/S. SHREE JOGESHWARI ESTATE PATEL MITRA MANDAL 5 SUCH OBJECTS OR PURPOSES TO THE EXCLUSION OF OTHER OR OTHERS AS THE SAID MEMBERS MAY TH INK FIT. IF ANY OF THE ABOVE OBJECTS IS FOUND TO BE INCONSISTENT WITH THE OBJECTS OF A PUBLIC CHARITABLE INSTITUTION UNDER SECTION 11 OF ANY OTHER SECTION OF THE INCOME TAX ACT, 1961 OR ANY OTHER DIRECT TAX LAW OR ANY OTHER LAW APPLICABLE TO SUCH TRUSTS AS NOW ENACTED OR AS MAY BE ENACTED OR AMENDED AT A FUTURE DATE, THE OBJECTS STATED ABOVE WILL BE TREATED AS SO MODIFIED TO ACCORD WITH SUCH LAW OR AMENDED LAW SO THAT ANY CONCESSIONS, PRIVILEGES, CONDITIONS OR REGULATIONS AVAILABLE AND APPLICABLE TO SUCH PUBLIC EDUCATIONAL CHARITABLE INSTITUTIONS WILL BE AVAILABLE OR APPLICABLE TO THIS TRUST AS WELL SO THAT THIS TRUST WILL CONTINUE TO RETAIN ITS CHARACTER AS A PUBLIC CHARITABLE INSTITUTION WITHOUT PROFIT MOTIVE WITH PUBLIC CHARACTER WITHIN THE MEANING OF A LL SUCH LAWS. ALL THE OBJECTS OF THE TRUST AND ITS ACTIVITIES WILL BE CONFINED TO INDIA AND WILL BE CARRIED ON WITHOUT PROFIT MOTIVE AND WITHOUT ANY DIS T INCTION ON ACCOUNT OF CAST, CREED, COLOUR OR RELIGION. 4. THE LD. AR HAS FURTHER CONTENDED THAT WHILE REJECTING THE APPLICATION OF THE ASSESSEE, THE DIT(E) WRONGLY OBSERVED THAT THE ASSESSEE TRUST WAS CARRYING ON COMMERCIAL ACTIVITIES RATHER THE PERUSAL OF THE OBJECTS OF THE TRUST REVEALS THAT THE ASSESSEE WAS CARRYING OUT CHARITABLE ACTIVITIES. THE CELEBRATION OF THE GANESH UTSAV AND NAVRATRI UTSAV WAS NOT RELIGIOUS ACTIVITY BUT THE CULTURAL ACTIVITY ONLY. THE SAME IS CELEBRATED BY HOLDING VARIOUS PROGRAMS INCLUDING DRAWING COMPETITION AMONG CHILDREN AND HOLDING OF DRAMA ETC. THE EVIDENCE IN THE SHA PE OF VOUCHERS FOR COOKING MATERIAL EXPENSES WAS ENOUGH TO PROVE THE ACTIVITY OF HOLDING THE COOKING CLASSES. FURTHER THAT THE DIT(E) WRONGLY GAVE A RESTRICTED AND NARROW MEANING TO WORD SANATORIUM . THE SAID FACILITY WAS AVAILED OF BY THE PERSONS REQUIRI NG CONVALESCENT AND CLEAN AIR AT THE SANATORIUM. THE SANATORIUM WAS USED BY SMALL FAMILIES DURING THE YEAR 2012 - 13 AGGREGATING 1300 PERSONS. HE HAS FURTHER CONTENDED THAT THE ASSESSEE IS ENTITLED TO BE REGISTERED AS A CHARITABLE TRUST, ITS OBJECTS BEING FALLING IN THE CATEGORY OF CHARITABLE PURPOSE AS PER DEFINITION OF CHARITABLE PURPOSE GIVEN U/S. 2(15) OF THE INCOME TAX ACT. HE HAS FURTHER CONTENDED THAT ASSUMING THAT THE ABOVE ACTIVITIES OF THE TRUST, EVEN IF, ARE CONSIDERED BUSINESS ACTIVITIES, EVEN ITA NO.267/M/2013 M/S. SHREE JOGESHWARI ESTATE PATEL MITRA MANDAL 6 THEN THE REGISTRATION TO IT CANNOT BE REFUSED THOUGH THE RECEIPTS/INCOME EXCEED RS.1000000/ - (RS.2500000/ - FROM A.Y. 2012 - 13) AND BEING HIT BY PROVISO(I) TO SECTION 2(15) OF THE A CT. HE HAS RELIED IN THIS RESPECT UPON THE ORDER OF THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF GHATKPAR JOLLY GYMKHANA DATED 2 3.10.2013 (ITA NO.882/M/2012 ) AND FURTHER IN THE CASE OF KHAR GYMKHANA DATED 10.7.2013(ITA NO.373/M/2012) . ON THE OTHER HAND THE LD. DR HAS RELIED UPON THE OBSERVATIONS OF THE DIT(E) MADE VIDE IMPUGNED ORDER. HE HAS FURTHER CONTENDED THAT THE SHORT PERIOD STAY OF THE OCCUPANTS FOR ONLY 2 - 3 DAYS AND FURTHER THE RUSH OF THE PERSONS DURING WEEK - ENDS/HOLIDAYS AND FURTHER MENTIONING OF THE WORD ATITHI GRIHA ON THE BOOKING DEPOSIT RECEIPTS WHICH IN ENGLISH MEANS GUEST HOUSE PROVES THAT THE ASSESSEE IN FACT WAS RUNNING A GUEST HOUSE. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNED REPRESENTATIVES OF THE PARTIES AND HAVE ALSO GONE THROUGH THE RECORD. THE LD. DIT(E) HAD REJECTED THE REGIST RATION TO THE ASSESSEE - TRUST MAINLY ON THE GROUND THAT THE ACTIVITIES OF THE INSTITUTION WERE NOT MOTIVATED BY A SPIRIT OF GENUINE CHARITY BUT IN FACT WERE BUSINESS OR COMMERCIAL ACTIVITIES . WHILE HOLDING SO, HE NOTICED THAT THE ASSESSEE TRUST RECEIVED SUB STANTIAL INCOME FROM THE VARIOUS ACTIVITIES CARRIED OUT BY IT. EVEN THE ALLEGED SANATORIUM AT LONAWALA IN FACT WAS RUN AS A GUEST HOUSE FOR COMMERCIAL PURPOSE. ON THE OTHER HAND THE CONTENTION OF THE LD. AR HAS BEEN THAT EVEN IF IT IS CONSIDERED SO, STIL L THE REGISTRATION CAN NOT BE REFUSED TO THE ASSESSEE IN THE LIGHT OF THE PROPOSITION OF LAW LAID DOWN BY THE CO - ORDINATE BENCHES OF THE TRIBUNAL IN THE CASES OF GHATKPAR JOLLY GYMKHANA (SUPRA) AND KHAR GYMKHANA (SUPRA) . 6. THE INCOME TAX EXEMPTION UNDE R SECTION 12 OF THE INCOME TAX ACT IS AVAILABLE TO TRUST CREATED WHOLLY FOR CHARITABLE PURPOSES BUT SUBJECT TO MAKING ITA NO.267/M/2013 M/S. SHREE JOGESHWARI ESTATE PATEL MITRA MANDAL 7 AN APPLICATION FOR REGISTRATION UNDER SECTION 12A OF THE ACT FOLLOWED BY REGISTRATION UNDER SECTION 12AA(1) OF THE ACT AFTER SATISFACTION OF THE COMMISSIONER/REGISTERING AUTHORITY ABOUT THE OBJECTS OF THE TRUST AND THE GENUINENESS OF ITS ACTIVITIES; MEANING THEREBY THE COMMISSIONER HAS TO SATISFY HIMSELF THAT THE OBJECTS AND ACTIVITIES OF THE TRUST ARE WHOLLY FOR CHARITABLE PURPOSES. THE WOR D CHARITABLE PURPOSES HAS BEEN DEFINED UNDER SECTION 2(15) OF THE ACT. TO BE MORE CLEAR AND FOR THE SAKE OF CONVENIENCE , SE CTION 2(15) OF THE INCOME TAX ACT IS REPRODUCED AS UNDER : 2.(15) CHARITABLE PURPOSE' INCLUDE S RELIEF OF THE POOR, EDUCATION , MED ICAL 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, CO MMERCE 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 RECEI PTS FROM THE ACTIVITIES REFERRED TO THEREIN IS TEN LAC RUPE ES OR LESS IN THE PREVIOUS YEAR 7. A PERUSAL OF THE ABOVE REPRODUCED SECTION 2(15) OF THE ACT REVEALS THAT THE DEFINITION IS AN INCLUSIVE DEFINITION AND NOT AN EXHAUSTIVE ONE. A PART FROM CHARI TABLE ACTIVITIES LIKE RELIEF TO THE POOR, EDUCATION, MEDICAL RELIEF ETC. IF THE ACTIVITIES OF A TRUST ARE FOR ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY THE SAME WILL BE INCLUDED IN THE DEFINITION OF CHARITABLE PURPOSES. HOWEVER, THE FIRST P ROVISO TO THE SAID SECTION PROVIDES THAT IF THE TRUST/INSTITUTION CARRIES OUT ANY ACTIVITY IN THE NATURE OF ANY TRADE, COMMERCE OR BUSINESS FOR A CESS OR IF FOR ANY OTHER CONSIDERATION IRRESPECTIVE OF THE NATURE OF ITA NO.267/M/2013 M/S. SHREE JOGESHWARI ESTATE PATEL MITRA MANDAL 8 USE OR APPLICATION OF SUCH MONEY RETAINED FROM SUCH ACTIVITY WILL NOT BE AN ACTIVITY FOR ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AS SUCH WILL BE EXCLUDED FROM THE DEFINITION OF CHARITABLE PURPOSES. A CAREFUL READING OF THE ABOVE SECTION FURTHER REVEALS THAT THE EXCLUSION CLAUS E IN THE SHAPE OF FIRST PROVISO PROVIDING FOR EXCLUSION FROM THE DEFINITION OF CHARITABLE PURPOSES IN CASE OF THE TRUST/INSTITUTION CARRYING OUT ANY ACTIVITY IN THE NATURE OF ANY TRADE, COMMERCE OR BUSINESS FOR A CESS OR IF FOR ANY OTHER CONSIDERATION IR RESPECTIVE OF THE NATURE OF USE OR APPLICATION OF SUCH MONEY RETAINED FROM SUCH ACTIVITY IS APPLICABLE IN THE CASE OF AN ACTIVITY FOR ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY . HOWEVER THE SAME HAS NO APPLICATION OR EFFECT IN CASE OF ACT IVITIES OF THE TRUST CARRIED FOR THE PURPOSE OF 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. F URTHER , VIDE NEWLY INSERTED PROVISO W.E.F. 01.04.2009 , THE RIGOR OF THE FIRST PROVISO HAS BEEN DILUTED. AS PER THE SAID PROVISO THE FIRST PROVISO, SHALL NOT APPLY IF THE AGGREGATE VALUE OF THE RECEIPTS FROM THE ACTIVITIES AS MENTIONED I N THE FIRST PROVISO IS RS.10 LA KHS OR LESS IN THE PREVIOUS YEAR WHICH, AS OBSERVED ABOVE, IS ATTRACTED IN CASE OF CHARITABLE PURPOSES CONSTITUTING AN ACTIVITY FOR ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. HOWEVER , THE ABOVE LIMIT OF RS. 10 LAKHS HAS NO EFFE CT OR APPLICABILITY IN CASE OF MONEY/RECEIPTS RECEIVED DURING THE CARRYING OUT OF THE ACTIVITIES OF RELIEF OF THE POOR, EDUCATION , MEDICAL RELIEF, PRESERVATION OF ENVIRONMENT (INCLUDING WATERSHEDS, FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENTS OR PLA CES OR OBJECTS OF ARTISTIC OR HISTORIC INTEREST, IF THE COMMISSIONER IS OTHERWISE SATISFIED ABOUT THE CHARITABLE NATURE OF THE OBJECTS AND GENUINENESS OF THE ACTIVITIES OF THE CONCERNED TRUST /INSTITUTION. ITA NO.267/M/2013 M/S. SHREE JOGESHWARI ESTATE PATEL MITRA MANDAL 9 8. NOW COMING TO THE FACTS OF THE PRESENT CASE, T HE ASSESSEE DURING THE FINANCIAL YEARS 2009 - 10 TO 2011 - 12 RECEIVED NAVARATRI UTSAV INCOME OF RS.2 , 19 ,853/ - , RS. 3 , 83 , 366/ - AND RS.5 , 98 , 302/ - RESPECTIVELY AND FURTHER INCOME OF RS. 6 , 00 , 317/ - , RS.7 , 26 , 209/ - , AND RS. 6 , 52 , 205/ - FROM RENTING OF UTENSILS AT CO NCESSIONAL RATES . APART FROM THAT DURING THE FINANCIAL YEAR 2010 - 11, THE TOTAL RECEIPT FROM ALLEGED SANATORIUM AT LONAWALA WAS RS.16 , 82 , 315/ - AND FOR F.Y. 2011 - 12 WAS RS.20 , 66 , 256/ - . FURTHER THE RECEIPTS FROM GANPATI UTSAV FOR F.Y. 2011 - 12 WERE RS.40 , 03 4/ - . SO FAR THE PREVIOUS YEAR I.E. F.Y.2011 - 12 IS CONCERNED, THE TOTAL RE CEIPTS OF THE ASSESSEE WERE RS. 598302.00 + RS.652205.00 + RS.2066256.00 + RS.40034.00 WHICH COMES OUT TO BE RS.33 , 56 , 797/ - WHICH WAS MUCH MORE THAN THE PRESCRIBED LIMIT OF RS.10 , 00 , 0 00/ - . NONE OF THE ACTIVITIES OF THE ASSESSEE - TRUST, FROM WHICH THE INCOME WAS RECEIVED, FALLS IN THE DEFINITION OR SCOPE OF THE PURPOSE OF RELIEF OF THE POOR, EDUCATION, MEDICAL RELIEF, PRESERVATION OF ENVIRONMENT (INCLUDING WATERSHEDS, FORESTS AND WILDLIF E) AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS O F ARTISTIC OR HISTORIC INTEREST BUT AT THE MOST CAN BE INCLUDED WITHIN THE SCOPE OF AN ACTIVITY FOR ADVANCEMENT OF ANY OTHER OB JECT OF GENERAL PUBLIC UTILITY. THE ASSESSEE HAS ALSO FAILED TO PROVE THAT THE ALLEGED SANATORIUM AT LONOWALA WAS IN FACT NOT USED AS A GUEST HOUSE. A PERUSAL OF THE RECORD ON FILE REVEALS THAT THE MOST OF THE OCCUPANTS STAYED THERE FOR A VERY SHORT DURATION AND THE OCCUPANCY REMAINED MUCH MORE DURING WEEK - ENDS/HOLIDAYS. E VEN ON THE DEPOSIT RECEIPTS, IT HAS BEEN MENTIONED AS ATITHI GRIHA AND FURTHER NO ONE IS ALLOWED TO STAY THERE FOR MORE THAN SEVEN DAYS. IT IS THE OWN CASE OF THE ASSESSEE THAT T HE SANATORIUM WAS USED BY SMALL FAMILIES DURING THE YEAR 2012 - 13 AGGREGATING 1300 PERSONS. ALL THESE FACTS REVEAL THAT THE COMPLEX AT LONAWALA HAS BEEN USED AS A GUEST HOUSE AND THE SAME DOES NOT FALL IN ANY ITA NO.267/M/2013 M/S. SHREE JOGESHWARI ESTATE PATEL MITRA MANDAL 10 MANNER IN THE DEFINITION OF SANATORIUM. EVEN IF THE ACTIVITIES OF THE ASSESSEE TRUST, AS POINTED OUT BY THE DIT(E) IN HIS OR DER, ARE CONSIDERED TO BE FALLING IN THE DEFINITION OR WITHIN THE SCOPE OF AN ACTIVITY FOR ADVANCEMENT OF ANY OTHER O BJECT OF GENERAL PUBLIC UTILITY , STILL THE CASE OF THE ASSESSEE TRUST IS HIT BY THE SECOND PROVISO TO SECTION 2(15) OF THE ACT BEING ITS TOTAL RECEIPTS MUCH MORE THAN THE PRESCRIBED LIMIT OF RS. 10 LAKHS FOR THE YEAR UNDER CONSIDERATION. 9. NOW COMING TO THE CASE OF GHATKOPAR JOLLY GYMKHANA(SUPRA) RELIED UPON BY THE ASSESSEE, THE QUESTION BEFORE THE T RIBUNAL IN THE SAID CASE WAS RELATING TO THE CANCELLATION OF THE REGISTRATION WHICH WAS ALREADY GRANTED TO THE SAID TRUST FOR THE REASONS THAT ITS TOTAL RECEIPTS FOR THE PREVIOUS YEAR HAD CROSSED THE PRESCRIBED LIMIT. IT WAS UNDER THOSE CIRCUMSTANCES IT WAS OBSERVED BY THE CO - ORDINATE BENCH O F THE TRIBUNAL (INCIDENTALLY CONSTITUTED BY BOTH OF US) THAT THE TAX EXEMPTION OR BENEFITS ARE GRANTED TO A TRUST OR INSTITUTION BECAUSE ITS ACTIVITIES FALL WITHIN THE DEFINITION OF CHARITABLE PURPOSES AS DEFINED U/S. 2(15) OF THE ACT. UNDER SECTION 12AA( 3) THE REGISTRATION OF SUCH TRUST/INSTITUTION CAN BE CANCELLED IF ITS ACTIVITIES HAVE BECOME NON GENUINE OR IT IS NOT CARRYING OUT ACTIVITIES AS PER OBJECTS OF THE INSTITUTION. ONCE THE ACTIVITIES OF A REGISTERED CHARITABLE INSTITUTION CEASE TO BE CHARITAB LE OR DO NOT FALL WITHIN THE PURVIEW OF DEFINITION OF 'CHARITABLE PURPOSE' AS PER THE RELEVANT PROVISIONS/DEFINITIONS GIVEN UNDER THE ACT, THEN, SUCH INSTITUTION WOULD NOT BE ENTITLED TO TAX EXEMPTION OR BENEFITS GRANTED UNDER THE ACT. EVEN DESPITE THE FAC T THAT SUCH AN INSTITUTION, OTHERWISE, IS CARRYING OUT CHARITABLE ACTIVITIES. FURTHER DEALING WITH THE QUESTION AS TO WHETHER THE REGISTRATION OF THE ASSESSEE AS A CHARITABLE INSTITUTION IS LIABLE TO BE CANCELLED BECAUSE OF THE REASON THAT THE TOTAL RECEI PTS EXCEEDED THE LIMIT OF RS.10.00 LA KHS AS PROVIDED UNDER THE SECOND PROV ISO TO SECTION 2(15) OF THE ACT, IT HAS BEEN OBSERVED BY ITA NO.267/M/2013 M/S. SHREE JOGESHWARI ESTATE PATEL MITRA MANDAL 11 US IN THE SAID CASE AS UNDER : IN OUR VIEW THE WORD 'PREVIOUS YEAR' MENTIONED IN THE SECOND PROVISO TO SECTION 2(1 5) IS MORE RELEVANT. IT HAS NOT BEEN MENTIONED THAT THE FIRST PROVISO, WHICH AS OBSERVED IS A RIGOROUS PROVISO, WILL NOT APPLY IF THE TOTAL RECEIPTS FROM THE CHARITABLE ACTIVITIES EXCEEDS THE LIMIT OF RS.10.00 LACS DURING 'ANY YEAR' RATHER, THE WORD IS 'PR EVIOUS YEAR'. THAT MEANS THE BENEFITS WILL NOT BE AVAILABLE TO THE ASSESSEE FOR THE ASSESSMENT YEAR IN WHICH THE GROSS RECEIPTS OF INCOME EXCEEDS THE LIMIT OF RS.10.00 LACS, HOWEVER, THAT DOES NOT MEAN THAT SUCH BENEFITS WILL NOT BE AVAILABLE TO THE INSTIT UTION FOR ALL OTHER ASSESSMENT YEARS DURING WHICH ITS RECEIPTS DOES NOT CROSS THE LIMIT OF RS.10.00 LACS. THE WORD 'PREVIOUS YEAR' MENTIONED IN THE SECOND PROVISO MAKES IT LIBERAL TO GET AN INTERPRETATION THAT IT IS NOT THE REGISTRATION OF THE INSTITUTION AS CHARITABLE INSTITUTION WHICH IS AFFECTED, RATHER, IT IS THE ELIGIBILITY OF THE SAID INSTITUTION TO GET TAX EXEMPTION/ BENEFITS WHICH IS AFFECTED THAT TOO FOR THE RELEVANT YEAR DURING WHICH THE GROSS RECEIPTS OF THE INSTITUTIONS CROSS THE LIMIT OF RS.10. 00 LACS. THE INSERTION OF SECOND PROVISO HAS NOT MADE THE DEFINITION RESTRICTIVE OR RIGOROUS RATHER WITH THE INSERTION OF SECOND PROVISO TO SECTION 2(15) OF THE ACT, THE RIGOR OR RESTRICTIVE NATURE OF THE DEFINITION HAS BEEN DILUTED AND HAS BEEN MADE WIDE ENOUGH TO INCLUDE RELATED BUSINESS ACTIVITIES OF THE TRUST/INSTITUTION, AS DESCRIBED THE FIRST PROVISO TO SECTION 2(15) OF THE ACT, ALSO WITHIN THE SCOPE OF DEFINITION OF CHARITABLE PURPOSES. THE LIMIT OF RECEIPT UP TO RS.10.00 LACS DURING THE 'PREVIOUS YE AR' AS MENTIONED IN THE SECOND PROVISO, HAS MADE THE SECTION FURTHER LIBERAL MANDATING TO OBSERVE THE CHARITABLE CHARACTER OF THE CONCERNED TRUST/ INSTITUTION FROM YEAR TO YEAR BASIS. FOR THE PREVIOUS YEAR, DURING WHICH THE GROSS RECEIPT INCOME CROSSES LIM IT OF RS.10.00 LACS, THE TRUST WILL NOT GET EXEMPTION OR BENEFIT OF ITS BEING CHARITABLE IN NATURE DESPITE ITS CARRYING OUT CHARITABLE ACTIVITIES. HOWEVER, IT WILL GET SUCH BENEFIT IF IT IS REGISTERED AS CHARITABLE INSTITUTION AND INCOME FROM BUSINESS ACTI VITIES, AS MENTIONED IN FIRST PROVISO TO SECTION 2(15), DOES NOT CROSS LIMIT OF RS.10.00 LACS. OUR VIEW IN THIS RESPECT IS FORTIFIED FROM THE JUDGMENT OF THE CO - ORDINATE BENCH DECISION OF THE TRIBUNAL IN THE CASE OF RAJASTHAN HOUSING BOARD VS. CIT (2012)21 TAXMANN.COM77(JP). 10. THE CASE OF THE ASSESSEE IS NOT THAT OF A TRUST WHICH HAS ALREADY BEEN REGISTERED AS A CHARITABLE TRUST AFTER SATISFACTION BEING RECORDED BY COMMISSIONER/ DIT(E) REGARDING THE CHARITABLE NATURE OF THE OBJECTS AND GENUINENESS OF THE ACTIVITIES FALLING WITHIN THE SCOPE OF DEFINITION OF CHARITABLE ITA NO.267/M/2013 M/S. SHREE JOGESHWARI ESTATE PATEL MITRA MANDAL 12 PURPOSES AS PROVIDED UNDER SECTION 2(15) OF THE ACT. IN THE CASE OF THE ASSESSEE TRUST, THE COMMISSIONER/DIT(E) WAS NOT SATISFIED ABOUT THE NATURE OF OBJECTS AND GENUINENESS OF ITS ACTIVITIES BEING CHARITABLE RATHER WAS OF THE VIEW THAT ACTIVITIES OF THE INSTITUTION WERE NOT MOTIVATED BY A SPIRIT OF GENUINE CHARITY BUT IN FACT WERE BUSINESS OR COMMERCIAL ACTIVITIES. SIMILARLY THE FACTS AND THE POINT OF LAW INVOLVED IN THE CASE OF KHAR GYMKHAN A (SUPRA) ARE ALSO QUITE DIFFERENT AND BOTH THE CASE LAWS RELIED UPON BY THE LD.AR HAS NO APPLICABILITY TO THE FACTS OF THE PRESENT CASE. 11. IN VIEW OF OUR ABOVE OBSERVATIONS, THE ACTION OF THE DIT(E) IN REJECTING THE APPLICATION OF THE ASSESSEE FOR REG ISTRATION AS CHARITABLE TRUST IS UPHELD AND THE APPEAL OF THE ASSESSEE IS HEREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.12. 2013. SD/ - SD/ - ( D. KARUNAKARA RAO ) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 31.12. 2013. * KISHORE COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT ( A) CONCERNED, MUMBAI THE DR C BEN CH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.