M/s.Ashis Super Merchato, Cochin V. The DCIT(Exemption), Ernakulam

ITA 68/COCH/2014

• Counselvise Citation: 6821914 RSA 2014
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 13-10-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 21-02-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K K JOHN
• Assessee Lawyers: DIVYA RAVINDRAN
• Keywords: Business income; Depreciation; Charitable institution; Maximum Marginal Rate; Bad and doubtful debts; Commercial expediency
• Section: 11; 12A; 12AA

Judgement Text

19 ITAS 67 & 68/COCH/2014 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND CHANDRA POOJ ARI, AM I.T.A. NOS. 67&68/COCH/2014 ASSESSMENT YEARS : 2007-08 & 2008-09 M/S. ASHISH SUPER MERCATO, VERAPOLY ARCHDIOCESAN SALES CENTRE, MARINE DRIVE, KOCHI-682 031. [PAN: AAATA 3485D] VS. THE DEPUTY DIRECTOR OF INCOME- TAX (EXEMPTION), RANGE-2, ERNAKULAM. (ASSESSEE -APPELLANT) (REVENUE-RESPONDEN T) ASSESSEE BY .SMT. DIVYA RAVINDRAN, ADV. REVENUE BY SHRI K.K.JOHN, SR. DR DATE OF HEARING 13/10/2014 DATE OF PRONOUNCEMENT 05/12/2014 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THESE TWO APPEALS FILED BY THE ASSESSEE ARE DIRECT ED AGAINST THE DIFFERENT ORDERS PASSED BY THE CIT(A)-II, FOR THE ASSESSMENT YEARS 2007-08 AND 2008-09. 20 ITAS 67 & 68/COCH/2014 2. SINCE THE ISSUE IS IDENTICAL IN BOTH THE APPEALS , THEY WERE CLUBBED TOGETHER, HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 3. THE ONLY GRIEVANCE OF THE ASSESSEE IN THESE APPE ALS IS WITH REGARD TO NON-GRANTING OF EXEMPTION UNDER SECTION 11(4A) OF T HE I.T. ACT, THOUGH THE ASSESSEE WAS REGISTERED UNDER SECTION 12A OF THE I. T. ACT. 4. THE BRIEF FACTS AS NARRATED IN I.T.A. NO. 67/COC H/2014 ARE THAT THE ASSESSEE IS A PUBLIC CHARITABLE TRUST WITH REGISTRA TION UNDER SECTION 12A OF THE I.T. ACT, 1961. THE INSTITUTION FILED ITS RETUR N OF INCOME FOR THE ASSESSMENT YEAR 2007-08 ON 24/10/2007 DECLARING NIL INCOME. WHILE MAKING THE ASSESSMENT, THE ASSESSING OFFICER DISALL OWED THE CLAIM U/S. 11 OF THE ACT. THE ASSESSING OFFICER ALSO FOUND THAT NO SEPARATE BOOKS OF ACCOUNTS WERE MAINTAINED FOR BUSINESS ACTIVITIES AN D ALSO DISALLOWED BAD DEBTS WRITTEN OFF AT RS.3,099/-, INTEREST AND PENAL TY AT RS.1,03,720/- AND DEPRECIATION CLAIMED AT RS.1,55,540/-. THE ASSESSI NG OFFICER HAS ALSO APPLIED MAXIMUM MARGINAL RATE FOR THE INCOME AND IS SUED TWO NOTICES ONE U/S. 156 FOR TAX AT NIL AND THE OTHER NOTICE DEMAND ING THE TAX OF RS.13,04,483/-. 21 ITAS 67 & 68/COCH/2014 4.1 WHILE MAKING THE ADDITION, THE ASSESSING OFFICE R HAD GONE INTO THE DETAILS OF THE MAIN ACTIVITIES OF THE TRUST, ITS MA IN OBJECTS AND THE NATURE OF THE ACTIVITIES UNDER VARIOUS HEAD. ON OBSERVING TH AT THE MAJOR INCOME AND EXPENDITURE OF THE ASSESSEE TRUST WAS BY RUNNING A SUPER MARKET ON COMMERCIAL BASIS AND NOT BY CHARITABLE AND RELIGIOU S ACTIVITIES SO THAT HE DISALLOWED EXEMPTION U/S. 11(4A) TO THE ASSESSEE. AGAINST THIS, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CI T(A). 5. THE CIT(A) OBSERVED THAT ALTHOUGH THE ASSESSEE S OCIETY IS RELIGIOUS AND CHARITABLE ORGANIZATION, IT WAS UNDERTAKING MIS SION ACTIVITIES, ORGANIZING CATHOLIC COMMUNITY DEVELOPMENT PROGRAMMES BUT AT TH E SAME TIME, IT WAS ALSO RUNNING SUPER MARKET BY NAME ASHISH SUPER MERC ATO. IN THIS REGARD, ACCORDING TO THE CIT(A), THE PROVISIONS OF SECTION 11 ARE VERY CLEAR, ACCORDING TO WHICH, WHERE THE INCOME IS DERIVED FRO M THE PROPERTY HELD UNDER TRUST WHOLLY FOR CHARITABLE OR RELIGIOUS PU RPOSES, AND SUCH INCOME IS APPLIED FOR CHARITABLE OR RELIGIOUS PURPOSES, THEN ONLY THE VARIOUS BENEFITS UNDER THE SECTION ARE ALLOWABLE TO THE TRUST. IN T HIS CASE, THE CIT(A) OBSERVED THAT THE ASSESSEE TRUST WAS NOT UNDERTAKIN G ITS ACTIVITIES WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES, RATHER THE TOTAL INCOME FROM COMMERCIAL ACTIVITIES BY RUNNING A SUPER MARKET THERE ARE GROS S RECEIPTS TO THE TUNE OF 22 ITAS 67 & 68/COCH/2014 RS.77,45,329/- WHEREAS EXPENSES FOR CHARITY ARE ONL Y TO THE TUNE OF RS. 12,00,177/- (RS.11,96,410 AS PER THE ASSESSING OFFI CER). 5.1 THE CIT(A) FURTHER OBSERVED THAT IN A NUMBER OF HIGH COURT AND SUPREME COURT DECISIONS, IT WAS HELD THAT IF THE PR IMARY OR DOMINANT PURPOSE OF A TRUST OR INSTITUTION IS CHARITABLE, AN OTHER OBJECT WHICH BY ITSELF MAY NOT BE CHARITABLE BUT WHICH IS MERELY ANCILLARY OR INCIDENTAL TO THE PRIMARY OR DOMINANT PURPOSE WOULD NOT PREVENT THE T RUST OR INSTITUTION FROM BEING A VALID CHARITY. ACCORDING TO THE CIT(A), THE TEST WHICH HAS, THEREFORE, TO BE APPLIED IS WHETHER THE OBJECT WHIC H IS SAID TO BE NON- CHARITABLE IS A MAIN OR PRIMARY OBJECT OF THE TRUST OR INSTITUTION OR IT IS ANCILLARY OR INCIDENTAL TO THE DOMINANT OR PRIMARY OBJECT WHI CH IS CHARITABLE. THE CIT(A) ALSO RELIED ON THE DECISION OF THE SUPREME C OURT IN THE CASE OF ADDL. CIT VS. SURAT ART SILK CLOTH MANUFACTURES ASSOCIATI ON (121 ITR 1) WHERE IN IT WAS HELD THAT ANY COMMERCIAL ACTIVITY CAN BE TAKEN AS INCIDENTAL OR CONDUCIVE TO THE ATTAINMENT OF OBJECTS OF THE TRUST . ALTHOUGH THE WORD WHOLLY MAY NOT BE APPLIED IN STRICT SENSE BUT IT SHOULD NOT BE THAT COMMERCIAL ACTIVITY ARE MAIN ACTIVITIES AND CHARITA BLE OR RELIGIOUS ACTIVITIES BECOME ANCILLARY IN THE OVER ALL ACTIVITY OF THE AS SESSEE. 23 ITAS 67 & 68/COCH/2014 5.2 THE CIT(A) ALSO OBSERVED THAT SINCE IN THE PRES ENT CASE, THE MAJOR ACTIVITY OF CHARITABLE ORGANIZATION IS RUNNING OF A SUPER MARKET, THE SAME CANNOT BE TREATED AS CHARITABLE OR RELIGIOUS ACTIVI TY AS IT IS BEING CARRIED OUT ON COMMERCIAL PRINCIPLES OF BUSINESS EXPEDIENCY FOR EARNING PROFIT AND RUNNING OF THIS SUPER MARKET CAN ALSO NOT BE TREATE D AS BUSINESS INCIDENTAL TO THE ATTAINMENT OF THE OBJECTIVES OF THE TRUST. THE CIT(A) ALSO OBSERVED THAT THE RECEIPTS DERIVED FROM SUCH RUNNING OF SUPE R MARKET ARE NOT EXCLUSIVELY USED FOR CHARITABLE PURPOSE RATHER MAJO RITY OF THE EXPENSES ARE TOWARDS ESTABLISHMENT AND RUNNING OF THE SUPER MARK ET. ACCORDING TO THE CIT(A), IT IS ALSO NOT A CASE WHERE SUPER MARKET IS SELLING VARIOUS ARTICLES ON ANY SUBSIDIZED RATES TO BENEFIT THE POOR OR NEED AN D THEY ARE SELLING IT AT PROFIT AS ANY OTHER GENERAL MERCHANT DOES. THUS TH E CIT(A) HELD THAT RUNNING OF SUPER MARKET WHERE RECEIPTS ARE TO THE T UNE OF RS.77,45,329/- AND CHARITABLE EXPENSES ARE OF RS.12,00,177/- CANNO T BE SAID AS ANCILLARY OR INCIDENTAL ACTIVITY UNDERTAKEN WHILE DOING CHARITY, RATHER THE WHOLE FABRIC OF ACTIVITIES LOOKS LIKE A CORPORATE BUSINESS BEING UN DERTAKEN, WHERE AS PART OF THE CORPORATE SOCIAL RESPONSIBILITY SOME CHARITY WH ICH WORKS OUT TO JUST 15.5% OF TOTAL RECEIPTS HAS BEEN DONE. 5.3 ACCORDING TO THE CIT(A), AS PER THE PROVISIONS OF SUB-SECTION (4A) OF SECTION 11 AMENDED WITH EFFECT FROM 01-04-1992 ALL THAT IS REQUIRED FOR THE 24 ITAS 67 & 68/COCH/2014 BUSINESS INCOME OF THE TRUST OR INSTITUTIONS TO BE EXEMPT FROM TAX IS THAT THE BUSINESS SHOULD BE INCIDENTAL TO THE ATTAINMENT OF THE OBJECTIVE OF THE TRUST OR INSTITUTION AND THAT SEPARATE BOOKS OF ACCOUNTS ARE MAINTAINED BY SUCH TRUST OR INSTITUTION IN RESPECT OF BUSINESS AS WELL AS CHARITABLE ACTIVITIES. IN VIEW OF THE SPECIFIC PROVISION OF SEC. 11 THAT ACTI VITIES OF THE ORGANIZATION SHOULD BE WHOLLY FOR CHARITABLE AND RELIGIOUS PURPO SES, AND IF THEY ARE IN THE NATURE OF BUSINESS, THE SAME HAVE TO CONFORM TO THE CONDITIONS LAID DOWN IN SEC 11(4A), THE CIT(A) JUSTIFIED THE ACTION OF THE ASSESSING OFFICER IN HOLDING THAT THE ASSESSEE IS NOT ENTITLED TO EXEMPTION U/S. 11 OF THE I.T. ACT. ACCORDINGLY, THE CIT(A) CONFIRMED THE DENIAL OF EXE MPTION OF THE INCOME OF THE ASSESSEE U/S. 11(4A) OF THE ACT. AGAINST THIS , THE ASSESSEE IS IN APPEAL BEFORE US. 6. THE LD. AR SUBMITTED THAT THE ASSESSEE IS REGIST ERED AS A CHARITABLE INSTITUTION UNDER THE TRAVANCORE COCHIN LITERARY SC IENTIFIC AND CHARITABLE SOCIETIES REGISTRATION ACT, 1955. ACCORDING TO THE LD. AR, THE MAIN OBJECTIVES FOR WHICH THE SOCIETY WAS FORMED AS PER PARA 4 OF THE MEMORANDUM OF ASSOCIATION ARE AS UNDER: (A) TO PROMOTE THE CAUSE OF CHARITY, MISSION ACTIVI TIES, WELFARE, EMPLOYMENT, DIFFUSION OF USEFUL KNOWLEDGE, UPLIFTME NT AND EDUCATION AND 25 ITAS 67 & 68/COCH/2014 TO CREATE AN AWARENESS OF SELF-RELIANCE AMONG THE M EMBERS OF THE PUBLIC. (B) TO RESPOND TO THE NEEDS OF TIME AND TO ORGANIZE CATHOLIC COMMUNITY FOR RECEIVING SOCIAL JUSTICE, GENERAL UPLIFTMENT AN D GROWTH. (C) TO FOSTER THE SPIRIT OF CHARITY TO ALL AND TO S ECURE EDUCATIONAL, SOCIAL AND ECONOMIC DEVELOPMENT TO THE MEMBERS OF THE COMM UNITY. (D)TO ESTABLISH AND MAINTAIN TECHNICAL, COMMERCIAL AND MEDICAL INSTITUTIONS AND TO IMPART USEFUL TRAINING TO CREAT E SELF-RELIANCE TO THE MEMBERS OF THE COMMUNITY. (E) TO ESTABLISH AND MAINTAIN INSTITUTIONS FOR THE RELIEF OF THE SICK AND THE AILING, FOR THE INDIGENT, THE DISABLED, THE OLD AND DESTITUTE, THE ORPHANS AND THE UNCARED FOR WITHOUT ANY CONSIDERATION OF CA STE, COMMUNITY, COLOUR OR CREED. (F) TO RAISE FUNDS BY SUBSCRIPTIONS, DONATIONS, GIF TS FOUNDATIONS AND LOANS AND TO RECEIVE AIDS AND SUBSIDIES IN CASH OR KIND. (G) TO ESTABLISH AN EXHIBITION-CUM-SALES CENTRE FOR THE PRODUCTS OF THE VARIOUS SOCIAL SERVICE ORGANIZATIONS IN THE ARCHDIO CESE ON A CHARITABLE BASIS AND TO UNDERTAKE ANY COMMERCIAL ACTIVITY THAT WOULD NOT BE CONTRARY TO THE OBJECTIVES OF THE SOCIETY AND TO USE THE PRO FITS FROM SUCH COMMERCIAL ACTIVITIES TO FURTHER THE OBJECTIVES OF THE SOCIETY. 26 ITAS 67 & 68/COCH/2014 (H) TO PROVED FUNDS FROM THE INCOME OF THE SOCIETY FOR THE CHARITABLE WORKS AND MISSION ACTIVITIES OF THE ARCHDIOCESE OF VERAPOLY AS WELL AS OF SIMILAR SOCIETIES WITHIN THE ARCHDIOCESE OF VERAPOL Y. (I) TO ACQUIRE MOVABLE AND IMMOVABLE PROPERTIES BY PURCHASE, LEASE, MORTGAGE, ETC. AND TO ADMINISTER AND DEAL WITH THE SAME IN THE MANNER AS MAY BE DECIDED BY THE GOVERNING BODY. (J) TO OBTAIN FINANCES AND LOANS FROM BANKS AND OTH ER INSTITUTIONS FOR THE ESTABLISHMENT OR OTHERWISE AND FOR IMPLEMENTING THE PROJECTS THAT MAY BE UNDERTAKEN BY THE SOCIETY. (K) TO PLEDGE, HYPOTHECATE OR MORTGAGE MOVABLE OR I MMOVABLE PROPERTY BELONGING TO THE SOCIETY. (L) TO EQUIP THE ESTABLISHMENTS, UNDERTAKINGS OR IN STITUTIONS WITH NECESSARY INSTRUMENTS; MACHINERIES FURNITURES AND E QUIPMENTS. (M)TO MAINTAIN FUNDS TO MEET THE EXPENSES OF CAPITA L NATURE AND PAY INTO SUCH FUNDS, MONEYS AT SUCH TIMES AND IN SUCH AMOUNT S AS THE GOVERNING BODY MAY DECIDE FROM TIME TO TIME. (N) TO ESTABLISH AND MAINTAIN RESERVE FUNDS AS MAY BE DECIDED BY THE GOVERNING BODY DEPENDING UPON THE REQUIREMENTS OF T HE SOCIETY. (O) TO INVEST AND DEAL WITH THE FUNDS OF THE SOCIE TY NOT IMMEDIATELY REQUIRED, IN SOCIETIES OR OTHER INSTITUTIONS. 27 ITAS 67 & 68/COCH/2014 (P) TO DO AND CARRY OUT ALL SUCH OTHER LAWFUL ACTS, DEEDS AND THINGS WHICH ARE ESSENTIAL, INCIDENTAL OR CONDUCIVE TO THE ATTAI NMENT OF THE OBJECTS OF THE SOCIETY. 6.1 THE LD. AR SUBMITTED THAT THE ASSESSING OFFICER HAS ERRONEOUSLY HELD THAT THE TRUST HAS NOT CARRIED OUT ANY ACTIVITY OF CHARITABLE NATURE FOR THE PUBLIC AT LARGE AND HE CAME TO A FINDING THAT NONE OF THE OBJECTIVES SET OUT IN THE TRUST DEED, EXCEPT RUNNING THE SUPER MARKET FOR COMMERCIAL PURPOSES HAVE BEEN CARRIED OUT BY THE ASSESSEE. THE LD. AR SUBMITTED THAT THE ASSESSING OFFICER RELIED ON SEC. 11(4A) OF THE ACT AND HELD THAT THE BUSINESS SHOULD BE INCIDENTAL TO THE ATTAINMENT OF THE OBJEC T OF THE TRUST FOR BEING ELIGIBLE FOR EXEMPTION U/S. 11 OF THE ACT. ACCORD ING TO THE LD. AR, THE ASSESSING OFFICER ALSO HELD THAT THE ACTIVITY CARRI ED OUT BY THE TRUST IS NOT INCIDENTAL TO THE ATTAINMENT OF ANY CHARITABLE ACTI VITY AS SET OUT IN THE OBJECTS OF THE TRUST AND ACCORDINGLY, IT WAS HELD THAT THE ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION U/S. 11 OF THE ACT AND THE CIT(A) ALSO CO NFIRMED THE ABOVE ORDER. 6.2 THE LD. AR SUBMITTED THAT THE ASSESSEE REJECTED THE PROPOSAL TO COMPLETE THE ASSESSMENT BY TREATING THE STATUS OF T HE SOCIETY AS AOP WHEREIN IT WAS STATED THAT MAJOR EXPENSES OF THE SO CIETY ARE ESTABLISHMENT AND ADMINISTRATIVE IN NATURE AND THAT THE AMOUNT SP ENT FOR CHARITY IS ONLY FOR 28 ITAS 67 & 68/COCH/2014 A PARTICULAR COMMUNITY AND HENCE THE MEANING OF PUB LIC CHARITY IS NOT COVERED BY ITS ACTIVITIES. FOR THIS, THE LD. AR REL IED ON THE FOLLOWING CASE LAW: 1. SOLE TRUSTEE, LOKA SHIKSHANA TRUST VS. CIT (197 5)(101 ITR 234) (SC). 2. ADDITIONAL CIT VS. SURAT ART SILK CLOTH MANUF ACTURES ASSOCIATION (1980) (121 ITR 1 (SC). 3. CIT VS. DHARMODAYAM CO. (1977) 109 ITR 527) (S C). 6.3 HAVING REJECTED THE CLAIM FOR EXEMPTION FOR 2007-08, THE LD. AR SUBMITTED THAT THE ASSESSING OFFICER FOLLOWED THE S AME METHOD OF ASSESSMENT FOR THE ASSESSMENT YEAR 2008-09 ALSO. 6.4 THE LD. AR SUBMITTED THAT THE ENTIRE INCOME OF THE SOCIETY, INCLUDING THE INCOME FROM SUPER MARKET WAS EARMARKED FOR CHAR ITABLE ACTIVITIES AND THAT THE INCOME WAS ACTUALLY ALLOWED AS EXEMPTION U /S. 11 IN THE PAST. ACCORDING TO THE LD. AR, IT WAS INCORRECT TO SAY TH AT THE OBJECTIVES OF THE TRUST ARE NOT FULFILLED AND THE REGISTRATION GRANTE D U/S. 12A WOULD EXTEND TO THE ASSESSMENT YEARS 2007-08 AND 2008-09. BEING SO , THERE IS NO VIOLATION OF SEC. 11 OF THE ACT. 29 ITAS 67 & 68/COCH/2014 7. THE LD. AR ALSO FILED 2 ND PAPER BOOK (PGS. 4 TO 112) CONTAINING DONATION AND CHARITY VOUCHERS FOR THE ASSESSMENT YE AR 2007-08 AND 2008- 09 RESPECTIVELY. IN THE 2 ND PAPER BOOK (PG. 113), THE LD. AR ALSO FILED A PETITION SEEKING ADMISSION OF THE ADDITIONAL DOCUME NTS. 8. ON THE OTHER HAND, THE LD. DR STRONGLY OBJECTED TO THE ADMISSION OF THE ADDITIONAL DOCUMENTS AND ALSO SUBMITTED THAT TH ESE DOCUMENTS SHALL NOT BE ADMITTED AT THIS STAGE. FURTHER, HE SUBMITTED TH AT THE ASSESSEE WAS CARRYING ON THE BUSINESS OF SUPER MARKET ON COMMERC IAL BASIS AND THERE IS NO QUESTION OF ANY CHARITABLE ACTIVITIES BEING INVO LVED IN IT. BEING SO, THE ASSESSEE CANNOT BE GRANTED EXEMPTION U/S. 11(4A) OF THE I.T. ACT. 8.1 THE LD. DR ALSO RELIED ON THE FOLLOWING CASE LAW: 1) ACIT VS. THANTHI TRUST (2001) (247 ITR 785) (SC ). 2) IDEAL PUBLICATIONS TRUST VS. CIT (2008) (305 IT R 143) (KER.) 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORD. THE ISSUE BEFORE US IS WHETHER, ON THE FACTS AND CIRCUMSTANCE S OF THE CASE AND HAVING 30 ITAS 67 & 68/COCH/2014 REGARD TO THE TERMS OF THE TRUST DEED, IT CAN BE SA ID THAT THE SUPER MARKET BUSINESS CARRIED ON BY THE ASSESSEE WAS ITSELF HEL D UNDER THE TRUST. FOR THIS PURPOSE IT IS PROPER TO GO THROUGH THE OBJECTS FOR WHICH ASSESSEE-TRUST IS FORMED. AS PER THE MEMORANDUM OF ASSOCIATION OF THE ASSESSEE, THE OBJECTS ARE AS FOLLOWS: CLAUSE NO. 4 OF TRUST DEED: (A) TO PROMOTE THE CAUSE OF CHARITY, MISSION ACTIVI TIES, WELFARE, EMPLOYMENT, DIFFUSION OF USEFUL KNOWLEDGE, UPLIFTME NT AND EDUCATION AND TO CREATE AN AWARENESS OF SELF-RELIANCE AMONG THE M EMBERS OF THE PUBLIC. (B) TO RESPOND TO THE NEEDS OF TIME AND TO ORGANIZE CATHOLIC COMMUNITY FOR RECEIVING SOCIAL JUSTICE, GENERAL UPLIFTMENT AN D GROWTH. (C) TO FOSTER THE SPIRIT OF CHARITY TO ALL AND TO S ECURE EDUCATIONAL, SOCIAL AND ECONOMIC DEVELOPMENT TO THE MEMBERS OF THE COMM UNITY. (D)TO ESTABLISH AND MAINTAIN TECHNICAL, COMMERCIAL AND MEDICAL INSTITUTIONS AND TO IMPART USEFUL TRAINING TO CREAT E SELF-RELIANCE TO THE MEMBERS OF THE COMMUNITY. (E) TO ESTABLISH AND MAINTAIN INSTITUTIONS FOR THE RELIEF OF THE SICK AND THE AILING, FOR THE INDIGENT, THE DISABLED, THE OLD AND DESTITUTE, THE ORPHANS AND THE UNCARED FOR WITHOUT ANY CONSIDERATION OF CA STE, COMMUNITY, COLOUR OR CREED. 31 ITAS 67 & 68/COCH/2014 (F) TO RAISE FUNDS BY SUBSCRIPTIONS, DONATIONS, GIF TS FOUNDATIONS AND LOANS AND TO RECEIVE AIDS AND SUBSIDIES IN CASH OR KIND. (G) TO ESTABLISH AN EXHIBITION-CUM-SALES CENTRE FOR THE PRODUCTS OF THE VARIOUS SOCIAL SERVICE ORGANIZATIONS IN THE ARCHDIO CESE ON A CHARITABLE BASIS AND TO UNDERTAKE ANY COMMERCIAL ACTIVITY THAT WOULD NOT BE CONTRARY TO THE OBJECTIVES OF THE SOCIETY AND TO USE THE PRO FITS FROM SUCH COMMERCIAL ACTIVITIES TO FURTHER THE OBJECTIVES OF THE SOCIETY. (H) TO PROVED FUNDS FROM THE INCOME OF THE SOCIETY FOR THE CHARITABLE WORKS AND MISSION ACTIVITIES OF THE ARCHDIOCESE OF VERAPOLY AS WELL AS OF SIMILAR SOCIETIES WITHIN THE ARCHDIOCESE OF VERAPOL Y. (I) TO ACQUIRE MOVABLE AND IMMOVABLE PROPERTIES BY PURCHASE, LEASE, MORTGAGE, ETC. AND TO ADMINISTER AND DEAL WITH THE SAME IN THE MANNER AS MAY BE DECIDED BY THE GOVERNING BODY. (J) TO OBTAIN FINANCES AND LOANS FROM BANKS AND OTH ER INSTITUTIONS FOR THE ESTABLISHMENT OR OTHERWISE AND FOR IMPLEMENTING THE PROJECTS THAT MAY BE UNDERTAKEN BY THE SOCIETY. (K) TO PLEDGE, HYPOTHECATE OR MORTGAGE MOVABLE OR I MMOVABLE PROPERTY BELONGING TO THE SOCIETY. (L) TO EQUIP THE ESTABLISHMENTS, UNDERTAKINGS OR IN STITUTIONS WITH NECESSARY INSTRUMENTS; MACHINERIES FURNITURES AND E QUIPMENTS. 32 ITAS 67 & 68/COCH/2014 (M)TO MAINTAIN FUNDS TO MEET THE EXPENSES OF CAPITA L NATURE AND PAY INTO SUCH FUNDS, MONEYS AT SUCH TIMES AND IN SUCH AMOUNT S AS THE GOVERNING BODY MAY DECIDE FROM TIME TO TIME. (N) TO ESTABLISH AND MAINTAIN RESERVE FUNDS AS MAY BE DECIDED BY THE GOVERNING BODY DEPENDING UPON THE REQUIREMENTS OF T HE SOCIETY. (O) TO INVEST AND DEAL WITH THE FUNDS OF THE SOCIET Y NOT IMMEDIATELY REQUIRED, IN SOCIETIES OR OTHER INSTITUTIONS. (P) TO DO AND CARRY OUT ALL SUCH OTHER LAWFUL ACTS, DEEDS AND THINGS WHICH ARE ESSENTIAL, INCIDENTAL OR CONDUCIVE TO THE ATTAI NMENT OF THE OBJECTS OF THE SOCIETY. 10. IT IS TO BE NOTED THAT SECTION 11(1) OF THE ACT GRANTS EXEMPTION TO THE INCOME DERIVED FROM PROPERTY HELD UNDER TRUST WHOLL Y FOR CHARITABLE OR RELIGIOUS PURPOSES, TO THE EXTENT TO WHICH SUCH INC OME IS APPLIED TO SUCH PURPOSES IN INDIA. THERE IS NO EXHAUSTIVE DEFINITI ON OF THE WORDS PROPERTY HELD UNDER TRUST IN THE ACT; HOWEVER, SUB-SECTION (4) SAYS THAT FOR THE PURPOSES OF SECTION 11, THE WORDS PROPERTY HELD UN DER TRUST INCLUDES A BUSINESS UNDERTAKING SO HELD. SUB-SECTION (4A) AS IT STANDS AMENDED BY 33 ITAS 67 & 68/COCH/2014 THE FINANCE (NO. 2) ACT, 1991, WITH EFFECT FROM APR IL 1, 1992, IS IN THE FOLLOWING TERMS: (4A) SUB-SECTION (1) OR SUB-SECTION (2) OR SUB-SEC TION (3) OR SUB-SECTION (3A) SHALL NOT APPLY IN RELATION TO ANY INCOME OF A TRUST OR AN INSTITUTION, BEING PROFITS AND GAINS OF BUSINESS, UNLESS THE BUS INESS IS INCIDENTAL TO THE ATTAINMENT OF THE OBJECTIVES OF THE TRUST OR, A S THE CASE MAY BE, INSTITUTION, AND SEPARATE BOOKS OF ACCOUNT ARE MAIN TAINED BY SUCH TRUST OR INSTITUTION IN RESPECT OF SUCH BUSINESS. 11. THUS, IF A PROPERTY IS HELD UNDER TRUST, AND SU CH PROPERTY IS A BUSINESS, THE CASE WOULD FALL U/S. 11(4) AND NOT U/ S. 11(4A) OF THE ACT. SECTION 11(4A) OF THE ACT WOULD APPLY ONLY TO A CA SE WHERE THE BUSINESS IS NOT HELD UNDER TRUST. THUS, THERE IS DIFFERENCE BE TWEEN PROPERTY OR BUSINESS HELD UNDER TRUST AND BUSINESS CARRIED ON BY OR ON B EHALF OF THE TRUST. 12. THIS DISTINCTION WAS RECOGNIZED BY THE SUPREME COURT IN THE CASE OF ADDL. CIT VS. SURAT ART SILK CLOTH MANUFACTURERS AS SOCIATION (1980) 121 ITR 1 WHEREIN IT WAS OBSERVED THAT IF A BUSINESS UNDERT AKING IS HELD UNDER TRUST FOR A CHARITABLE PURPOSE, THE INCOME THEREFROM WOUL D BE ENTITLED TO THE EXEMPTION U/S. 11(1) OF THE ACT. IN THE PRESENT CA SE, THE FINDING OF THE CIT(A) IS THAT THE SUPER MARKET BUSINESS WAS NOT HE LD UNDER TRUST, BUT IT WAS 34 ITAS 67 & 68/COCH/2014 BUSINESS COMMENCED/CARRIED ON BY THE SOCIETY, SUBSE QUENT TO THE FORMATION OF TRUST. THOUGH THE BUSINESS WAS COMMENCED BY THE SOCIETY AND IT WAS CARRIED ON BY THE SOCIETY AFTER ITS FORMATION, IT C ANNOT BE SAID TO CONSTITUTE PROPERTY HELD UNDER TRUST. U/S. 11(4), IT IS ONLY THE BUSINESS WHICH IS HELD UNDER THE TRUST THAT WOULD ENJOY EXEMPTION IN RESPE CT OF ITS INCOME U/S. 11(1) OF THE I.T. ACT AND THERE IS A DISTINCTION BETWEEN THE OBJECTS OF A TRUST AND THE POWERS GIVEN TO THE TRUSTEES TO EFFECTUATE THE PURPOSE OF THE TRUST. THOUGH THE OBJECTS OF THE TRUST WERE CHARITABLE, TH EY WERE MERE POWERS CONFERRED UPON THE TRUSTEES TO CARRY ON THE BUSINES S AND THE PROFITS FROM SUCH BUSINESS WOULD BENEFIT THE CHARITABLE OBJECTS. THE EXEMPTION U/S. 11 CANNOT BE GRANTED ON THE REASON THAT THE BUSINESS I TSELF WAS NOT IN EXISTENCE AT THE TIME OF FORMATION OF THE TRUST AND THE PROPE RTY HELD UNDER TRUST AT THE TIME OF FORMATION OF THE TRUST WAS NOT SPELT OUT IN THE MEMORANDUM OF ASSOCIATION OF THE ASSESSEE. THE BUSINESS OF SUPERM ARKET WAS NOT AT ALL IN EXISTENCE AT THE TIME OF FORMATION OF THE TRUST SO AS TO SAY THAT THE BUSINESS IS PROPERTY HELD UNDER TRUST. THUS, THE SUPERMARKET BUSINESS WAS NOT EVEN IN THE CONTEMPLATION OF THE MEMORANDUM OF ASSOCIATION ON THE BASIS OF WHICH THE SOCIETY IS FORMED AND, THEREFORE, COULD NOT HAV E BEEN SETTLED UPON TRUST. THE BUSINESS CARRIED ON BEHALF OF A TRUST RATHER IN DICATES A BUSINESS WHICH IS NOT HELD IN TRUST, THAN A BUSINESS OF THE TRUST RUN BY THE ASSESSEE. IN THIS CASE, THE SUPERMARKET BUSINESS WAS CARRIED ON BY TH E ASSESSEE FOR AND ON BEHALF OF THE TRUST AND IT WAS NOT BUSINESS HELD UN DER TRUST. SECTION 11(1) OF 35 ITAS 67 & 68/COCH/2014 THE ACT CONFERS EXEMPTION FROM TAX ONLY WHERE THE P ROPERTY IS ITSELF HELD UNDER TRUST OR OTHER LEGAL OBLIGATION; IT DOES NOT APPLY TO CASES WHERE A TRUST OR LEGAL OBLIGATION IS NOT CREATED ON ANY PROPERTY BUT ONLY THE INCOME DERIVED FOR A CHARITABLE OR RELIGIOUS PURPOSE. SURPLUS FUN DS OF A TRUST, WHICH WAS CLAIMED TO BE EXEMPT ON THE FOOTING THAT IT WAS PRO PERTY HELD UNDER TRUST WITHIN THE MEANING OF SEC. 11(1) OF THE ACT, WAS NO T PROPERTY HELD UNDER TRUST SINCE THE PROPERTY FROM WHICH THE SURPLUS WAS GENER ATED WAS ITSELF NOT HELD UNDER TRUST. IN OTHER WORDS, MERELY CARRYING ON BU SINESS FOR AND ON BEHALF OF THE TRUST AND APPLYING THE PROFITS OF THE SAME FOR THE OBJECT OF THE TRUST DOES NOT ENTITLE FOR EXEMPTION U/S. 11(4) OF THE ACT UNL ESS THE BUSINESS IS INCIDENTAL TO THE ATTAINMENT OF THE OBJECTS OF THE TRUST. 13. WE NOW PROCEED TO CONSIDER THE QUESTION WHETHER THE CARRYING ON OF THE SUPERMARKET BUSINESS WAS INCIDENTAL TO THE ATTA INMENT OF THE OBJECTS OF THE TRUST. WE FAIL TO SEE ANY CONNECTION BETWEEN T HE CARRYING ON THE SUPERMARKET BUSINESS AND THE ATTAINMENT OF THE OBJE CTS OF THE TRUST, WHICH ARE BASICALLY TO PROMOTE CAUSE OF CHARITY, MISSION ACTIVITIES, WELFARE, EMPLOYMENT, DIFFUSION OF USEFUL KNOWLEDGE, UPLIFTME NT AND EDUCATION AND TO CREATE AN AWARENESS OF SELF-RELIANCE AMONG THE MEMB ERS OF THE PUBLIC AND OTHER OBJECTS ENUMERATED IN THE PRECEDING PARAGRAPH . THE MERE FACT THAT WHOLE OR SOME PART OF THE INCOME FROM SUPERMARKET B USINESS IS EARMARKED 36 ITAS 67 & 68/COCH/2014 FOR CHARITABLE PURPOSES WOULD NOT RENDER THE BUSINE SS ITSELF BEING CONSIDERED AS INCIDENTAL TO THE ATTAINMENT OF THE O BJECTS. WE ARE IN AGREEMENT WITH THE DEPARTMENT THAT THE APPLICATION OF INCOME GENERATED BY THE BUSINESS IS NOT RELEVANT CONSIDERATION AND WHAT IS RELEVANT IS WHETHER THE ACTIVITY IS SO INEXTRICABLY CONNECTED OR LINKED WITH THE OBJECTS OF THE TRUST THAT IT COULD BE CONSIDERED AS INCIDENTAL TO THOSE OBJECTIVES. 14. IT WAS CONTENDED BY THE LD. AR THAT THE SURPLUS FUNDS GENERATED FROM THE SUPERMARKET BUSINESS WAS SPENT TOWARDS CHARITAB LE ACTIVITIES AND THEREFORE, THE ASSESSEE IS ENTITLED FOR EXEMPTION U /S. 11(4) OF THE I.T. ACT. WE ARE UNABLE TO ACCEPT THIS CONTENTION. INITIALLY , THE ASSESSEE CARRIED ON THE BUSINESS ITSELF WHICH IS NOT AT ALL PROPERTY HE LD UNDER TRUST. THIS ACTIVITY IS A BUSINESS ACTIVITY AND THE PROVISIONS OF SECTIO N 11(4A) OF THE ACT IS APPLICABLE. 15. IT WAS CONTENDED THAT IF THE PROFITS OF THE BUS INESS CARRIED ON BY THE TRUST ARE UTILIZED BY THE TRUST FOR THE PURPOSES OF ACHIEVING THE OBJECTIVES OF THE TRUST, THEN THE BUSINESS SHOULD BE CONSIDERED T O BE INCIDENTAL TO THE ATTAINMENT OF THE OBJECTS OF THE TRUST AS OBSERVED BY THE SUPREME COURT IN THE CASE OF ACIT VS. THANTHI TRUST (2001) 247 ITR 7 85 WHICH IS AS UNDER: 37 ITAS 67 & 68/COCH/2014 AS IT STANDS, ALL THAT IT REQUIRES FOR THE BUSINES S INCOME OF A TRUST OR INSTITUTION TO BE EXEMPT IS THAT THE BUSINESS SHOUL D BE INCIDENTAL TO THE ATTAINMENT OF OBJECTIVES OF THE TRUST OR INSTITUTIO N. A BUSINESS WHOSE INCOME IS UTILIZED BY THE TRUST OR THE INSTITUTION FOR THE PURPOSES OF ACHIEVING THE OBJECTIVES OF THE TRUST ..IN ANY E VENT, IF THERE BE ANY AMBIGUITY IN THE LANGUAGE EMPLOYED, THE PROVISION M UST BE CONSTRUED IN A MANNER THAT BENEFITS THE ASSESSEE. 16. PRIMA FACIE THE ABOVE OBSERVATION WOULD APPEAR TO SUPPORT THE ASSESSEES CASE IN THE SENSE THAT EVEN IF THE SUPER MARKET BUSINESS IS HELD NOT TO CONSTITUTE A BUSINESS HELD UNDER TRUST, BUT ONLY AS A BUSINESS CARRIED ON BY OR ON BEHALF OF THE TRUST, SO LONG AS THE PRO FITS GENERATED BY IT ARE APPLIED FOR THE CHARITABLE OBJECTS OF THE TRUST, TH E CONDITION IMPOSED U/S. 11(4A) OF THE ACT SHOULD BE HELD TO BE SATISFIED, E NTITLING THE TRUST TO THE TAX EXEMPTION. 17. IN OUR OPINION, THESE OBSERVATIONS HAVE TO BE U NDERSTOOD IN THE LIGHT OF THE FACTS BEFORE THE SUPREME COURT IN THE CASE O F THANTHI TRUST (SUPRA) WHEREIN THE TRUST CARRIED ON THE BUSINESS OF A NEWS PAPER AND THAT BUSINESS ITSELF WAS HELD UNDER TRUST. THE CHARITABLE OBJECT OF THE TRUST WAS THE IMPARTING OF EDUCATION WHICH FALLS U/S. 2(15) OF TH E ACT. THE NEWSPAPER BUSINESS WAS INCIDENTAL TO THE ATTAINMENT OF THE OB JECT OF THE TRUST, NAMELY 38 ITAS 67 & 68/COCH/2014 THAT OF IMPARTING EDUCATION AND THE PROFITS OF THE NEWSPAPER BUSINESS ERE UTILIZED BY THE TRUST FOR ACHIEVING THE OBJECT OF I MPARTING EDUCATION. IN THIS CASE, THERE IS NO SUCH NEXUS BETWEEN THE SUPERMARKE T BUSINESS AND THE OBJECTS OF THE ASSESSEE THAT CAN CONSTITUTE THE CAR RYING ON OF THE SUPERMARKET BUSINESS, AN ACTIVITY INCIDENTAL TO THE ATTAINMENT OF THE OBJECTS, NAMELY, TO PROMOTE CAUSE OF CHARITY, MISSION ACTIVI TIES, WELFARE, EMPLOYMENT, DIFFUSION OF USEFUL KNOWLEDGE, UPLIFTME NT AND EDUCATION AND TO CREATE AN AWARENESS OF SELF-RELIANCE AMONG THE MEMB ERS OF THE PUBLIC ETC. WE ARE THEREFORE, OF THE OPINION THAT THE OBSERVATI ONS OF THE SUPREME COURT MUST BE UNDERSTOOD AND APPRECIATED IN THE BACKGROUN D OF THE FACT IN THAT CASE AND SHOULD NOT BE EXTENDED INDISCRIMINATELY TO ALL CASES. BEING SO, WE ARE INCLINED TO HOLD THAT THE ASSESSEE IS NOT ENTIT LED FOR EXEMPTION U/S. 11 OF THE I.T. ACT. 18. IN THE RESULT, BOTH THE APPEALS FILED BY THE A SSESSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 05-12-2014 JM UNDER SEPARATE ORDER SD/- (N.R.S.GANESAN) (CHANDRA POOJARI) JUDICIAL MEMBER A CCOUNTANT MEMBER PLACE: KOCHI DATED: 5 TH DECEMBER,2014 39 ITAS 67 & 68/COCH/2014 GJ 19. I HAVE THE BENEFIT OF GOING THROUGH THE ORDER D RAFTED BY THE LD.ACCOUNTANT MEMBER. HOWEVER, I AM UNABLE TO SUBS CRIBE MYSELF TO THE REASONS GIVEN BY THE LD.A.M. THEREFORE, I AM GIVIN G MY OWN REASON. 20. THE ASSESSEE IS A CHARITABLE INSTITUTION REGIST ERED U/S 12AA OF THE ACT. THE ASSESSEE IS CLAIMING DEDUCTION U/S 11 OF THE ACT IN RESPECT OF THE INCOME EARNED FROM SUPER MARKET. IT IS NOT IN DISP UTE THAT INCOME DERIVED FROM PROPERTY HELD UNDER TRUST WHOLLY FOR RELIGIOUS OR CHARITABLE PURPOSE IS EXEMPTED U/S 11(1) OF THE ACT TO THE EXTENT TO WHI CH SUCH INCOME IS APPLIED TO SUCH PURPOSES IN INDIA. THERE CANNOT BE ANY DIVERGENT VIEW THAT BUSINESS OR BUSINESS UNDERTAKING CAN ALSO BE H ELD UNDER TRUST. THE PROPERTY / BUSINESS SETTLED UPON THE TRUST ON THE D ATE OF ITS CREATION OR ESTABLISHED AFTER THE CREATION OF THE TRUST CAN BE TREATED AS A BUSINESS / PROPERTY HELD UNDER TRUST. THEREFORE, I AM OF THE CONSIDERED OPINION THAT THE SUPER MARKET ESTABLISHED AND RUN BY THE ASSESSE E TRUST CAN BE TREATED AS A PROPERTY / BUSINESS HELD UNDER TRUST. MOREOVE R, SECTION 11(4A) READS AS FOLLOWS: (4A) SUB-SECTION (1) OR SUB-SECTION (2) OR SUB-SE CTION (3) OR SUB-SECTION (3A) SHALL NOT APPLY IN RELATION TO ANY INCOME OF A 40 ITAS 67 & 68/COCH/2014 TRUST OR AN INSTITUTION BEING PROFITS AND GAINS OF BUSINESS, UNLESS THE BUSINESS IS INCIDENTAL TO THE ATTAINMENT OF THE OBJECTIVES OF THE TRUST OR, AS THE CASE MAY BE, INS TITUTION, AND SEPARATE BOOKS OF ACCOUNT ARE MAINTAINED BY SUCH TR UST OR INSTITUTION IN RESPECT OF SUCH BUSINESS. IN FACT SECTION 11(4A) WAS INTRODUCED BY FINANCE (N O.2) ACT OF 1991 WITH EFFECT FROM 01-04-1992. THE INCOME OF THE TRUST BE ING PROFIT AND GAINS OF BUSINESS IS ELIGIBLE FOR EXEMPTION U/S 11(1) OF THE ACT, PROVIDED THE BUSINESS IS INCIDENTAL TO THE ATTAINMENT OF THE OBJ ECT OF THE TRUST AND SEPARATE BOOKS OF ACCOUNT ARE MAINTAINED BY SUCH TR UST IN RESPECT OF THE BUSINESS. THEREFORE, SUB SECTION (4A) OF SECTION 1 1 PRESCRIBES TWO CONDITIONS, VIZ. (I) BUSINESS SHALL BE INCIDENTAL T O THE ATTAINMENT OF THE OBJECT OF THE TRUST; AND (II) SEPARATE BOOKS OF ACC OUNT SHALL BE MAINTAINED BY THE TRUST IN RESPECT OF SUCH BUSINESS. 21. THE APEX COURT HAD AN OCCASION TO INTERPRET THE PROVISIONS OF SECTION 11(4) AND 11(4A) OF THE ACT IN ACIT VS THAN THI TRUST (2001) 247 ITR 785 (SC). THE APEX COURT FOUND THAT ALL THAT I S REQUIRED FOR THE BUSINESS INCOME OF THE TRUST TO BE EXEMPT IS THAT T HE BUSINESS SHOULD BE INCIDENTAL TO THE ATTAINMENT OF THE OBJECT OF THE T RUST. THE APEX COURT 41 ITAS 67 & 68/COCH/2014 FURTHER OBSERVED THAT A BUSINESS WHOSE INCOME IS UT ILIZED BY THE TRUST OR THE INSTITUTION FOR THE PURPOSE OF ACHIEVING THE OB JECT OF THE TRUST OR INSTITUTION IS A BUSINESS WHICH IS INCIDENTAL TO TH E ATTAINMENT OF THE OBJECTIVES OF THE TRUST OR INSTITUTION. IN THE CAS E BEFORE THE APEX COURT IN THE CASE OF THANTHI TRUST (SUPRA) THE TRUST HAD THE FOLLOWING OBJECTS: - ESTABLISHING AND RUNNING A SCHOOL OR COLLEGE FOR THE TEACHING OF JOURNALISM; - ESTABLISHING AND / OR RUNNING OR HELPING TO RUN S CHOOLS, COLLEGES OR OTHER EDUCATIONAL INSTITUTIONS FOR TEAC HING ARTS AND SCIENCE; - ESTABLISHING SCHOLARSHIPS FOR STUDENTS OF JOURNAL ISM, ARTS AND SCIENCE; - ESTABLISHING AND / OR RUNNING OR HELPING TO RUN H OSTELS FOR STUDENTS; - ESTABLISHING AND / OR RUNNING OR HELPING TO RUN O RPHANAGES; AND - OTHER EDUCATIONAL PURPOSES. IN THE CASE BEFORE THE APEX COURT, THE ASSESSEE TRU ST WAS EARNING INCOME ON PRINTING AND PUBLICATION OF NEWSPAPER. PRINTING AND PUBLICATION OF NEWSPAPER ITSELF CANNOT BE TREATED AS EDUCATION W ITHIN THE MEANING OF SECTION 2(15) AS FOUND BY THE APEX COURT IN THE CAS E OF SOLE TRUSTEE, LOKA SHIKSHANA TRUST VS COMMISSIONER OF INCOME-TAX (1975 ) 101 ITR 234 (SC). 42 ITAS 67 & 68/COCH/2014 HOWEVER, THE ASSESSEE M/S THANTHI TRUST BEFORE THE APEX COURT APPLIED ITS INCOME ON ANOTHER EDUCATIONAL INSTITUTION WHICH CARRIED ON THE OBJECT OF EDUCATION. THE INCOME OF THE TRUST, WAS ALSO UTILI ZED FOR GIVING RELIEF TO THE POOR. THEREFORE, THE APEX COURT FOUND THAT THE TRU ST IS ENTITLED FOR THE BENEFIT OF SECTION 11 FORT THE ASSESSMENT YEAR 1992 -93 AND THEREAFTER. IN FACT, THE APEX COURT HAS OBSERVED ON PAGE 796 OF TH E ITR AS FOLLOWS: . A BUSINESS WHOSE INCOME IS UTILIZED BY THE TRU ST OR THE INSTITUTION FOR THE PURPOSES OF ACHIEVING THE OBJEC TIVES OF THE TRUST OR THE INSTITUTION IS, SURELY, A BUSINESS WHI CH IS INCIDENTAL TO THE ATTAINMENT OF THE OBJECTIVES OF THE TRUST. IN ANY EVENT, IF THERE BE ANY AMBIGUITY IN THE LANGUAGE EMPLOYED, TH E PROVISION MUST BE CONSTRUED IN A MANNER THAT BENEFI TS THE ASSESSEE. THE TRUST, THEREFORE, IS ENTITLED TO THE BENEFIT OF SECTION 11 FOR THE ASSESSMENT YEAR 1992-93 AND THER EAFTER. IT IS, WE SHOULD ADD, NOT IN DISPUTE THAT THE INCOME O F ITS NEWSPAPER BUSINESS HAS BEEN EMPLOYED TO ACHIEVE ITS OBJECTIVES OF EDUCATION AND RELIEF TO THE POOR AND THAT IT HAS MAINTAINED SEPARATE BOOKS OF ACCOUNT IN RESPECT THE REOF. 22. THE MADRAS HIGH COURT IN DIT (EXEMPTIONS) VS WI LINGTON CHARITABLE TRUST (2011) 330 ITR 24 (MAD) HAD AN OCCASION TO CO NSIDER AN IDENTICAL ISSUE. THE DEPARTMENT RAISED OBJECTION BEFORE THE MADRAS HIGH COURT THAT 43 ITAS 67 & 68/COCH/2014 SECTION 11(4A) OF THE ACT SHOULD BE MADE APPLICABLE ONLY TO THOSE ACTIVITIES WHICH ARE INCIDENTAL TO THE OBJECT OF THE TRUST. I T WAS ALSO CONTENDED BY THE REVENUE THAT BUSINESS CARRIED ON BY THE ASSESSEE WA S NOT ONE OF THE OBJECTIVES MENTIONED IN THE TRUST DEED; HENCE, THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 11(4A) OF THE ACT. WHILE CONSIDE RING THIS OBJECTION, THE MADRAS HIGH COURT FOUND THAT THE ARGUMENT OF THE LD .COUNSEL WAS APPEALING AND ATTRACTIVE. HOWEVER, IN VIEW OF THE J UDGMENT OF THE APEX COURT IN THANTHI TRUST (SUPRA) THE CONTENTION OF TH E REVENUE CANNOT BE ACCEPTED. IN FACT, THE MADRAS HIGH COURT HAS OBSER VED AS FOLLOWS ON PAGES 33, 34, & 35 OF THE ITR: 10.1 IT IS NOT IN DISPUTE THAT THE ASSESSEE-TRUST HOLDS THE PROPERTY IN TRUST. IT IS ALSO NOT IN DISPUTE THAT THE COMMERCIAL ACTIVITY IS BEING CARRIED ON BY THE ASSESSEE BY USI NG THE BUILDING AS MARRIAGE HALLS, AUDITORIUMS, ETC. THE ASSESSEE HAS FILED ITS RETURNS CLAIMING THAT THE INCOME DERI VED THEREIN IS BEING USED TOWARDS ITS OBJECTIVES WHICH ARE CHARITA BLE IN NATURE. 0.2 IN ORDER TO APPRECIATE THE RIVAL CONTENTIONS OF THE LEARNED COUNSEL APPEARING FOR BOTH SIDES, IT IS USE FUL TO EXTRACT SECTION 11(4A) OF THE INCOME-TAX ACT, 1961. 44 ITAS 67 & 68/COCH/2014 (4A) SUB-SECTION (1) OR SUB-SECTION (2) OR SUB- SECTION (3) OR SUB-SECTION (3A) SHALL NOT APPLY IN RELATION TO ANY INCOME OF A TRUST OR AN INSTITUTION BEING PR OFITS AND GAINS OF BUSINESS, UNLESS THE BUSINESS IS INCID ENTAL TO THE ATTAINMENT OF THE OBJECTIVES OF THE TRUST OR , AS THE CASE MAY BE, INSTITUTION, AND SEPARATE BOOKS OF ACC OUNT ARE MAINTAINED BY SUCH TRUST OR INSTITUTION IN RESP ECT OF SUCH BUSINESS. 10.3 SHRI PATTY B. JEGANATHAN, LEARNED COUNSEL APPE ARING FOR THE REVENUE, SUBMITTED THAT CONSIDERING THE SCOPE O F SECTION 11(4) VIS--VIS SECTION 11(4A) OF THE ACT, IT HAS T O BE HELD THAT UNTIL AND UNLESS THE BUSINESS AS SUCH IS CONNECTED EITHER DIRECTLY OR INDIRECTLY TO ANYONE OF THE OBJECTIVES OF THE ASSESSEE-TRUST, THE SAME CANNOT BE DECLARED AS INCI DENTAL TO SUCH OBJECTIVES. THE LEARNED COUNSEL FURTHER SUBMI TTED THAT INASMUCH AS THE BUSINESS ACTIVITIES ARE PURELY COMM ERCIAL IN NATURE UNLIKE IN THE CASE IN ASST.CIT VS THANTHI TR UST (2001) 247 ITR 785 (SC), THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION UNDER SECTION 11(4A) OF THE ACT. IT IS HIS FURTHER ARGUMENT THAT THE OLD BUILDING HAS BEEN DEMOLISHED AND RECONSTRUC TED BY THE ASSESSEE AND THEREFORE THE SAME HAS NOT BEEN HE LD IN TRUST. 10.4 EVEN THOUGH THE ARGUMENT OF THE LEARNED COUNSE L FOR THE REVENUE IS APPEALING AND ATTRACTIVE, WE ARE NOT ABLE TO ACCEPT THE SAID CONTENTION. THE ISSUE RAISED IS NO LONGER AVAILABLE FOR JUDICIAL REVIEW AND SCRUTINY BY THIS COURT, SINCE THE SAME HAS ALREADY BEEN DECIDED BY THE HONOURABLE APEX 45 ITAS 67 & 68/COCH/2014 COURT IN ASST.CIT VS THANTHI TRUST [2001] 247 ITR 7 85 (SC). THE JUDGMENT OF THE HONOURABLE APEX COURT REFERRED TO ABOVE HAS ALSO BEEN FOLLOWED BY THE DIVISION BENCH OF THI S COURT IN CIT V. SRI RAO BAGHADUR ADK DHARMARAJA EDUCATIONAL CHARITY TRUST [2008] 300 ITR 365 (MAD) AND CIT V. JANAKIAMM AL AYYANDAR TRUST [2005] 277 ITR 274 (MAD) AND ALSO BY A RECENT JUDGMENT OF THIS COURT IN CIT V. SRI NARAYAN A GURUVIAH CHETTYS ESTATE AND CHARITIES (2010) 326 ITR 662 (M AD). THE HONOURABLE APEX COURT IN ASST.CIT V. THANTHI TRUST (2001) 247 ITR 785 (SC) HAS OBSERVED AS FOLLOWS (PAGE 796): THE SUBSTITUTED SUB-SECTION (4A) STATES THAT THE I NCOME DERIVED FROM A BUSINESS HELD UNDER TRUST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES SHALL NOT BE INCLU DED IN THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE TRUST OR INSTITUTION IF THE BUSINESS IS INCIDENTAL TO THE A TTAINMENT OF THE OBJECTIVE OF THE TRUST OR, AS THE CASE MAY B E, INSTITUTION AND SEPARATE BOOKS OF ACCOUNT ARE MAINTAINED IN RESPECT OF SUCH BUSINESS. CLEARLY, T HE SCOPE OF SUB-SECTION (4A) IS MORE BENEFICIAL TO A T RUST OR INSTITUTION THAN WAS THE SCOPE OF SUB-SECTION (4A) AS ORIGINALLY ENACTED. IN FACT, IT SEEMS TO US THAT T HE SUBSTITUTED SUB-SECTION (4A) GIVES A TRUST OR INSTI TUTION A GREATER BENEFIT THAN WAS GIVEN BY SECTION 13(1)(BB) . IF THE OBJECT OF PARLIAMENT WAS TO GIVE TRUSTS AND INSTITUTIONS NO MORE BENEFIT THAN THAT GIVEN BY SEC TION 13(1)(BB), THE LANGUAGE OF SECTION 13(1)(BB) WOULD HAVE 46 ITAS 67 & 68/COCH/2014 BEEN EMPLOYED IN THE SUBSTITUTED SUB-SECTION (4A). AS IT STANDS, ALL THAT IT REQUIRES FOR THE BUSINESS IN COME OF A TRUST OR INSTITUTION TO BE EXEMPT IS THAT THE BUSIN ESS SHOULD BE INCIDENTAL TO THE ATTAINMENT OF OBJECTIVE S OF THE TRUST OR INSTITUTION. A BUSINESS WHOSE INCOME IS UTILIZED BY THE TRUST OR THE INSTITUTION FOR THE PU RPOSES OF ACHIEVING THE OBJECTIVES OF THE TRUST OR THE INSTIT UTION IS, SURELY, A BUSINESS WHICH IS INCIDENTAL TO THE ATTAI NMENT OF THE OBJECTIONS OF THE TRUST. IN ANY EVENT, IF T HERE BE ANY AMBIGUITY IN THE LANGUAGE EMPLOYED, THE PROVISI ON MUST BE CONSTRUED IN A MANNER THAT BENEFITS THE ASSESSEE. THE TRUST, THEREFORE, IS ENTITLED TO THE BENEFIT OF SECTION 11 FOR THE ASSESSMENT YEAR 1992-93 AND THEREAFTER. IT IS, WE SHOULD ADD, NOT IN DISPUTE T HAT THE INCOME OF ITS NEWSPAPER BUSINESS HAS BEEN EMPLOYED TO ACHIEVE ITS OBJECTIVES OF EDUCATION AND RELIEF T O THE POOR AND THAT IT HAS MAINTAINED SEPARATE BOOKS OF ACCOUNT IN RESPECT THEREOF . (EMPHASIS ADDED) 10.5 THE HONOURABLE APEX COURT IN THE ABOVESAID JUD GMENT WAS PLEASED TO HOLD THAT WHAT IS SUFFICIENT IS THAT THE INCOME DERIVED FROM THE BUSINESS FROM A PROPERTY HELD IN T RUST BY THE ASSESSEE IS UTILIZED TOWARDS THE ATTAINMENT OF THE OBJECTIVES. THEREFORE, IT WAS HELD THAT IT IS IRRELEVANT IF THE BUSINESS IS RUN ON A COMMERCIAL EXPEDIENCY WITH A PROFIT MOTIVE. I N VIEW OF THE CLEAR DICTUM OF THE HONOURABLE APEX COURT IT IS NOT OPEN TO THIS COURT TO GO INTO THE SAID QUESTION ONCE AGAIN WHICH IS IMPERMISSIBLE IN LAW. MORE SO, WHEN THE OTHER DIVI SION BENCHES OF THIS COURT HAVE ALSO DEALT WITH IDENTICA L CASES AS 47 ITAS 67 & 68/COCH/2014 THE ONE ON HAND AND TAKEN THE VIEW IN FAVOUR OF THE ASSESSEE. WHILE DEALING WITH AN ISSUE IN A MULTI-JUDGE COURT, THE JUDGES ARE BOUND BY PRECEDENTS AND PROCEDURE. JUDICIAL DE CORUM, DISCIPLINE AND LEGAL PROPRIETY DEMAND THAT THE LAW LAID DOWN BY THE HIGHER FORUM WILL HAVE TO BE FOLLOWED IN LET TER AND SPIRIT. THE DOCTRINE OF BINDING PRECEDENT BRINGS ABOUT AN E LEMENT OF UNIFORMITY, DECISIVENESS AS WELL AS CONSISTENCY IN JUDICIAL DECISIONS. IN VIEW OF THE JUDGMENT OF THE APEX COURT IN THE CA SE OF THANTHI TRUST (SUPRA) AND THE JUDGMENT OF THE MADRAS HIGH COURT I N WILINGTON CHARITABLE TRUST (SUPRA) IRRESPECTIVE OF THE NATURE OF BUSINES S UNDERTAKEN BY THE ASSESSEE TRUST, THE INCOME IS EXEMPT PROVIDED THE S AME IS APPLIED FOR ATTAINMENT OF THE OBJECT OF THE TRUST. THE CONTENT ION RAISED BY THE DEPARTMENT THAT OLD BUILDING WAS DEMOLISHED AND REC ONSTRUCTED BY THE ASSESSEE WAS ALSO REJECTED BY THE MADRAS HIGH COURT HOLDING THAT SO LONG AS THE BUILDING WAS USED FOR BUSINESS PURPOSE FOR C ONDUCTING MARRIAGE, THE SAME IS ELIGIBLE FOR EXEMPTION IF IT IS APPLIED FOR CHARITABLE PURPOSE AS PER THE OBJECT OF THE TRUST. IN THE LIGHT OF THE J UDGMENT OF THE APEX COURT IN THE CASE OF THANTHI TRUST (SUPRA) AND THE JUDGMENT OF THE MADRAS HIGH COURT IN WILINGTON CHARITABLE TRUST (SUPRA) LET US NOW EXAMINE THE ACTIVITIES CARRIED ON BY THE PRESENT ASSESSEE. 48 ITAS 67 & 68/COCH/2014 23. DURING THE YEAR UNDER CONSIDERATION THE SURPLU S INCOME GENERATED BY THE ASSESSEE TRUST IN THE SUPER MARKET IS TO THE EXTENT OF RS.77,45,329 OUT OF WHICH A SUM OF RS.11,96,410 WAS CLAIMED TO B E APPLIED FOR CHARITABLE PURPOSE. FROM THE DETAILS AVAILABLE ON RECORD, IT APPEARS, A SUM OF RS.11,50,000 WAS DONATED TO OTHER INSTITUTIONS. THE DETAILS OF SUCH DONATIONS ARE AS FOLLOWS: 1. DEPARTMENT OF CATECHISM - RS. 3,00,000 2. PAID TO YOUTH MINISTRY - RS. 3,50,000 3. PAID TO ARCHDIOCESE OF VERAPOLY FOR - RS. 5,00 ,000 CHARITY PURPOSE NO DETAILS IS AVAILABLE WITH REGARD TO APPLICATION OF INCOME TO THE EXTENT OF RS.46,410. THE FACT REMAINS IS THAT THE ASSESSEE T RUST HAS NOT APPLIED THE FUNDS TO THE OBJECT OF THE TRUST. IN FACT, IT DONAT ED THE FUNDS TO THE OTHER INSTITUTIONS. IT IS NOT KNOWN WHETHER THE OTHER IN STITUTIONS TO WHICH DONATIONS ARE MADE HAS SIMILAR OBJECTS LIKE THAT OF ASSESSEE. HOWEVER, SECTION 11(3)(D) INTRODUCED BY FINANCE ACT, 2002 W ITH EFFECT FROM 01-04- 2003 CLEARLY SAYS THAT ANY INCOME WHICH IS CREDITED OR PAID TO A TRUST OR INSTITUTION IS NOT ELIGIBLE FOR EXEMPTION AND THE S AME HAS TO BE TREATED AS INCOME OF THE ASSESSEE. SINCE THE ASSESSEE HAS NOT APPLIED THE SURPLUS FUNDS FROM THE BUSINESS OF SUPER MARKET FOR CHARITA BLE PURPOSE AS PER THE OBJECT OF THE TRUST, I AM OF THE CONSIDERED OPINION THAT THE ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION. 49 ITAS 67 & 68/COCH/2014 24. IN VIEW OF THE ABOVE REASONS, I AM OF THE CONSI DERED OPINION THAT THE CIT(A) HAS RIGHTLY CONFIRMED THE ORDER OF THE ASSES SING OFFICER. ACCORDINGLY, THE SAME IS CONFIRMED. 25. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS DI SMISSED. ORDER PRONOUNCED ON THIS 05 TH DAY OF DECEMBER, 2014. SD/- (N.R.S. GANESAN) JUDICIAL MEMBER COCHIN, DT : 05 TH DECEMBER, 2014 PK/- COPY TO: 1. M/S ASHISH SUPER MERCATO, VERAPOLY ARCHDIOCESAN SALES CENTRE, MARINE DRIVE, KOCHI 682 031. 2. THE DEPUTY DIRECTOR OF INCOME-TAX (EXEMPTION), R ANGE-2, ERNAKULAM. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-II, KOC HI 4. THE COMMISSIONER OF INCOME-TAX, KOCHI 5. THE DR (TRUE COPY) BY ORDER ASSTT REGSTRAR, ITAT, COCHIN BENCHES