COMMISSIONER OF INCOME-TAX Vs. SENGUNTHAR THIRUMANA MANDAPAM

JUDGEMENT

(1.) AS against the order of the Tribunal dated September 27, 2004, made in I.T.A. Nos. 1194, 1195, 1196, 1197 and 1203/ Mds/2003, the Revenue has preferred these appeals, raising the following substantial question of law : Whether, on the facts and in the circumstances of the case, the Income -tax Appellate Tribunal was right in holding that the assessee -society was entitled to exemption under Sections 11 of the Income -tax Act merely on the ground that the registration under Sections 12AA has been granted with effect from April 1, 1990, without noticing that no charitable activities have been conducted and the income from the letting out of kalyana mandapam assessable under the head 'Business' has not been applied for any charitable purposes like education or any other object of general public utility

(2.) THE assessee is a society registered under the Tamil Nadu Societies Registration Act. The relevant assessment years are 1990 -91, 1991 -92, 1992 -93, 1993 -94 and 1999 -2000, respectively. Admittedly, the society was allotted land by the Collector of Salem District in his proceedings in R. Dis. No. 274700 of 1983 dated December 23, 1984, on the specific condition that the land should be used for kalyana mandapam. As per the guidelines given by the Collector, the assessee should build a kalyana mandapam and it should function for the benefit of local people, mainly weavers and agriculturists. Any infringement of the above condition would enable the Collector to take over the land along with the building. The grant also provides to charge a very nominal rent for the building to meet maintenance, repairs and renovation expenses. Accordingly, the assessee was running a kalyana mandapam and collecting minimum nominal charges from the users.

(3.) ACCORDING to the assessee -society, it is a registered one established for charitable purpose and its income was exempted under Sections 11/12 of the Act. But, the Revenue rejected the explanation of the assessee on the sole ground that the assessee itself had admitted the income for the assessment years 1998 -99 and 1999 -2000 as income from business without claiming any exemption. The Assessing Officer further found that even though the object of the association was to construct a kalyana mandapam for the benefit of local people, upliftment of the poor, education and other social and charitable activities, the assessee had not undertaken any charitable activity since its inception except constructing and running a marriage hall, which is purely a commercial activity and does not have any charity involved in the activity and therefore, computed the income for the said assessment years as follows : _____________________________________________________________Assessment year Income assessed1990 -91 59,9601991 -92 1,81,9901992 -93 1,46,4301993 -94 66,8101994 -95 1,01,0201995 -96 56,0901996 -97 1,53,0001997 -98 4,00,2501998 -99 1,03,3601999 -2000 10,800________________________________________________________________