COMMISSIONER OF INCOME TAX Vs. SENGUNTHAR THIRUMANA MANDAPAM

JUDGEMENT

(1.) AS against the order of the Tribunal dated 27. 9. 2004 made in ITA Nos. 1198, 1199, 1200, 1201 and 1202/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 u/s. 11 of the Income Tax Act merely on the ground that the registration u/s. 12aa has been granted with effect from 1. 4. 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 1994-95, 1995-96, 1996-97, 1997-98 and 1998-1999 respectively. Admittedly, the Society was allotted a land by the Collector of Salem District in his proceedings in R. Dis. No. 274700/83 dated 23. 12. 1984 on specific condition that the land should be used for Kalyana Mandapam. As per the guidelines given by the Collector, the assessee should build 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 out maintenance, repairs and renovation expenses. Accordingly, the assessee was running a Kalyana Mandapam and collecting minimum nominal charges from the users.

(3.) THE learned Standing Counsel appearing for the revenue, placing strong reliance on the decision of this Court in CIT v. HALAI NEMON ASSOCIATION (243 ITR 439) contends that exemption for income of the charitable trust under Sections 11 and 12aa of the Act cannot be granted automatically inasmuch as each transaction has to be looked into to decide whether the income earned was assessable as business income or otherwise. It is his further contention that the assessing officer had given a clear finding that the assessee had not undertaken any charitable activity since its inception, except constructing a marriage hall and letting for rent and that there was no charity involved in the same, which finding has not been either traversed or reversed by the Commissioner or by the Tribunal with convincing reasons.