Shanti Prime Publication Pvt. Ltd.
Sec. 11 & 12 of Income Tax Act, 1961— Trust - Exemption to trust —Disallowance need not necessarily lead to holding the assessee disentitled to the benefits of sections 11 and 12.
Facts: CIT (Appeals) has erred in law in ignoring that the assessee was engaged in the activity of commercialization of education and its activities did not fall under the second limb of “charitable purpose? i.e. “education? within the meaning of section 2(15) and therefore, was not eligible for benefit of exemption of section 11 & 12”.
Held, that when once CIT(A) upheld the disallowance of business promotion and entertainment expenditure, it was not right on his part to have held the assessee entitled to the benefits of section 11 and 12. Here, it is seen that the two actions are mutually intrinsically exclusive and the disallowance need not necessarily lead to holding the assessee disentitled to the benefits of sections 11 and 12. As correctly noted by the Ld. CIT(A), following 'Idicula Trust Society', 20112-ITS-940-ITAT, if an assessee has extended any undue benefit to a person mentioned in section 13(3), such amount would not be considered as application of income for the purpose of fulfilment of objects of the Society and the benefit under section 11 and 12 would not be available of such amount. However, this would not lead to any conclusion of the assessee having lost its charitable status. There is nothing on record to dispute the charitable nature of the assessee trust, as envisaged in its Trust Deed. The element of profit would not render such charitable nature otiose. Therefore, there is no paradox in the findings recorded by the Ld. CIT(A) in firstly upholding the disallowance of business promotion and entertainment expenditure and then, holding the assessee entitled to the benefits of Section 11/12. As the ld. CIT (Appeals) has followed the order of the Co-ordinate Bench in assessee’s own case for the same assessment year, wherein it has been held that assessee is entitled to exemption under Section 11 and 12, the ld. CIT (Appeals) followed the same. - UMAK EDUCATIONAL TRUST V/s DEPUTY CIT -  26 ITCD Online 118 (ITAT-DELHI)