Chapter: Income which do not form part of Total Income

#CAPassion #DTCL #M17-004

Queen’s Education Society v. CIT (2015- SC)

Issue: Where an institution engaged in imparting education incidentally makes a profit, would it lead to an interface that it ceases to exist solely for educational purposes?

Facts: Assessee, an educational institution, established with the sole object of imparting education, showed surplus and claimed exemption u/s 10((23C)(iiiad)
AO rejected exemption on the ground that assessee has made profits and did not exist solely for educational purposes.
CIT(A) & Tribunal allowed assessee claim, HC restored AO order

Decision: SC upheld Tribunal’s view that the assessee was engaged in imparting education and profit was only incidental to the main object of spreading education. Hence it is eligible for exemption.

#CAPassion #DTCL #M17-005

CIT v. Kribcho (2012 - Del .HC)

Issue: whether sec 14A is applicable in respect of deductions, which are permissible and allowed under chapter VI-A.

Facts: Assessee being a co-operative society, claimed deduction u/s 80P(2)(d) on dividend income from NAFED and Co-op Bank and also on interest on deposits made with co-op banks.

AO, relying on sec 14A, contended that such income was not included in total income of assessee and therefore, the expenditure with respect to such income should be disallowed.

Decision: HC observed that 14A is not applicable for deductions. Deductions under chapter VI-A are different from sec 14A. No disallowance can be made u/s 14A in respect of income included in total income in respect of which deduction is allowable u/s 80C to 80U.
Note: Department filed SLP against HC order which was dismissed on 15/2/2013.

#CAPassion #DTCL #M17-006

CIT v.Karimangalam Onriya Pengal Semipu Amaipu Ltd. (2013 - Mad. HC)
CIT v. Society for promotion of education (2016- SC)
{RTP, May 17}
Issue: where an application for registration of a charitable trust is not disposed off within a period of 6 months as required u/s 12AA(2), can the trust deemed to have been registered u/s 12AA?
HC (in case of Karimangalam) held that time frame mentioned in sec 12AA(2) is only directory in nature and non-consideration of registration application within said time frame of six months would not amount to “deemed registration”
Decision: SC (in case of Society for promotion of education) held that deemed registration would commence only after 6 months from date of application.
Note: SC judgement overruled Karimanglam case. Hence, Karimangalam case may be ignored.

#CAPassion #DTCL #M17-007

DIT v.Meenakshi Amma Endowment Trust (2013 - Kar. HC)

Issue: where application for registration u/s 12A is made within a short time of formation of trust, cane be denied on the ground that no charitable activity has been commenced by trust?

Decision: View taken by authority was not tenable. Application for registration u/s 12A can be made even within a week of formation of trust. In such case, objects of trust as mentioned in trust deed have to be taken into consideration for verifying genuineness of trust not the activities carried on by it. If later on, it is found that such trust is not carrying any charitable acivity, the concerned authorities may withdraw the registration granted or cancel it.

#CAPassion #DTCL #M17-008

DIT v.Khetri Trust  (2014 – Del.)

Issue: where properties bequeathed to a trust could not be transferred to it due to ongoing court litigation and pendency of probate proceedings, can violate the provisions of sec.11(5)?

Decision: No violation of sec 11(5)

#CAPassion #DTCL #M17-009

DIT v.Ramoji Foundation  (2014 - AP. HC)

Issue: whether approval of Civil Court is required for amendment of trust deed, even when settler has given power to the trustees to alter the trust deed?

Decision: No such approval is required when settler has already given power to trustees to alter the trust deed. Hence authorities may relied upon such altered deed.

Gourav Kapoor
CA Passion


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