Compilations of case law: STATUS OF ASSESSEE : TRUST: EXEMPTION

EXEMPTION

Registration of a Trust u/s 12A is a condition precedent to claim exemption u/s 11 & 12
U.P. Forest Corporation Vs DCIT (SC) 297 ITR 1

Charitable Trust carrying on educational activities – But not conducting any courses in formal education – Not affiliated to / registered by any authority – No exemption.
Saurashtra Education Foundation Vs CIT (Guj) 273 ITR 139
Bihar Institute of Mining & Mine Surveying Vs CIT (Pat) 208 ITR 608

Assessee conducting examinations for recruitment to various public sector banks – Income earned not exempt u/s 10(22)
Institute of Banking Personnel Selection Vs ADIT (ITAT, Mum) 67 ITD 160

Exemption u/s. 10(22) – Assessee granting scholarships to deserving Parsi students – Not entitled for exemption.
CIT Vs Sorabji Nusserwanji Parekh (Guj) 201 ITR 939

Assessee running hospital, income of which is exempt u/s 10(22) – Interest income from banks, UTI, gift shop income etc. not entitled to exemption.
National Health & Education Society Vs ADIT (Exemption) (ITAT, Mum) 70 ITD 330

Trust advanced money to a company in which trustees were Directors – Advance was for construction of hospital but amount not utilized during relevant accounting year – Amount not entitled to exemption.
CIT Vs V.G.P. Foundation (Mad) 262 ITR 187

Huge sums of money advanced to company having substantial interest in Trust – No interest charged nor adequate security taken – violation u/s 13(3) – Denial of exemption upheld
Kanahya Lal Punj Charitable Trust Vs DIT (Exem) (Del) 297 ITR 66

Property of trust let out at meager rent to a firm in which one of the trustees is partner – No exemption.
Ram Bhawan Dharamshala Vs State of Rajasthan (Raj) 258 ITR 725

Trust – Payments made to interested persons – No exemption.
CIT Vs Nagarathu Vaisiyargal Sangam (Mad) 246 ITR 164

Refrigerator purchased by Trust and placed in residence of managing trustee till trust buildings were ready – No exemption to Trust.
Agappa Child Centre Vs CIT (Ker) 226 ITR 211

Object to conduct stock exchange – No prohibition against declaration of dividends to share holders or dealing with its profits in any manner it liked – No exemption.
Delhi Stock Exchange Association Ltd. Vs CIT (SC) 225 ITR 235
Bihar State Forest Department Corporation Vs CIT (Pat) 224 ITR 757

Donation received from associated companies used for the benefit of children of Trustees – No exemption u/s 11
Concast (India) Educational Trust Vs ITO (ITAT, Bom) 57 ITD 599

A part of Trust income was being used directly or indirectly for benefits of its founder and Managing Director – No exemption u/s 11 or 10(22).
Skin Institute & Public Services Charitable Trust Vs ADIT (Exemption) (ITAT, Del) 65 ITD 125
Chandrika Educational Trust Vs CIT (Ker) 139 CTR 96

Charitable and non-charitable objects – Trustees can apply income to any of these objects – No exemption u/s 11.
Daulat Ram Public Trust Vs CIT (Del) 244 ITR 514

Manner in which trust property was to be utilized, not indicated in trust deed – Not entitled to exemption.
Assembly Rooms Vs CIT (Mad) 241 ITR 76

Proviso to Sec. 13 of IT Act and Sec. 21A of WT Act lays down that exemption will not be denied if part of the income is applied for benefit of a person referred to in Sec. 13(3), if such use or application is in compliance to mandatory terms of Trust which is created before 1.4.62 – Mandatory terms should have existed before 1.4.62 – Subsequent amendment of Trust deed imposing such a term – No exemption.
CIT Vs Rattan Trust (SC) 227 ITR 356

Certain amount set apart as provision was not actually applied for charitable purposes – Not entitled to exemption u/s. 11.
Nachimuthu Industrial Association Vs CIT (SC) 156 CTR 187

Trust must be for public benefit – Only those subscribing to fund continuously or their dependents eligible to benefit in this case – Benefit conferred is not public but private – Not entitled to exemption.
CIT Vs BEL Employees Death Relief Fund and Service Benefit Fund Association (Kar) 225 ITR 270.
CIT Vs ITI Employees Death and Superannuation Relief Fund) (Kar) 234 ITR 308

Interest on investments received by Trust would not be covered by principle of mutuality – not entitled to exemption.
CIT Vs ITI Employees Death and Superannuation Relief Fund (Kar) 234 ITR 308

Surplus earned by organizing exhibition, is business income – No separate books for this business, but can be deciphered from common books of the institution →not amount to 11(4A)
Indian Machine Tools Mfrs. Association Vs ADIT (Exemption) (ITAT, Mum) 70 ITD 304.

Rent received from exhibition hall hiring, meeting hall hiring, parking fee – Income from business.
Visveswaraya Ind. Res. Dev. Centre Vs DCIT (ITAT, Mum) 59 ITD 156

Since assessee could not prove that donors were able to give direction before / at time of donation to corpus funds nor assessee was maintaining separate accounts for this purpose, Assessing Officer was right in denying exemption.
Shri Digambar Jain Naya Mandir Vs ADIT (ITAT, Cal) 70 ITD 121

Donation sent to assessee Trust with specific directions to be spent on organizing 'kisan rally' - To be treated as income of assessee.
Khemraj Nemichand Shrishrimal Charitable Trust Vs CIT (MP) 231 ITR 43
Trust founded by members of family – Income earned by Trust from family concern in AY 80-81 but given to trust only in 1984 – Sums remained with firm – Not used for charitable purposes – No exemption.
CIT Vs Muthoottu Charitable Trust (Ker) 227 ITR 203

Chit business carried on by Trust was not in the course of actual carrying out the primary purpose of the trust – No exemption u/s 11.
Dasa Balinjika Seva Sangam Vs CIT (Mad) 240 ITR 863

Deemed income u/s 11(3) – not eligible for accumulation for further period
The Trustees, The B.N. Gamadia Parsi Hunnarshala Vs ADIT (Exemption) (ITAT, Mum) 77 TTJ 274

If the surplus is a regular feature and is a result of intentional charging of abnormal high fee not commensurate with the expenditure, exemption u/s 10(22) cannot be allowed
ACIT Vs Bal Bharti Nursery School (ITAT, All) 82 ITD 71
All India Personality Enhancement & Cultural Centre for Scholars, AIPECS Society Vs DCIT (ITAT, Del) 91 ITD 240

Objective of Trust is carrying on business of race club and scientific breeding of horses – Registration refused
Hyderabad race Club Vs CIT (AP) 153 ITR 521

When the assessee collects money over and above the fees prescribed by the Government, it amounts to selling the education and the element of charity no longer remain in the activities of the assessee – Not eligible for exemption
Vodithala Education Society Vs ADIT (Exem) 2008-TIOL-139-ITAT-HYD