Law:

Section:

Section 11, read with section 12AA, of the Income-tax Act, 1961 - Charitable or religious trust - Exemption of income from property held under - Assessment years 1994-95 to 1999-2000 - Whether where main object of assessee society was to construct Kalyana Mandapam for benefit of local people, mainly weavers and agriculturists, land was also granted by District Collector to achieve said object, viz., for benefit of local people, upliftment of poor, education and other social and charitable activities, letting out of Kalyana Mandapam by collecting nominal rent to meet out maintenance, repairs and renovation expenses would not defeat right of exemption under section 11 merely on account of fact that accumulated funds had not been spent for other charitable activities, viz., for upliftment of poor, education and other social activities - Held, yes FACTS Certain land was given by the District Collector to the assessee society to construct Kalyana Mandapam on specific condition that 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 provided for collecting nominal rent for the building to meet out maintenance, repair and renovation expenses. The assessee used to let out Kalyana Mandapam for social and charitable activities and collecting nominal rent from the users. For the assessment years in question assessee claimed that its income was exempted under section 11. The Assessing Officer found that even though the object of the assessee 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 was purely a commercial activity and did not have any charity involved in the activity and, therefore, computed the income for the assessment years in question. Commissioner (Appeals) and the Tribunal rendered a concurrent finding that the very activity of constructing the Kalyana Mandapam and letting…

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