The Two member bench of Pune Income Tax Appellate Tribunal ( ITAT ) held that constructing and maintaining houses, housing colonies for the low income group people are not charitable purposes under Section 2(15) of the Income Tax Act,1961
The Assessee, Golden Charitable Trust,filed the appeal against the order of Commissioner of Income Tax(Exemption)by rejecting the application for the Registration of the trust under Section 12A(1) of the Income Tax Act, 1961.The assessee trust is engaged in pursuing purely charitable objects such as providing medical and educational aid to needy beneficiaries .
During the adjudication Kishor B Phadke, the counsel for assessee submitted that Assessee had carried out Charitable activities like medical aid etc.Further submitted that the CIT(E) had not properly appreciated the submission of the assessee.
Keyur Patel, Counsel for Revenue supported the order of lower authorities and argued that Clause(D) of the trust deed which is about construction of houses. The construction of houses cannot be a charitable object.
It was observed that the assessee trust was formed on 13.02.2009 by Shri Mohammad Shafi Haji Chand Bagwan as Settler of the Trust. The said trust was registered with Assistant Charity Commissioner, Sangli on 24.03.2014.
Thus, as per the said object, one of the objects of the assessee is to construct and maintain houses, housing colonies for the low income group people. To construct houses or housing colonies, even if it is for low-income groups, is a business activity.
Therefore, such activity cannot be considered as “Charitable Purpose” as defined in section 2(15) of the Income Tax Act.
After reviewing the facts the ITAT bench of S.S.Godara (Judicial Member) and Dr. Dipak P. Ripote(Accountant Member) held that constructing and maintaining houses, housing colonies for the low income group people are not charitable purposes under Section 2(15) of the Income Tax Act.
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