Letting Premises to Fund Charity Not Business Activity | ITAT

Case Details: Marwadi Navyuvak Vachanalaya v. Commissioner of Income-tax(Exemption) - [2025] 179 taxmann.com 415 (Pune-Trib.)

Judiciary and Counsel Details

• Justice C.V. Bhadang, President & R.K. Panda, Vice President
• Bhuvanesh Kankani for the Appellant.
• Amol Khairnar, CIT-DR for the Respondent.

Facts of the Case

Assessee-trust was registered under the Bombay Trust Act, 1950 and the Societies Registration Act, 1860. It operated a library under the name of ‘Marwadi Navyuvak Vachanalaya’ with the primary aim of offering a conducive and supportive environment for financially underprivileged students to focus on their studies.

The trust applied for registration under Section 12A and Section 12AB. During the verification process, the CIT(E) noticed that the trust was earning substantial income from renting out properties. The aggrieved assessee filed the instant appeal before the Tribunal.

ITAT Held

The Tribunal held that the CIT(E) had determined that the primary activity of the trust is letting out property on rent, which constitutes a business activity. He was of the opinion that the receipts were prima facie from an activity in the nature of the advancement of any other object of general public utility, wherein fees are charged for the services rendered.

However, the assessee should not be denied registration under Section 12A merely for earning rental income by letting out a part of the premises which has been utilised for the objects of the trust. The proviso to Section 2(15) of the Act would not be attracted for earning rental income by letting out a part of the premises which has been utilised for the objects of the trust.

Therefore, the assessee should not be denied registration under Section 12A.

List of Cases Reviewed

• DIT (Exemptions) v. Shri Vile Parle Kelavani Mandal [2015] 58 taxmann.com 288/232 Taxman 499/378 ITR 593 (Bombay) (para 12)
• CIT v. Madras Stock Exchange Ltd. [1976] 105 ITR 546 (Madras) (para 13)
• CIT v. Andhra Chamber of Commerce/South Indian Chamber of Commerce/South India Film Chamber of Commerce/Madras Stock Exchange Ltd. [1981] 7 Taxman 27/130 ITR 184 (SC) (para 14)
• Oswal Bandhu Samaj v. ITO (Exemptions) [2022] 138 taxmann.com 561/195 ITD 200 (Pune – Trib.) (para 15) Followed.

List of Cases Referred to

• DIT (Exemptions) v. Shri Vile Parle Kelavani Mandal [2015] 58 taxmann.com 288/232 Taxman 499/378 ITR 593 (Bombay) (para 6)
• CIT v. Madras Stock Exchange Ltd. [1976] 105 ITR 546 (Madras) (para 7)
• CIT v. Andhra Chamber of Commerce/South Indian Chamber of Commerce/South India Film Chamber of Commerce/Madras Stock Exchange Ltd. [1981] 7 Taxman 27/130 ITR 184 (SC) (para 7)
• Oswal Bandhu Samaj v. ITO (Exemptions) [2022] 138 taxmann.com 561/195 ITD 200 (Pune – Trib.) (para 8).