CIT (Exemption) v. Kanakia Art Foundation – [2019] 108 taxmann.com 43 (Bombay)

The assessee-trust filed an application for registration under section 12A.

 The Assessing Officer (AO) rejected assessee’s application holding that objects of assessee were not in nature of charitable purposes.

The Tribunal allowed assessee’s appeal holding that the objects of the trust were in nature of charitable purposes.

 It was further concluded that even if trust was not following objects of trust, it was always open for AO to examine the same while granting exemption under section 11.

The Bombay High Court held that the Commissioner had referred to clause (f) of the objects but reproduced only part of it to contend that the object was “to convert plays into ……….episodes on T.V…….” and this couldn’t be termed as charitable.

The Commissioner had wholly misread the objects. Clause (e) of the objects is to create a culture among the elite class of the society for considering work of art as an asset that can be passed on to the next generation with pride and prestige.

Immediately, following clause (f) which has not been fully reproduced by the Commissioner in his order is to write through or with the help of literary persons, of different aptitudes or classes, plays in art and culture and other languages on different topics, to translate plays written in different languages into other languages, or to convert plays into drams in to short plays or episodes or T.V. or radio plays.

The Commissioner, thus, picked up a portion of this clause in isolation to argue that the same was not charitable.

The object of assessee mentioned that with help of literary persons of different aptitudes or classes, plays written in different languages could be converted into dramas or episodes or T.V. plays and, said activity could not be regarded as commercial in nature. Thus, impugned order passed by Tribunal did not require any interference.