IN THE HIGH COURT OF DELHI AT NEW DELHI 
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   ITA 499/2012  
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 DIT              ..... Appellant 
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 Through Mr. Abhishek Maratha, sr. standing counsel with Ms. Anshul 
 Sharma, Adv. 
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 versus 
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 INDIAN NATIONAL THEATRE TRUST       ..... Respondent 
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 Through Mr. V P Gupta, Adv. 
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 CORAM: 
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 HON'BLE MR. JUSTICE S. RAVINDRA BHAT 
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 HON'BLE MR. JUSTICE R.V.EASWAR 
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 O R D E R 
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     05.09.2012 
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 Issue notice. 
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 2. Mr. V P Gupta, Adv. accepts notice on behalf of the respondent. 
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 3. We have heard counsel for the parties.  Revenue claims to be 
 aggrieved by the order dated 10.10.2011 of the Income Tax Appellate 
 Tribunal (Tribunal, for short) in ITA No.3795/Del/2011.  It urges that 
 the impugned order holding that assessee is entitled to exemption under 
 Section 11 is erroneous.  The assessee trust claimed and was granted 
 exemption.  Its main objects are promotion of artistic and cultural 
 expression through dramas, music and education etc. in its own 
 auditorium.  For the relevant assessment year 2008-09 it returned a total 
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 income of `1,67,83,000/-.  It incurred expenditure of `23 lakhs towards repairs and maintenance and other running expenses in the maintenance of 
 the building.  ?Nil income? return was filed on account of the fact that 
 receipts were exempted.  The assessment order inter alia ruled that the 
 expenditure towards donation (`23 lakhs) made to other trust was 
 inadmissible and that since the respondent-assessee did not carry out any 
 charitable activity but merely let out its premises to other 
 organizations as well as auditorium to other theatre groups etc., it was 
 engaged in a commercial activity. 
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 4. The assessee?s appeal was allowed by the Appellate Commissioner who 
 relied upon his previous orders as well as those of the Tribunal.  The 
 revenue unsuccessfully appealed to the Tribunal.  Ld. counsel for the 
 appellant revenue urged that letting out the auditorium to other parties 
 and part of the premises did not constitute charitable purpose.  It was 
 emphasized that in the absence of any cultural activity such as staging 
 in-house production etc., the assessee could not claim to be carrying on 
 any activity that can qualify as charitable.  It was urged in addition 
 that the donation made to the tune of `23 lakhs could not have been 
 allowed since that did not amount to application of income for a 
 charitable purpose. 
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 5. Counsel for the assessee relied upon the previous orders of the 
 ITAT, particularly common order dated 22nd April, 1999.  Reliance was 
 also placed upon the judgment of this Court in CIT Vs. M/s Indian 
 National Theatre Trust, New Delhi ITR 134/1986, which had affirmed that 
 order on 13.11.2007. 
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 6.  This Court has considered the submissions.  The assessee had in 
 its return before the Assessing Officer stated as follows : 
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 ?As per the aforesaid letter your goodself have observed that income and 
 expenditure of our Trust are mainly related to property held by us at 4, 
 Safdar Hashmi Marg, New Delhi, expenditure incurred is not related to 
 charitable activities except donation paid to certain parties.  Your 
 goodself had observed that one the basis of above it appears that there 
 is absence of any philanthropic and charitable activities on the part of 
 the trust. 
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 In this connection we are have to submit that our was formed as 
 Charitable Trust in 1958.  It was duly registered u/s 12A vide 
 Registration no. DLI(C)(T-422)  Dt. 9/2/1977. The trust is the owner of 
 an auditorium constructed at plot measuring 0.603 Acres situated on 
 Barakhamba Road (opposite Mandi House) i.e. 4, Safdar Hashmi Marg, New 
 Delhi.  The trust is using the Auditorium for carrying on charitable 
 purposes.  Object of the Trust is to promote artistic and cultural 
 expression through drama, music, education cognate activities. 
 Accordingly the Auditorium is made available for performance in the 
 nature of dance drama, music, education etc. Auditorium is made available 
 for normally to schools, colleges, theatre groups etc.  Our trust takes 
 nominal charges for making the auditorium available for such activity 
 only with a view to meet partly running cost.  It is emphatically stated 
 that activity of making available auditorium to other institution for the 
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 purpose of promoting dance, drama, music etc is in the nature of charitable activities and same does not result in any earning to the 
 trust.  With a view to earn income for the purpose of carrying on the 
 charitable activities, the trust had partly let out the premises so as to 
 earn regular income.  The deficit of making available the auditorium for 
 promoting dance, drama, music, education etc, is met out of the said 
 rental income. Further, our trust also supports charitable activities 
 being carried by other on charitable institutions having objects 
 consistent with our object by way of making donations to them.  The 
 aforesaid position is being there for number of years and charitable 
 activities of our trust have always been accepted in the past.? 
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 7. The Assessing Officer however rejected the contention stating that 
 the assessee used to charge market rates while hiring or letting out 
 auditorium.  We discern no material to warrant that conclusion.  Apart 
 from hiring of the auditorium, the assessee received rents on account of 
 letting out some portion of its premises to M/s Benett and Coleman.  That 
 cannot be termed as unreasonable.  In view of the fact that the previous 
 orders in which the claim for the assessee to be a charitable trust was 
 upheld, we do not see any reason to interfere with the impugned order in 
 this aspect.  As far as second question i.e. donation of `23 lakhs is 
 concerned, this Court noticed that the same has not been urged on behalf 
 of the revenue in its appeal.  Nevertheless this aspect is covered by the 
 previous ruling in ITR 134/1986 dated 13.11.2007.  The Court observed in 
 that judgment as follows : 
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 ?11. As far as the third question is concerned, on examining the orders 
 passed by the authorities, in which the objects of both the Assessee 
 Trust as well as the Shriram Centre for Art and Culture have been 
 discussed, we are of the considered view that the Tribunal was correct in 
 its conclusion that the sum of Rs.50,000/- deposited with Shriram Centre 
 for Art and Culture should be treated as an application of the income of 
 the Trust. The word application has to be given a wider interpretation 
 keeping in view the purpose for which the provision has been introduced.? 
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 8. For the above reasons there are no substantial questions of law 
 which arises for consideration by this Court in the present appeal; the 
 same is accordingly dismissed. 
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 S. RAVINDRA BHAT, J 
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 R.V.EASWAR, J 
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 SEPTEMBER 05, 2012 
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 vld 
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 $ 25 
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