N.V. Vasudevan, Judicial Member. - This is an appeal by Sri Shanmukhananda Fine Arts & Sangeetha Sabha Charitable Trust, (hereinafter referred as "Appellant Sabha") against the order dated 2-2-2011 of the Director of Income Tax (Exemption), Mumbai, (DIT) passed under section 12AA(3) of the Income-tax Act, 1961 (the Act).

2. The appellant Sabha is registered as a Society under the Societies Registration Act and also as a Charitable Institution under the Bombay Trusts Act, 1950. The Appellant Sabha was also granted registration under section 12AA of the Act.

3. Under section 11 of the Act Income from property held under trust for charitable or religious purposes, to the extent to which such income is applied to such purposes will not form part of the total income under the Act. In other words such income would not be taxable. One of the conditions for availing of exemption under section 11 of the Act is that the trust or institution has to make an application for registration of the trust or institution in the prescribed form and in the prescribed manner and such trust or institution should be registered under section 12AA of the Act. Registration under section 12AA of the Act will be granted only after the Commissioner is satisfied that the objects of the trust or institution are charitable and the activities of the trust or institution are genuine. There is no dispute that the Appellant Sabha in the present case was granted such registration under section 12AA of the Act and its assessments were being completed on the basis that there exists a valid registration under section 12AA of the Act.

4. The Addl.Director of Income Tax (Exemptions), Range-1, Mumbai, during the scrutiny assessment proceedings of the appellant Sabha noticed that the appellant Sabha had amended its objects clause Since January, 2008 by incorporating clause 3(iii) in the objects clause of its Memorandum of Association. The objects of the appellant Sabha as it existed after such amendment are as follows:

"3. The objects of the Sabha are:

(i)Secular Education in Music, Dance, Drama, culture and other fine arts.

(ii)Medical Relief, Health Services and Yoga, and without prejudice to the generality of the above;

(a)To promote, advance and propagate Music, Literature, Dance, Drama and other Fine Arts in all forms and by all legitimate means and without derogation to the generality of Secular Education.

(b)To organize and/or conduct or arrange to conduct schools/colleges in fine Arts, seminars/symposia, concerts, competitions, demonstrations, lectures, film shows, music, dance and drama festivals for the attainment of the objects of the Sabha and to provide facilities for advancement of such education, publications, archives and libraries and other similar means.

(c)To award scholarships, stipends, honours and prizes and other forms of encouragement/assistance for learning/propagating music, dance drama and other fine Arts in pursuance of the above objects.

(d)To undertake and promote scientific research for extension of knowledge in relation to Fine Arts in all their branches.

(e)To provide medical relief to any person irrespective of caste or creed and to establish Medical Centres/Hospitals for providing medical services and also to undertake and promote education and research in medical science and allied activities.

(f)To provide services in the fields of Community Health, Services, Yoga and Nutrition.

(g)To engage in all other lawful and allied activities as may be incidental or conducive to the promotion and furtherance of any or all the objects of the Sabha.

(h)To carry on the aforesaid objects either by itself or in association with others."

(iii)To affiliate and/or take over/merge/have any arrangement with any other trust/society or institution having similar objects, with or without its assets and on such terms and conditions as may be decided upon by the Sabha."

(Clause (iii) added by amendment of the Memorandum of Association with effect from 26-9-2004)

4. The Ad