INCOME TAX ACT, 1961

Section 11 Section 2(15), Proviso

Charitable trust - Exemption under section 11 - Applicability of proviso to section 2(15) - Charging of fee against research work--No profit motive established by AO

Assessee, a research-based charitable organization carrying on research on various issues and providing consultancy on the issues as desired by its clients, claimed exemption under section 11. AO held that assessee was engaged in activities being 'advancement of any other object of general public utility and as assessee was mainly providing research information to its client against amount of fee charged, the activity was in the nature of commerce, trade or business and, therefore, assessee was not entitled for benefit of section 11 in view of proviso to section 2(15).Held: To decide whether any activity is in the nature of the trade, commerce or business, what is to be seen in profit motive involved in the activties. In the instant case, activity of assessee remains same starting from 1963 and there was no change in the activity of society. The society was granted exemption under section 11 for assessment year 2008-09 and CBDT had also granted approval for exemption vide Notification No. 82/2010, dated 20-10-2010. Merely because assessee received some fees for research and project work, it did not mean that assessee was involved in commercial business activity especially when fee received by the assessee was exorbitant and excessive than the cost incurred by assessee or AO had not able to substantiate that activity of assessee were carried out with any profit motive, therefore, assessee duly engaged in charitbale activity was entitled for exemption under section 11.

Relied:ICAI v. DGIT (2012) 347 ITR 99 (Delhi) : 2012 TaxPub(DT) 253 (Del-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2009-10 & 2011-12

INCOME TAX ACT, 1961

Section 5

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