ACIT v. Mehrangarh Museum Trust & Vice-versa

INCOME TAX ACT, 1961

--Charitable trust--Charitable purposeApplicability of proviso to section 2(15)--Assessee running museum, charged fee to meet part of cost for rendering services--Where assessee trust was charging fee to use museum and fort run by it, these activities were held as incidental to attainment of main object because charging of fee to meet a part of the cost for rendering charitable services could not result in the services being regarded as business activities and, accordingly, the assessee did not cease to be a charitable institution, notwithstanding proviso to section 2(15).--Assessee trust was settled with the object of setting up a world-class museum for the benefit of public at large and, therefore, assessee had taken on lease, M Fort, for an indefinite period. AO observed that assessee undertook commercial activities such as, allowing filming of movies, permitting hoteliers to host dinners at the Fort and allowing craftsmen to give live demonstration of their activities. AO held that the objects of the assessee fell under head 'advancement of any other object of general public utility' under section 2(15), but since the assessee carried on commercial activities for consideration, in view of the proviso to that section, the assessee was no longer eligible for exemption under section 11. Held: Assessee was engaged in preservation of monuments and articles/ things of historic nature, which was the predominant object of the assessee. The aforesaid activities were incidental to the main object only. Charging of fee to meet a part of the cost for rendering charitable services could not result in the services being regarded as business activities and, accordingly, the assessee did not cease to be a charitable institution, notwithstanding proviso to section 2(15).