INCOME TAX ACT, 1961

Section 11

Charitable trust - Exemption under section 11 - Objects of general public utility -

Assessee-society was engaged in activities of upliftment of the poor, providing training and skill development of the poor in rural areas in the backward districts. Assessee got grant from Central and State Government and from various other organizations. It was allowed benefit of exemption under section 11(1) continuously upto assessment year 2010-11. However, in the assessment year 2011-12, assessee was denied exemption by the AO invoking proviso to section 2(15). CIT(A) allowed the exemption under section 11(1) with all consequential benefits. Held: Assessee was not engaged in any trade, commerce or business and, thus, mischief of proviso of section 2(15) was not attracted in the case of assessee. AO had not brought on record any evidences which could suggest that the activities of the assessee have been carried out with profit motive and also even could not controvert the fact that assessee had not charged any fee from the clients except the cost of project actually incurred. In the sanction letter of grant to the assessee, there was mention of supervision or monitoring of the activities by the donor, but that in itself was not sufficient to hold that any profit motive was involved. CIT(A) following the decision of High Court in case of India Trade Promotion Organization v. DGIT(E) (2015) 53 taxmann.com 404/229 Taxman 347/371 ITR 333 (Delhi) : 2015 TaxPub(DT) 0623 (Del-HC) had rightly decided the issue in favour of assessee.

REFERRED : India Trade Promotion Organization v. DGIT (Exemptions) (2015) 371 ITR 333 (Delhi) : 2015 TaxPub(DT) 0623 (Del-HC) ICAI v. DGIT (Exemptions) (2012) 347 ITR 99 (Delhi) : 2012 TaxPub(DT) 0253 (Del-HC) Radhasoami Satsang v. CIT (1992) 193 ITR 321 (SC) : 1992 TaxPub(DT) 0858 (SC)

FAVOUR : In assessee's favour

A.Y. : 2011-12

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