INCOME TAX ACT, 12961

Section 11

Charitable trust - Exemption under section 11 - AO alleging activities of assessee as hybrid partly covered by section 11 read with section 2(15) and partly by principle of mutuality - Assessee not having generated any surpluses from anyone of members or non-members

Assessee-trust claimed exemption under section 11. AO held that activities of assessee were hybrid in nature, partly covered by section 11 read with section 2(15) and partly by princple of mutuality and since assessee was not maintianing separate books of account, income could not be bifurcated under principle of mutuality or otherwise and entire surplus in I & E account was taxable income of assessee. Held: As assessee was registered as 'Charitable Trust', its income could not be computed on principle of mutuality and was required to be computed under sections 11, 12 and 13. Tribunal had also given finding of fact that assessee had not generated any surplus for anyone- members/non-members. Its activities were geared towards providing services for its members with bulk of expenditure going towards maintaining complex. Assessee had not claimed partial relief as a charitable organization and partly as a mutual association. Since activities of assessee were held to be charitable, plea of principal of mutuality became superfluous and accordingly, there was no ground to disentitle assessee to benefits of section 2(15) read with section 11.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2012-13

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