INCOME TAX ACT, 1961

Section 2(15), Proviso 11

Charitable trust - Exemption under section 11 - Applicability of proviso to section 2(15) - Income earned from activity incidental to attachment of dominant charitable object

Assessee was a trust registered under section 12A having objects of promotion of sports, games and recreation facilities to public at large and for the physical development and healthy life style as well as promotion of other charitable objects. It claimed exemption under section 11. AO took the view that since assessee derived income by way of receipts from its members, viz., membership fee, entrance fee, identity card fee, locker rent, resevation charges, etc., proviso to section 2(15) got attracted to assessee's case and, therefore, no exemption could be allowed.Held: Dominant object of assessee was undoubtedly promotion of sports, games and providing recreation facilities to public at large and to members in particular and, therefore, mere receipts on account of compensation from decorator against gymkhana function, miscellaneous income and compensation from caterer (restaurant) could not be construed as activities in the naure of trade, commerce or business for the purpose of proviso to section 2(15) as income under the above heads was earned only as activity incidental to dominant activity of the trust. Also there was no charge or allegation against assessee at any stage that there was application of income for any purpose other than object of the trust, therefore, denial of exemption was not justified.

Followed:DIT (Exemptions) v. Shri Vile Parle Kelavani Mandal, (2015) 378 ITR 593 (Bom) : 2015 TaxPub(DT) 4996 (Bom-HC), DIT (Exemptions) v. Shree Nashik Panchvati Panjrapole, (2017) 397 ITR 501 (Bom) : 2017 TaxPub(DT) 1508 (Bom-HC) and Addl.CIT v. Surat Art Silk Cloth Manufacturers Association, (1980) 121 ITR 1 (SC) : 1980 TaxPub(DT) 848 (SC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

SUBSCRIBE FOR FULL CONTENT