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The Tax Publishers2020 TaxPub(DT) 2726 (Bang-Trib) INCOME TAX ACT, 1961
Section 2(15)
Since activities from which assessee trust derived income were inherent part of main object of assessee being charitable in nature proviso to section 2(15) was therefore not applicable to the case of assessee and assessee was entitled to the benefits of section 11.
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Charitable trust - Exemption under section 11 - Applicability of proviso to section 2(15) - Assessee earned income on incidental activities
Assessee, a statutory body, constituted under section 5 of Karnataka Industrial Areas assessee, a statutory body, constituted under section 5 of Karnataka Industrial Areas Development Act, 1966 (KIADA) had been provided with special powers for expedition, acquisition of land for industrial and infrastructure purposes in the state of Karnataka. It claimed exemption under section 11. AO noticed that assessee earned income. On disposal of land, sale of application forms, recoveries of fines, penalties, interest, other receipts, rent, fofeiture of deposits, water supply charges. Accordingly, AO invoked provisio to section 2(15) and thus disallowed exemption. Held: Main aim and object for which assessee was established was to (a) Promote rapid and orderly development of industries in the State in implementation of policies of Government and to Facilitate in establishing infrastructure projects. A look at the income stream of assessee clearly revealed that all the activities from which assessee trust derived income were inherent part of main object of assessee. It was clear that profit making was not the driving force or objective of assessee. Rather purpose for which assessee was created was to regulate and develop drinking water and drainage facilities in the urban areas and for matters connected therewith. This mades it clear that any income generated by assessee did not find its way into the pockets of any individuals or entities. and was utilized fully for the purposes of objects of assessee. Accordingly, proviso to section 2(15) was therefore not applicable to the case of assessee and assessee was entitled to the benefits of section 11.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2012-13
INCOME TAX ACT, 1961
Section 11
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