INCOME TAX ACT, 1961

Section 2(15), Proviso

Charitable trust - Exemption under section 11 - Applicability of proviso to section 2(15) - Collection of cess and fee incidental to main object being charitable in nature

Assessee-trust was engaged in urban development and town planning claimed exemption under section 11. AO noticed that as assessee charged various types of fees from public for providing certain amenities, i.e., roads, bridges, development charges, registration fee, etc., therefore, activities of assessee were in the nature of trade/commerce/business and therefore, assessee was not entitled to exemption in view of proviso to section 2(15). Held: Main object of assessee was advancement of object of general public utility and profit making was neither aim nor object of the Trust. It was not the principal activity. Merely because assessee collected fees and cess incidental to the main object being charitable in nature, proviso to section 2(15) did not get attracted to assessee's case and, therefore, denial of exemption under section 11 was not justified.

Relied:Indian Trade Promotion Organization v. Director of IT (Exemption) in WP(C) No. 1872 of 2013, decided on 22-1-2015 and CIT v. Jodhpur Development Authority, Jodhpur TA No. 63 of 2012, decided on 5-7-2016 : 2016 TaxPub(DT) 3870 (Raj-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2013-14

INCOME TAX ACT, 1961

Section 11

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