INCOME TAX ACT, 1961

Section 2(15), Proviso 11

Charitable trust - Exemption under section 11 - Applicability of proviso to section 2(15) - No formal and systematic educational function discharged by assessee, rather commercial, in view of receipt on turnkey project basis from RBI

Assessee-company upon being granted licence under section 25 of erstwhile Companies Act, 1956 as a non-profit entity, under membership of National Council of Science Museum (NCSM) an autonomous body, formed under the Ministry of Culture, (Govt. of India), got registered under section 12(A). Being engaged in particular activities of taking up all kinds of museum/science centre projects on turnkey basis assessee claimed exemption under section 11. AO noticed that assessee decided to set up a museum in the premises belonging to Reserve Bank of India at 8, Council House Street in terms of an agreement entered into by and between assessee and the Reserve Bank of India. In fact, assessee became successful bider in an open tender process floated by RBI for setting up said museum project on turnkey basis and hence awarded with said contract for executing the work. Accordingly, AO took the view that assessee being engaged in full-fleded commercial activities during the year was not entitled to exemption under section 11 in view of proviso to section 2(15). Held: Though assessee was a registered concern under section 12A as charitable institution, actual work done by assessee in the year under consideration was not charitable in nature particularly when no formal and systematic educational function was discharged by it, rather commercial, in view of receipt on turnkey project basis, from RBI in lieu of service rendered by assessee. Accordingly, proviso to section 2(15) got attracted and denial of exemption was justified.

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2013-14, 2014-15& 2015-16

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