INCOME TAX ACT, 1961

Section 11

Charitable trust - Exemption under section 11 - Assessee established with the main object of improving Public Transport System - Allegation that 'Revenue from Test Laboratory' and 'Consultancy Receipts' which were commercial in nature

Assessee was an apex coordinating body of all Nationalized State Road Transport Corporation working under the Ministry of Road Transport and Highways. It was established with the main object of improving Public transport system in country. Exemption under section 11 was sought to be denied to assessee on allegation that it received 'Revenue from Test Laboratory' and 'Consultancy Receipts' which were commercial in nature.Held: There was evidence and material to show that activity were carried out on sound and recognized business principles and persuaded with reasonable continuity then it would constitute business even if there is no profit motive as we have already noted that in assessee's own case for assessment year 1989-90, 1990-91 and 1993-94. It was held that the aims and objects of the assessee were to render common services to members and assist them in such matters as standardization of equipment, purchase of materials for thereon use at economical prices, promotional efficiency of Road Transport Services and deduction is operational cost of member State Road Transport Undertakings are the activities of charitable purpose towards promotion of main objects set out in the Memorandum of Association of the assessee association. Thus, in absence of any substantial allegation or incriminating material, it could not be accepted that assessee association was conducting these activities with the main object of earning profits. In instant case, activities of the assessee's association could not be termed either 'trade', ''commerce' or 'business' simply because assessee association was receiving some charges or fees for rendering services on non-commercial principles to State Road Transport Undertakings and other concern members for a fee or charges.

REFERRED : India Trade Promotion Organization v. Director General of Income Tax (Exemptions) & Ors. 2015 TaxPub(DT) 623 (Del-HC), Institute of Chartered Accountants of India & Anr. v. Director General of IT (Exemptions), Delhi & Ors. (2013) 358 ITR 91 (Del-HC) : 2013 TaxPub(DT) 2666 (Del-HC), Institute of Chartered Accountants of India and Anr. v. Director General of Income Tax (Exemptions) & Ors. (2012) 347 ITR 99 (Del-HC) : 2012 TaxPub(DT) 253 (Del-HC), CIT v. Truck Operators Association 2010 TaxPub(DT) 2183 (P&H-HC), Association Of State Road Transport Undertakings. v. Dy. CIT (E). 2001 TaxPub(DT) 0975 (Del-Trib) and Director General of Income Tax (Exemptions) v. India Trade Promotion Organization 2017 TaxPub(DT) 3992 (SC).

FAVOUR : In assessee's favour.

A.Y. : 2013-14 & 2014-15

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