INCOME TAX ACT, 1961

Section 11

Charitable trust - Exemption under section 11 - Applicability of proviso to section 2(15) - Collection of cess and fees by urban development authority incidental to its main object

Assessee-urban development authority engaged in Area Development and Town Planning claimed deduction under section 11. AO held that on account of assessee having collected cess and fee, proviso to section 2(15) got attracted and, therefore, assessee was not entitled for exemption. Held: Assessee was established/constituted under provisions of the Gujarat Town Planning Act and profit making was neither the aim nor object of assessee. It was not the principal activity and collection of fees and cess was incidental to the object and purpose of said Act. Merely because while carrying out activities for the purpose of achieving the objects of general public utility certain incidental surpluses were generated, that would not render the activity in the nature of trade, commerce or business. Accordingly, proviso to section 2(15) did not get attracted and assessee was, therefore, entitled to exemption under section 11.

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2012-13

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