INCOME TAX ACT, 1961

Section 2(15), Proviso

Charitable trust - Exemption under section 11 - Applicability of proviso to section 2(15) - Selling of plots and premises by Town Improvement Trust

Assessee, town improvement trust claimed exemption under section 11. AO denied exemption on the ground that assessee carried on business of sale and purchase of residential plots and commercial properties and earned huge net profit which did not fall within the ambit of advancement of any other object of general public utility under section 2(15).Held: Selling of plots and premises by assessee trust was only incidental and ancillary to its main purpose, i.e, 'town improvement' in almost every respect. Even where plots were developed and premises were constructed and sold at the market price, the activity was not commercial or business venture per se but one necessitated on account of the implementation of the provisions of trust through statutory schemes. The main purpose of such schemes is driven by public requirements and not as a commercial venture per se. They were incidental to the main object of trust and mere profit making on account of certain incidental or ancillary activities of the trust did not disentitle assessee to exemption under section 11.

REFERRED :

FAVOUR : In assessee's favour.

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

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