Dy. CIT v. Semi Conductor Laboratory, Deptt. of Space, Government of India

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The Tax Publishers2016 TaxPub(DT) 2534 (Chd-Trib) : (2016) 161 ITD 0584 Dy. CIT v. Semi Conductor Laboratory, Deptt. of Space, Government of India INCOME TAX ACT, 1961 --Charitable trust--Exemption under section 11Purchase and sale of articles required by Government--Applicability of proviso to section 2(15)--Where assessee society manufactured articles as required by the Government and sold those to the Government concern only, at a rate less than market rate, which showed that the object of assessee was not to carry on business for profit motive and whatever activities in the nature of business the assessee was carrying on were all incidental to attainment of its main object. Therefore, assessee was eligible for exemption under section 11. --AO was of view that assessee had made certain purchases and sales, therefore, the activities of the society were not of charitable nature and that assessee was not eligible for exemption under section 11. *Held:* Assessee manufactured articles as required by the Government and sold them to the Government concern only. Further, assessee was making sales to the concern which was less than market rate, this fact also strengthened the case of the assessee that it was not driven by profit motive. No allegation of violation of any provision of section 13 was coming out from the order of AO, nor it was contended. Once it was seen that the object of assessee was not to carrying on the business for profit motive then, whatever activities in the nature of business the assessee was carrying on were all incidental to attainment of its main object. In such a scenario, assessee was eligible for exemption under section 11. Income Tax Act, 1961 Section 11 *Relied:*India Trade Promotion Organisation v. Dy. CIT (2015) 371 ITR 333 (Del). *REFERRED :* Khoday Distilleries Ltd. v. State of Karnataka (1995) 1 SCC 574. FAVOUR : In assessee's favour A.Y. : 2010-11 & 2011-12 IN THE ITAT, CHANDIGARH BENCH H.L.KARWA, V.P. & RANO JAIN, A.M. DCIT v. Semi Conductor Laboratory Deptt. Of Space, Government of India ITA No. 151, 858 /Chd/2014 SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2016 TaxPub(DT) 2534 (Chd-Trib) : (2016) 161 ITD 0584

Dy. CIT v. Semi Conductor Laboratory, Deptt. of Space, Government of India

INCOME TAX ACT, 1961

--Charitable trust--Exemption under section 11Purchase and sale of articles required by Government--Applicability of proviso to section 2(15)--Where assessee society manufactured articles as required by the Government and sold those to the Government concern only, at a rate less than market rate, which showed that the object of assessee was not to carry on business for profit motive and whatever activities in the nature of business the assessee was carrying on were all incidental to attainment of its main object. Therefore, assessee was eligible for exemption under section 11. --AO was of view that assessee had made certain purchases and sales, therefore, the activities of the society were not of charitable nature and that assessee was not eligible for exemption under section 11. Held: Assessee manufactured articles as required by the Government and sold them to the Government concern only. Further, assessee was making sales to the concern which was less than market rate, this fact also strengthened the case of the assessee that it was not driven by profit motive. No allegation of violation of any provision of section 13 was coming out from the order of AO, nor it was contended. Once it was seen that the object of assessee was not to carrying on the business for profit motive then, whatever activities in the nature of business the assessee was carrying on were all incidental to attainment of its main object. In such a scenario, assessee was eligible for exemption under section 11.

Income Tax Act, 1961 Section 11

Relied:India Trade Promotion Organisation v. Dy. CIT (2015) 371 ITR 333 (Del).

REFERRED : Khoday Distilleries Ltd. v. State of Karnataka (1995) 1 SCC 574.

FAVOUR : In assessee's favour

A.Y. : 2010-11 & 2011-12

IN THE ITAT, CHANDIGARH BENCH

H.L.KARWA, V.P. & RANO JAIN, A.M.

DCIT v. Semi Conductor Laboratory Deptt. Of Space, Government of India

ITA No. 151, 858 /Chd/2014