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2021 (10) TMI 728 - ITAT BANGALOREExemption u/s 11 - Denial of exemption as assessee is into providing buses on hire for excursion, wedding, pilgrimage etc., to general public and charges for such letting are collected on commercial basis - whether the CIT(A) was justified in coming to the conclusion that the assessee’s activities do not fall within the ambit of the proviso to section 2(15)? - As per AO Assessee carries on activities which are akin to business venture rather than charitable organization - Revenue from operations and miscellaneous income and these incomes included income from streams which were commercial in nature - HELD THAT:- Assessee is a statutory corporation established under the RTC Act, 1950. It is not driven b profit motive but is for providing transportation facilities to members of the public. The State Government fixes fares for travel by public. Buses ply in areas even where it is not economically viable. Sec.18 of the RTC Act, 1950 lays down duties of the corporation which is to provide, secure and promote efficient, adequate, economical and properly coordinated system of road transport services in the State of Karnataka. Sec.22 of the RTC Act, 1950 lays down that the corporation should act on business principles in the sense it has to recover the cost of services rendered to the public which means that it cannot provide service free of cost. Sec.30 of the RTC Act, 1950 provides how profits of the corporation shall be disposed and it lays down that the same shall be used only for road development. As seen from the various provisions of the RTC Act, 1950 which we have set out in the earlier part of the order that the dominant and prime objective of the Assessee is not profit making. Prior to the introduction of the proviso to Section 2(15) of the Act, there was no dispute that the Assessee was established for charitable purposes. The stream of traffic revenue and non traffic revenue by itself would demonstrate that the Assessee does not exist for profit. Assessee does not driven primarily by desire or motive to earn profits but to do charity through advancement of an object of general public utility. The proviso to Sec.2(15) of the Act is therefore not applicable to the case of the Assessee. We therefore concur with the view of the CIT(A) and hold that the Assessee is entitled to the benefits of Sec.11 - Decided in favour of assessee.
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