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2015 (9) TMI 845 - AT - Income TaxEntitlement to exemption u/s 11 and 12 and section 10(23C)(iiiab) - engagement in manufacturing activity - CIT(A)-I held that the A.O. has erred in applying first proviso to section 2(15) to the case of the appellant trust and taxing the exempt income under section 10(23C)(iiiab). - Held that:- Once the activities of the Assessee are educational and medical in nature, the considerations of element of business activity and profit motives embedded therein etc. are rendered wholly irrelevant under S. 2(15) of the Act. The Assessee trust has been granted registration u/s 12A of the Act by the revenue on the basis of the object clauses. The activities carried out by the Assessee are not found by the Revenue to be ultra vires the objects. It is true that merely because the CIT has granted registration u/s 12A will not by itself preclude the AO from examining compliance u/s 11 of the Act. However, in the present case, no cogent case of non compliance has been made out. Merely because some manufacturing activities in the nature of alleged business activities are involved, this will not change the character of activity. The Assessee has demonstrated as to how these allied manufacturing activity has assisted its key objects in the area of education and medical reliefs. The receipts from manufacturing activities have been admittedly applied towards the objects of the trust. Therefore, in our considered view, manufacturing activity allied to education and medial reliefs etc. resulting in profits is no handicap for holding the activities to be charitable in nature under section 2(15) of the Act irrespective of fact that it may involve carrying on of commercial activities provided income from such activities are utilized towards charitable purposes. This view is also fortified by the CBDT Circular no. 11/2008 dated 19/12/2008. The very definition of ‘charitable purpose’ under S. 2(15) is inclusive in nature and not mutually exclusive. The Assessee is entitled to relief in any of the sub clause dehors the relief for other activity available under other sub clause. The stand of the Assessee that the receipts from manufacturing activity has been applied for furtherance of the principle objects also remains uncontroverted. As a logical corollary, the activities in question are not for the purposes of profit as contemplated in S. 10(23C) (iiiab) & (iiiac) of the Act. The case laws relied upon the Revenue are distinguishable on facts since the profits from manufacturing activity has been applied in the proceedings for larger object of charitable nature of education and medical relief. In the absence any other plea to vacate the order of CIT(A) granting relief on this issue, We find no reason to interfere with the order of the learned CIT(A). - Decided against revenue.
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