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2022 (8) TMI 1400 - HC - Income TaxExemption u/s 11 - exemption disallowed on the ground that registration u/s 12AA granted to the assessee stood cancelled - what's the charitable nature of activities carried out by assessee in terms of Section 2(15)? - Tribunal restored the registration of assessee u/s 12 AA considering the nature of activity of assessee is charitable and it is not hit by proviso of Section 2(15) - HELD THAT:- Grant of registration u/s 12 AA to Development Authority like the present respondent assessee, was considered in Hapur Pilkhuwa Development Authority [2016 (8) TMI 1305 - ALLAHABAD HIGH COURT] as held For the applicability of proviso to Section 2(15), the activities of the trust should be carried out on commercial lines with intention to make profit. Where the trust is carrying out its activities on noncommercial lines with no motive to earn profits, for fulfillment of its aims and objectives, which are charitable in nature and in the process earn some profits, the same would not be hit by proviso to section 2(15). The aims and objects of the assessee-trust are admittedly charitable in nature. Mere selling some product at a profit will not ipso facto hit assessee by applying proviso to Section 2(15) and deny exemption available under Section 11. The intention of the trustees and the manner in which the activities of the charitable trust institution are undertaken are highly relevant to decide the issue of applicability of proviso to Section 2(15). The proviso to Section 2(15) is not applicable to the facts and circumstances of the case, and the assessee was entitled to exemption provided under Section 11 for the relevant assessment year. Another statutory body, namely, Krishi Utpadan Mandi Samiti constituted under U.P. Krishi Utpadan Mandi Adhiniyam, 1964 was also registered under Section 12AA and the question whether amount transferred to Mandi Parishad would constitute application of income for 'charitable purpose' under Section 11(1)(a) of Act, 1961 has been decided against Revenue by Supreme Court in Commissioner of Income Tax Vs. Krishi Utpadan Mandi Samiti [2012 (10) TMI 26 - SUPREME COURT] wherein Court has also confirmed this Court's judgment [2009 (12) TMI 14 - HIGH COURT OF ALLAHABAD] No substantial question of law is involved in the impugned order of the Tribunal. Decided against revenue.
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