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2016 (5) TMI 361 - AT - Income TaxExemption u/s 11 - whether miscellaneous income earned by the assessee can be considered as receipts from rendering services, in relation to trade, commerce or business, as specified in the proviso to section 2(15)? - Held that:- Activity carried on business principles does not mean that the assessee was carrying on business. It is clear from material on record that all activities of the assessee are directed towards achieving its main object of promoting export on ready made garments from India. It did not carry any activity for earning profit and, therefore, it has to be held that the assessee did not carry on ‘business’ as the term is understood in common parlance. The assessee, therefore, is a public charitable institute. For the purpose of granting exemption, the dominant or min object is to be seen even if it is found that at some point of time the persons at the helm of affairs did not observe rules and acted in a manner not authorized by rules that would not make any difference to the claim of the assessee. A breach of a duty by public or private holder of an office cannot change the character of office or institution. Thus even if it is proved that certain favours were done by the Executive Committee in allotment of quota that would not make the assessee a non-charitable institution. For all the above reasons, we hold that assessee is a charitable institution to which provisions of section11 are applicable. The provisions of section 28(iii) or of s.11(4A) are not applicable to this case as the assessee did not carry on any business. The objects of the assessee are charitable in nature and that the assessee did not carry on any activity with an object to carry profit. As there is no profit motive, the question of attracting the proviso to section 2(15) does not arise - Decided in favour of assessee.
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