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2016 (5) TMI 812 - AT - Income TaxExemption under section 11 denied - assessee is registered under section 12AA - nature of object - Held that:- Definitely the object of the society contains sale and purchase as one of its objects, still the ultimate object is not to give benefit to some specific person. Nowhere in his order, the Assessing Officer has been able to bring on record any material or evidence that the assessee is carrying on any activity which is driven by object of profit making. The assessee manufactures articles as required by the Government and sell those to the Government concern only. Another fact coming out from the order of the Assessing Officer that the assessee is making sales to the concern which was less than market rate, this fact also strengthens the case of the assessee that it is not driven by profit motive. No allegation of violation of any provision of section 13 of the Act is coming out from the order of the Assessing Officer nor it was contended before us. If the assessee does not do the activity of sale and purchase, it will come to a standstill and will not be able to work and the objects for which registration was granted to it will cease to exist. In order to attain its objects it has to in any case, carry on activities of sale and purchase. In this view, we do not find that the activities of sale and purchase which have been questioned by the Assessing Officer have been carried on by the assessee with the objective to earn profit. Once it is seen that the object of the assessee is not to carrying on the business for profit motive, we can very easily infer that whatever activities in the nature of business the assessee is carrying are all incidental to attainment of its main object. In such a scenario, the provisions of section 11(4A) of the Act comes into play and the assessee has to maintain separate books of account for said business. However, in the present case, the assessee is carrying all its activities out of grants received by the Government, therefore, there cannot be two separate set of books. This fact has not been controverted by the Assessing Officer, nor the learned D.R. while arguing before us, does the same. In view of the above, as per the proposition laid down by the Delhi High Court in the case of India Trade Promotion Organization (2015 (1) TMI 928 - DELHI HIGH COURT ), the case of the assessee is not hit by the proviso to section 2(15) of the Act. Therefore, for the assessment year under consideration, the assessee is eligible for exemption under section 11 of the Act. - Decided in favour of assessee.
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