Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2021 (10) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (10) TMI 1051 - AT - Income TaxExemption u/s.11 - Charitable activity u/s 2(15) - assessee is a registered entity u/s 25 of The Companies Act, 1956 and holds valid registration u/s 12AA since the year 2005 and hitherto allowed exemption u/s 11 / 12 as applicable to a charitable trust - AO denied the same in this year by holding that the assessee collected maintenance charges, track rent and earned income from other sources which would be in the nature of commercial receipts and therefore, the activities were hit by proviso to Sec. 2(15) - HELD THAT:- As in INDIA TRADE PROMOTION ORGANIZATION VERSUS DIRECTOR GENERAL OF INCOME TAX (EXEMPTIONS) & OTHERS [2015 (1) TMI 928 - DELHI HIGH COURT] if the institution is not driven primarily by a desire or motive to earn profits, but to do charity through the advancement of an object of general public utility, it would be an institution established for charitable purposes. It was also observed that merely because a fee or some other consideration is collected or received by the assessee, it would not lose its character of having been established for a charitable purpose. The dominant activity of the assessee was to be examined. If it was not business, trade or commerce then any such incidental or ancillary activity would also not fall within the categories of business, trade or commerce. Hon’ble Allahabad High Court in CIT V/s Lucknow Development Authority [2013 (9) TMI 570 - ALLAHABAD HIGH COURT] has held that where a trust is carrying on its activities for the fulfillment of its aims and objectives which are of charitable in nature with no motive to earn profit and in the process, earns some profit, the same would not be hit by proviso to Section 2(15). Thus, it is fairly settled legal position that it is the pre-dominant objective which would be relevant to examine the applicability of proviso to Sec.2(15). The Ld. CIT(A) after examining the primary objects of the assessee as well as the purpose for which it was established, came to a conclusion that the primary objective was charitable in nature and collection of fees was not to earn profit. Therefore, the assessee did not cease to be charitable in character so as to render it ineligible to claim benefits u/s 11 and 12. We concur with these findings of Ld. CIT(A) and consequently, dismiss the revenue’s appeals for all the years.
|