INCOME TAX ACT, 1961

Section 2(15), Proviso 11

Charitable trust - Exemption under section 11 - Applicability of proviso to section 2(15) - No dominant objective of profit making

Assessee formed under the RTC Act, 1950 to provide economic and efficient transport system to public claimed exemption under section 11. AO held that assessee was involved in activities in the nature of business and was, therefore, not existing for charitable purposes as per proviso to section 2(15) for the reasons that It was providing luxury buses fully air-conditioned on hire for excursion, wedding, pilgrimage, etc., to general public and charges for such letting were collected on commercial basis. Also, assessee was providing advertisements on buses and charging substantial fees and the non-operating revenue was less than non-traffic revenue.Held: Assessee was a statutory corporation established under RTC Act, 1950 and dominant and prime objective of assessee was not profit making. Prior to the introduction of provisio to section 2(15), there was no dispute to the fact that assessee was established for charitable purposes and stream of traffic revenue and non-traffic revenue by itself would demonstrate that assessee did not exist for profit, therefore, proviso to section 2(15) was not applicable to assessee's case and denial of exemption under section 11 was not justified.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2009-10

INCOME TAX ACT, 1961

Section 11

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