INCOME TAX ACT, 1961

Section 2(15), Proviso Section 11

Charitable trust - Exemption under section 11 - Applicability of proviso to section 2(15) - Collection of cess fee incidental to object of advancement of objects of general public utility

Assessee-Urban development authority engaged in the Area Development and Town Planning and carrying out the activity of general public utility claimed exemption under section 11. AO held that on account of collection of cess and fee, proviso to section 2(15) got attracted to assessee's case and, therefore, assessee was not entitled to exemption. Held: Assessee was established/constituted under the provisions of the Gujarat Town Planning Act and collection of fees and cess was incidental to the object and purpose of the Act. Profit making was neither the aim nor object of the Trust. It was not the principal activity. Merely because while carrying out the activities for the purpose of achieving the objects of general public utility, certain incidental surpluses were generated, same would not render the activity in the nature of trade, commerce or business. Accordingly proviso to section 2(15) did not get attracted and assessee was entitled to exemption under section 11.

Followed:Ahmedabad Urban Development Authority v. Asstt. CIT (2017) 396 ITR 323 (Guj) : 2017 TaxPub(DT) 1863 (Guj-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2011-12

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