Proviso to sec. 2(15) conditions to be fulfilled as publishing advertisement intrinsically linked with activity of trust

Media Research Users Council Vs ADIT (ITAT Mumbai)

ITAT Mumbai held that the activity of the trust for publishing advertising in the newspaper is intrinsically linked for newspaper activity falls within the ambit of sub-clause (i) of Subsection 2(15) and conditions imposed in sub-clause (ii) of the proviso has to be fulfilled.

Facts- Present appeal is filed contesting that CIT(A) has erred in law and in facts in confirming the denial of exemption u/s.11 of the Act by the AO by invoking proviso to Section 2(15) and denying the exemption u/s11, despite assessee being registered u/s.12A.

AO held that the second proviso to Section 2(15) clearly provides that if the aggregate value of the receipts from the activities exceeds Rs.10 lakhs, then where the object is any other object of general public utility, shall not be a charitable purpose. Here, the gross receipts of the assessee is more than Rs.10 lakhs and therefore, assessee has to be considered as non-charitable organization and accordingly, he denied the benefit of exemption u/s.11.

Conclusion- Held that concept of pure charity i.e. the performance of an activity without consideration is not envisioned under the Act, however, as long as GPUs object involves activities which also generates profits, it can be granted exemption provided the quantitative limit under second proviso to Section 2(15) for receipts from such profits, was adhered to.

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