The assessee was a recipient of research and training grant and other income to the tune of Rs. 1.36 crores. The AO determined that the latter were commercial receipts and guided by proviso to Section 2(15) and held that the assessee could not avail the benefit under section 11(23) of the Act. The ITAT relied upon the judgement in the case of India Trade Promotion Organisation vs. Director General of Income Tax (2015) 371 ITR 333 which had observed that as long as the predominant activity of an institution is not business or commerce, and that the so called suspect income is derived on the basis of some subsidiary or incidental activity, the exemption cannot be denied.
Relevant Extract of the Judgment
3. During the course of hearing, the Ld. Counsel for the assessee, at the very outset stated that on the similar issues, the appeals of the assessee were allowed by the ITAT vide Order dated 27.5.2016 passed in ITA No. 2657/Del/2013 for the assessment year 2009-10 wherein it has been held that “invocation of proviso to section 2(15) of the Act to deny claim of exemption under section 11 and 12 of the Act is not justified. Accordingly, grounds of appeal are allowed.” It was further submitted that the said Order of the ITAT has been affirmed by the Hon’ble Jurisdictional High Court. Ld. A.R. of the Assessee has filed a small Paper Book enclosing therewith the copy of the aforesaid orders for record.
