Vanita Samaj Vs ITO (Exemption) (ITAT Mumbai)
The Mumbai Bench of the Income Tax Appellate Tribunal allowed the appeals filed by a charitable trust for Assessment Years 2014–15 and 2015–16 and held that exemption under Section 11 of the Income-tax Act could not be denied merely because the trust earned receipts from hall rentals, decorator royalty, flour mill operations, and other incidental activities.
The assessee was a trust registered under the Bombay Public Trust Act and also registered under Section 12A of the Income-tax Act. It had filed returns declaring nil income after claiming exemption under Section 11. During scrutiny assessment proceedings, the Assessing Officer examined the activities of the trust and observed that it earned substantial receipts from hall letting, decorator royalty, flour mill operations, and similar activities. According to the Assessing Officer, these activities were carried out regularly and systematically and therefore constituted trade, commerce, or business activities.
The assessee contended that it was engaged in charitable activities for public welfare and that the receipts were only incidental to its charitable objects. It argued that there was no profit motive and that the income had been applied towards charitable purposes. However, the Assessing Officer invoked the proviso to Section 2(15) and Section 13(8) of the Act, holding that the assessee fell within the category of “advancement of any other object of general public utility” and was engaged in commercial activities for consideration. As a result, exemption under Section 11 was denied and income was assessed under normal provisions for both assessment years.
