Shanti Prime Publication Pvt. Ltd.
Sec. 2(15) of Income-tax Act, 1961— Charitable trust— Merely because while carrying out the activities for the purpose of achieving the objects of the trust, certain incidental surpluses were generated, would not render the activity in the nature of trade, commerce or business.
Facts: Whether Tribunal was right in deleting the orders of AO without acknowledging the fact that once the trust loses its character being hit by the proviso to s. 2(15), the only blanket available to it, was principle of mutuality. Further the Tribunal also failed to appreciate the fact that interest income earned from non-members could neither be exempted from tax under s. 11 as it had lost its charitable character being hit by proviso to s. 2(15) nor could be exempted under the principle of mutuality as the interest income was earned from non-members ?
Held, that Tribunal held that there was no charge or allegation against the assessee at any stage that there was application of income for any purpose other than the object of the trust. Tribunal opined that mere charging of fee ipso facto would not enable an activity to be governed by the proviso to s. 2(15). Tribunal held that object of assessee is undoubtedly promotion of sports, games and providing recreation facilities to the public at large and to the members in particular and therefore receipts on account of compensation from decorator against gymkhana function, miscellaneous income and compensation from caterer (restaurant) cannot be construed as activities in the nature of trade, commerce or business for the purpose of the proviso to s. 2(15). Tribunal has returned a finding of fact on all the counts to the effect that the income under the above heads were earned only as activity incidental to the dominant activity of the trust. Merely because while carrying out the activities for the purpose of achieving the objects of the trust, certain incidental surpluses were generated, would not render the activity in the nature of trade, commerce or business. - CIT V/s MATUNGA GYMKHANA - [2020] 314 CTR 818 (BOM)