2016 (11) TMI 1380 - HC - Income Tax

Applicability of proviso to Section 2(15) to deny the benefit of Section 11 - Held that - The assessee was a recipient of research and training grant and other income to the tune of ₹ 1.36 crores. The Assessing Officer (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 judgment in the case of India Trade Promotion Organisation vs Director General of Income Tax (2015 (1) TMI 928 - DELHI HIGH COURT) which had observed that 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. This court notices that the reasoning in India Trade Promotion Organisation (supra) has been affirmed and applied in several other judgments, therefore, no question of law arises.

Summary

The High Court of Delhi dismissed the appeal regarding the Income Tax Appellate Tribunal's decision on Section 11 benefits. The Tribunal held that the proviso to Section 2(15) was not applicable, allowing the assessee to benefit from Section 11. The court cited a previous judgment and affirmed that as long as the main activity is not business, incidental income does not disqualify for exemption.