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Issues involved: Interpretation of u/s 2(15) of the Income Tax Act, 1961 regarding charitable purpose and profit-making activities.
The judgment pertains to an appeal regarding the interpretation of the first proviso to Section 2(15) of the Income Tax Act, 1961. The court noted that the legal issue in this appeal is governed by the decision of the Supreme Court in the case of Additional CIT v. Surat Art Silk cloth Manufacturers Association, (1980) 121 ITR 1 (SC). The Supreme Court held that the primary or dominant purpose of a trust or institution must be examined to determine if it is involved in carrying out any activity for profit. If the primary purpose is to carry out an object of general public utility and not for profit, it satisfies the requirements of Section 2(15) of the Act. The court emphasized that profit-making should not be the predominant object of the activity for it to be considered charitable. In a previous decision, the court had established that the dominant purpose and objective of the Institute of Chartered Accountants of India is to regulate the profession of chartered accountants in India. The institute conducts entrance examinations, regulates member conduct, and sets accountancy standards. While the institute provides coaching facilities for members and clerks, these activities are aimed at maintaining professional standards and promoting accountancy as a preferred profession. The court noted that there was no finding by the assessing officer that the institute's primary objective was to generate profit from these activities. Based on the above considerations, the court found no merit in the appeal and dismissed it in limine.
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