Interpretation of phrase "any other object of public utility not involving the carrying on of any activity for profit". - Income Tax - 1232/CBDT

INSTRUCTION NO. 1232/CBDT Dated : January 27, 1979 Section(s) Referred: 11 ,2(15) Statute: Income - Tax Act, 1961 The taxation of charitable trusts has undergone a radical change with the decision of the Supreme Court in the case of Lok Shikshana Trust (101-ITR 234). The Supreme Court has, in this decision, given a restrictive interpretation of the phrase "any other object of public utility not involving the carrying on of any activity for profit", occuring in the definition of "charitable purpose" contained in sec.2(15) of the I.T.Act, 1961. 2. Representations have been received by the Board that with the pronouncement of this Decision, charitable trusts which have been running charitable activities involving commercial activities have been held to be disentitled to the exemption available u/s.11. Consequently, these trusts have been put in a position wherein they would have to pay large amount of taxes. 3. The Direct Tax Laws Committee has in its interim report recommended legislative amendment to delete the words "not involving the carrying on of any activity of profits" occuring in sec.2(15). The recommendations of the Direct Tax Laws Committee are under consideration of Government. 4. Pending a decision on the recommendations of the Committee, it is desired that assessments of charitable trusts wherein the application of the Supreme Courts decision in the case of Lok Shikshana Trust would come in, may not be made if it would result in denial of the exemption u/s.11 and consequent creation of income-tax demands on these trusts. This is of course subject to no case being allowed to get barred by limitation.