The assessee trust's fund-raising program, "Adbhut Hungama," ...

Charitable trust's one-time fundraising event involving donation coupons and lucky draw not considered "business" by tribunal.

Case Laws     Income Tax

November 28, 2024

The assessee trust's fund-raising program, "Adbhut Hungama," involving the sale of donation coupons and a mega lucky draw, was considered a business activity by the CIT(E), leading to the denial of registration u/s 12AB. However, the surplus from this program was utilized for purchasing medical equipment and establishing medical facilities in Gujarat and Rajasthan. The Tribunal held that the one-time fund-raising program cannot be considered an organized business activity akin to selling lottery tickets, and there was no violation of Section 12AB(4). Relying on the Gujarat High Court's decision in United Way of Baroda, the Tribunal ruled that such activities do not amount to "trade," "commerce," or "business" u/s 2(15) proviso. The purpose and dominant object of the institution's activities are material in determining whether they constitute business. The Tribunal set aside the CIT(E)'s order and directed the granting of exemption u/s 12AB. Additionally, the Tribunal clarified that Section 13 provisions can only be invoked during assessment, not at the registration stage u/s 12A, citing the Gujarat High Court's decision in Bayath Kutchhi Dasha Oswal Jain Mahajan Trust.

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