Income earned by trust from business activities eligible for exemption if primary objects were charitable

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HIGH COURT OF MADRAS

Commissioner of Income-tax, Madurai

v.

Janakiammal Ayyanadar Charitable Trust

Tax Case (Appeal) Nos. 1566 & 1567 of 2005

Date of Pronouncement – September 18, 2012

 

Even though the Tribunal had not given any finding as regards the primary purpose, yet a reading of the order of the Assessing Officer shows that he had considered the clauses in the trust deed to arrive at the finding that the primary objects of the trust are charitable in nature and that the property given was impressed with the character of trust property. Having held so the Assessing Officer nevertheless pointed out that there was no evidence to hold that the business of manufacture and sale of paper caps carried on by the trust was in the course of the actual carrying on of the primary objects. Hence, the trust was not entitled to claim exemption under section 11. With the finding of fact arrived at by the Assessing Officer that the primary objects of the trust were charitable in nature, in the face of sections 2(15) and 11(4A) read with section 13(1)(bb) the assessee was eligible for exemption.