No Withdrawal of Income Tax Exemption even if Society Charges Fees during Charitable Activities : High Court

Income Tax Exemption if Society Charges Fees during Charitable Activities

Facts of the Case

The assesse is a charitable institution and whether charitable exemption can be withdrawn because society receives fees and thus the assessee is involved in any trade, commerce or business.

Held by High Court

Mere receipt of fee or charge cannot be said that the assessee is involved in any trade, commerce or business

Income Tax Act does not exclude entities which are essentially for charitable purpose but are conducting some activities for a consideration or a fee.

Income Tax Act only exclude organizations which are carrying on regular business with profit motive with intent to distribute the profit to the shareholders/owners.

The assessee/society is running a printing press and publishing a newspaper. The profit so generated is used for charitable purposes and apparently there is no profit motive in the activities of the assessee. As such it cannot be said that the assessee is involved in any trade, commerce or business.

The assessee/society is charitable in nature as the profit, if any, made by the assessee/society is being ploughed back for charitable activities. Further, the appellant itself has granted the assessee registration under Section 12A, recognition under Section 10(23C)(vi) and Exemption under Section 80G of the Act.

Thus  the assessee/society does not carry on any business, trade or commerce with the intent of earning and distributing profit.