Delhi High Court allows Income Tax Exemption to Charitable Society running Printing Press and uses Profit so generated for Charitable Purposes [Read Judgment]

The Delhi High Court allowed the Income Tax Exemption to Charitable Society running printing presses and using the profit generated for charitable purposes.

The assessee, Servants of People Society is a charitable institution, and mere receipt of fees and income, etc. cannot be said that the assessee is involved in any trade, commerce, or business. The assessee is carrying the mandate of the Will of Late Gopa Bandhu Dass in running the printing press and the newspaper and the income so generated is used for charitable purposes and apparently, there is no profit motive in the activities of the assessee and as such it cannot be said that the assessee is involved in any trade, commerce or business and as such the mischief of the Proviso of section 2(15) is not apparently attracted.

The appellant stated that the ITAT erred in allowing the benefit of exemption under Section 11 of the Income Tax Act, 1961 in the facts and circumstances of the present case. He submits that the Tribunal erred in treating the assessee as a charitable institution, even when the activities of the assessee fell under the last limb of Section 2(15) of the Act. He emphasizes that the activities carried out by the assessee yielded income/profit to the society and were commercial in nature.

The division bench of Justice Manmohan and Justice Navin Chawla noted that 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. Consequently, the mischief of Proviso to Section 2(15) of the Act is not attractive.

“The assessee/society is charitable in nature as the profit, if any, made by the assessee/society is being plowed 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,” the court said.

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