Law:

Section:

Section 13, read with section 11, of the Income-tax Act, 1961 - Charitable or religious trust - Denial of exemption - Assessment years 1981-82 to 1983-84 - Assessee was a public charitable trust which was carrying on business of manufacturing safety matches - Main object of assessee-trust was to provide relief to poor by way of establishing and maintaining hospitals, schools, etc. - Assessee-trust claimed exemption under section 11 - Assessing Officer held that assessee was not entitled to exemption under section 11 on ground that case came within purview of section 13(1)(bb) - Commissioner (Appeals) as well as Tribunal held that assessee-trust was entitled to exemption under section 11 as a charitable turst - Whether since in instant case, business carried on by assessee was not in course of actual accomplishment of primary object of trust, assessee would be hit by provision of section 13(1)(bb) and would not be entitled to benefit of section 11 - Held, yes FACTS The assessee was a public charitable trust, carrying on the business of manufacturing safety matches. The main object of the assessee-trust was to provide relief to the poor, by way of establishing and maintaining hospitals, schools, etc. The assessee claimed exemption under section 11. The Assessing Officer held that the assessee was not entitled to the exemption under section 11, on the ground that the case would come within the purview of section 13(1)(bb). The Commissioner (Appeals) as well as the Tribunal held that the assessee-trust was entitled to exemption under section 11 as a charitable trust. On revenue's appeal : HELD The provision of section 13(1)(bb ) is clearly attracted to the instant case. The scope of the said section was considered in the decision of the Supreme Court in the case of Asstt. CIT v. Thanthi Trust [2001] 247 ITR 785/ 115 Taxman 126 , in which it was held that the requirement of section 13(1)(bb) is that the exemption under section 11 will not be available to such a trust that carries on any business, unless the business is carried on in the course of actual accomplishment of a primary purpose of the trust. The business must, therefore, be carried on in the course of the…

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