Charitable purpose – Exemption u/s. 11 – Management and development programme and consultancy charges part and parcel of Institute of management studies set up by assessee – No element of business in conducting management courses – Surplus funds applied towards attainment of objects of institute – Income generated from giving various halls and properties – Assesse entitled to exemption u/s. 11

The assessee trust set up thirty schools and colleges. The Tribunal held that the management and development programme and consultancy charges were part and parcel of the institute of management studies set up by the assessee. The Tribunal found that the element of business was missing in conducting the management courses and that some surplus was generated which itself was applied towards the attainment of the object of the educational institute and that separate books of account could not be insisted upon. The Tribunal held that the assessee is entitled to exemption u/s. 11.

On appeal by the Revenue, the Bombay High Court upheld the decision of the Tribunal and held as under:

“i) The finding of fact arrived at by the Tribunal could not be termed perverse and it was in consonance with the factual aspect regarding the activities of the trust and the object that it was seeking to achieve.

ii) The letting out of halls for marriages, sale and advertisement rights had not been found to be a regular activity undertaken as a part of business. The income was generated from giving various halls and properties of the institution on rental only on Saturdays and Sundays and on public holidays when they are not required for educational activities, and this could not be said to be a business which was not identical to attainment of the objects of the trust. This being merely an incidental activity and the income derived from it having been used for the educational institute and not for any particular person, and separate books of account having been maintained, this income could not be brought to tax.”