Charitable purpose – Exemption – Sections 2(15), proviso, 11 – A. Y. 2009-10 – Object of trust to provide training to needy women in order to equip or train them in skills and make them self reliant – Nursing training provided at centre of Trust free of cost – Occasional sales or generation of funds for furthering objects but not indicative of trade, commerce or business – Proviso to section 2(15) not applicable – Trust entitled to exemption

The assessee-trust formed to carry out the object of education and development of natural talents of people having special skill, more particularly women. It trained them to earn while learning. It educated them in the field of catering, stitching, toy making, etc. While giving them training, it used material brought from the open market. In the process some finished product such as pickles, jam, etc., were produced and which the assessee sold through shops, exhibitions and personal contacts. The Director of Income-tax held that the assessee has shown sales to the tune of 69,72,052/-. He accordingly held that the proviso to section 2(15) is applicable and hence the assessee was not entitled to exemption. The Tribunal found that the motive of the assessee was not the generation of profit but to provide training to needy women in order to equip or train them in these fields and make them self confident and self reliant. The Tribunal took the view that occasional sales or the trusts own fund generation were for furthering the objects but not indicative of trade, commerce or business. The proviso did not apply. The Tribunal held that the assessee is entitled to exemption.

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

“i) Considering the fact that the trust had been set up and was functional for the past several decades and it had not deviated or departed from any of its stated objects and purpose, utilisation of the income, if at all generated, did not indicate the carrying on of any trade, commerce or business.

ii) The Tribunal’s view was to be upheld. The view was taken on an overall consideration and bearing in mind the functions and activities of the trust. In such circumstances it was not vitiated by any error of law apparent on the face of the record.”