47 Charitable purpose – Charitable institution – Exemption u/s. 11 r.w.s. 2(15) – A. Ys. 2010-11 and 2011-12 – Society created by RBI to assist banks and financial institutions – Finding by Tribunal that assessee carried out an object of general public utility and was not engaged in trade – Assessee entitled to exemption

The assessee was a society registered at the instance of the Reserve Bank of India (RBI) for the purpose of assisting banks and financial institutions, for the improvement of their performance. The assessee also offered M. Tech courses and Ph. D degrees in banking. It claimed exemption u/s. 11 of the Act, for the A. Ys. 2010-11 and 2011-12. The Assessing Officer rejected the claim. The Tribunal found that the assesee was carrying out an object of general public utility. It held that the assessee was not carrying on an activity in the nature of any trade, commerce or business. The Tribunal also pointed out that the charging of a fee by the assessee was not with profit motive and that therefore, merely because the assessee derived income it could not be held to be carrying on an activity in the nature of trade, commerce or business. It granted the exemption to the assessee. On appeal by the Revenue, the Telangana and Andhra Pradesh High Court upheld the decision of the Tribunal and held as under:

“i)    The assessee was created by the Reserve Bank of India for the improvement of the performance of banks and the financial sector of the country, ultimately to have a bearing upon the economy of the country. Hence it was an institution established for an object of public utility.

ii)    The Tribunal had found that it was not carrying on any activity in the nature of trade. It was therefore entitled to exemption u/s. 11 for the A. Ys. 2010-11 and 2011-12.”