The Supreme Court held that although the assessee society had historically been treated as a charitable institution and granted exemption under the Income Tax Act, the question of its continued eligibility for exemption in respect of income derived from newspaper publication and advertisement revenue required fresh examination in light of the law laid down in CIT v. Ahmedabad Urban Development Authority. The Court observed that the Appellate Commissioner, the Income Tax Appellate Tribunal, and the High Court had relied on the decision in India Trade Promotion Organisation v. Director General of Income Tax (Exemptions) without considering the subsequent authoritative interpretation of Section 2(15), which clarifies that trusts advancing objects of general public utility may engage in trade, commerce, or business only if such activities are incidental to their charitable objects and the receipts therefrom remain within the prescribed statutory limits. Noting that advertisement revenue constitutes a commercial activity connected with newspaper publication, the Court held that the nature and quantum of such receipts must be scrutinised to determine compliance with the proviso to Section 2(15). Accordingly, the appeal filed by the Revenue was partly allowed, and the matter was remitted to the Assessing Officer for a fresh determination of the assessee’s entitlement to exemption under Sections 2(15) and 11 of the Act.

SOURCE LINK

https://api.sci.gov.in/supremecourt/2022/16773/16773_2022_14_6_41407_Judgement_31-Jan-2023.pdf

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