CIT v Surat Art Silk Cloth Merchant Association 121 ITR 1
Assessee company was registered under section 25 of the Companies Act, 1956 (now section 8 of the Companies Act, 2013) and registered under section 12A of the Act. The assesee company received annual subscription fees from members and commission for import license and constructed a building out of the amount received and rend received from tenants and claimed it as exempt under section 11 of the Act. Revenue rejected the claim on the ground that objects of the Act. Hon. Supreme Court held that it is not that in every case where the activity is being carried on which gives rise to profit, that would amount to non-charitable activity, resulting in forfeiting exemption available to the Trust. Where an activity was not pervaded y profit motive but was carried on primarily for serving the dominant charitable purposes, it would not be correct to describe the same as an activity for profit; but where an activity was carried on with the predominant object of earning profit, it would be an activity for profit, though it may be carried on in the advancement of the charitable purpose of the Trust or the institution. Therefore, the assesse company is not hit by provisions of section 2(15) of the Act.