ICAI Accounting Research Foundation v DIT(Exemption), ITA No. 4897/Del/2011
The ICAI Accounting Research Foundation undertook three research projects and charged fees for the same.
The Assessing Officer (AO) cancelled the registration of the foundation under section 12A of the Income Tax Act, on the ground that the activities of the assessee were commercial since it was charging fees for specific projects and such service were only professional services, which cannot be termed as a charitable activity. The Income Tax Appellate Tribunal (ITAT) Delhi ruled that there are two essential requirements for an activity to be considered as business: (i) it must be a continuous course of activity, and (ii) it must be carried on with a profit motive. The ITAT Delhi held that the activities of the assessee foundation are ancillary activities only and amounted to the advancement of an object of general public utility. Therefore, merely charging fees would not render the activity as commercial and does not detract from its charitable nature.