Registration u/s 80G(5)(vi) cannot be denied to charitable trust even if it is running some activity that yields profit

As a rule, if the terms of the trust permit its operation 'for profit' they become, prima facie, evidence of a purpose falling outside charity. They would indicate the object of profit-making unless and until it is shown that the term of the trust compel the trustee to utilize the profits of business also for charity. This means that the test introduced by the amendment is "Does the purpose of a trust restrict spending the income of a profitable activity exclusively or primarily upon what is `charity' in law? If the profits must necessarily feed a charitable purpose, under the terms of the trust, the mere fact that the activities of the trust yield profit will not alter the charitable character of trust."

CASE LAW DETAILS

Decided by: ITAT, BANGALORE BENCH `B', In The case of: Prasanna Trust v. DIT (Exemption),  Appeal No.: ITA No. 1391/Bang./2008,
Decided on: June 12, 2009

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