Charitable trust exemption remains available where business activity is incidental and dominant objects stay charitable under tax law.

A charitable trust does not lose exemption under section 11 merely because it carries on a business activity, if its dominant objects remain charitable within section 2(15). The trust deed in question showed charitable purposes such as relief of the poor, education and medical relief, and the business of exhibiting pictures under an agreement did not alter that character. Exemption could not be denied solely on the ground of business activity, because the business was not the governing purpose of the trust. The trust therefore remained entitled to charitable exemption.

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Issues: Whether a trust with charitable objects remains entitled to exemption under section 11 of the Income-tax Act, 1961 merely because it is empowered to, or in fact does, carry on business activity for profit.

Analysis: The trust deed showed charitable objects, including relief of the poor, education and medical relief. The mere fact that the trust carried on the business of exhibition of pictures under an agreement did not alter its charitable character. Exemption under section 11 cannot be denied solely because the trust carries on business, so long as the predominant object remains charitable within section 2(15) and the business activity is not the governing purpose of the trust.

Conclusion: The trust was entitled to exemption as a charitable institution, and the business activity did not disqualify it from relief under section 11.

Final Conclusion: The reference was answered in favour of the assessee and against the Revenue, affirming the trust's charitable status and exemption claim.

Ratio Decidendi: A charitable trust does not lose exemption under section 11 merely because it carries on business if its dominant objects remain charitable within section 2(15).

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