Charitable exemption survives incidental profit where the dominant object remains charitable, and exemption is upheld.

Exemption under section 11(4A) remained available to a charitable institution where the predominant object of the activity was charitable and not the earning of profit. The presence of some profit from the activity did not, by itself, destroy the institution's charitable character or justify denial of exemption. Applying that test, the institution was held entitled to exemption, and the referred question was answered in the affirmative in its favour.

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Issues: Whether exemption under section 11(4A) of the Income-tax Act, 1961 was available to a charitable institution despite earning some profit from its activities.

Analysis: The decisive consideration is whether the predominant object of the activity is to carry out a charitable purpose or to earn profit. If the principal object is charitable, the mere fact that some profit arises from the activity does not destroy the charitable character of the institution or justify denial of exemption.

Conclusion: The assessee was entitled to exemption, and the answer to the referred question was in the affirmative, in favour of the assessee.

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