Charitable trust exemption under section 11 remains available despite running a business activity when income stays within statutory limits.

A charitable trust running a tent house was held entitled to exemption under section 11 of the Income-tax Act, 1961, because the mere fact that a trust carries on business does not by itself disqualify it from exemption. The approach denying relief solely on the ground that a charitable trust could not run a business was rejected as consistent with the Supreme Court's rule in Surat Art Silk Cloth Mfrs. Association. It was also noted that no material showed the income to be outside section 11, and the point now urged had not been canvassed before the Tribunal.

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Issues: Whether the assessee, a charitable trust running a tent house, was entitled to exemption of its income under section 11 of the Income-tax Act, 1961.

Analysis: The exemption had been denied only on the ground that a charitable trust could not run a business. That approach was not accepted by the appellate authority or the Tribunal, and it was held to be consistent with the rule laid down by the Supreme Court in Surat Art Silk Cloth Mfrs. Association. No material was shown to establish that the income was outside the ambit of section 11 or that the question now urged had been canvassed before the Tribunal.

Conclusion: The assessee was entitled to exemption under section 11, and the question was answered in its favour.

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