Charitable status withdrawal turned on trade or commerce exclusion and absence of a substantial question of law.

Withdrawal of charitable status under the Income-tax Act was examined on the basis of concurrent findings that the assessee was not established for the prescribed charitable objects and that its activities did not advance general public utility. The note also records that the Finance Act, 2008 provisos, effective from 1 April 2009, exclude activities in the nature of trade, commerce or business, or services connected with them, when undertaken for consideration. On that reasoning, the order did not raise any debatable legal issue, and no substantial question of law was found to justify admission of the challenge.

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Issues: Whether the order withdrawing the assessee's charitable status under Section 12AA(1)(b)(i) of the Income-tax Act, 1961 gave rise to any substantial question of law warranting admission of the appeal.

Analysis: The appellate record showed concurrent findings that the assessee was not established for the objects contemplated by Section 2 of the Income-tax Act, 1961 and that its activities did not advance the object of general public utility. The provisos introduced by the Finance Act, 2008, effective from 01.04.2009, excluded from the definition of charitable purpose any activity in the nature of trade, commerce or business, or rendering services in relation thereto for consideration. On those findings, the impugned order did not disclose any debatable legal issue.

Conclusion: No substantial question of law arose and the challenge to withdrawal of charitable status failed.

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