Predominant charitable purpose test preserves exemption where incidental surplus does not defeat general public utility status.

An association qualifies as an for advancement of an object of general public utility where its predominant purpose is charitable and not profit-making. Section 2(15) applies by testing the dominant object of the activity; incidental surplus does not defeat exemption if the main purpose remains charitable. On the stated facts, the association's principal object was to promote, encourage and protect the interests of persons engaged in banking and pawnbroking, and its constitution required income and property to be applied only to its objects without distribution of profits to members. It was therefore entitled to exemption under section 11 read with section 2(15) of the Income-tax Act, 1961.

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Issues: Whether the assessee association was established for the advancement of an object of general public utility not involving the carrying on of any activity for profit, and was therefore entitled to exemption under section 11 read with section 2(15) of the Income-tax Act, 1961.

Analysis: The controlling test is whether the predominant object of the activity is to subserve a charitable purpose or to earn profit. Section 2(15) qualifies only the limb relating to the advancement of any other object of general public utility. If the dominant purpose is charitable, the mere fact that the activity yields some surplus does not take the case out of charity. On the facts, the association's main object was to promote, encourage and protect the interests of persons engaged in banking and pawnbroking, with the remaining objects being incidental. The association was also bound by its constitution to apply its income and property only towards its objects, without distribution of profits to members.

Conclusion: The association satisfied the requirement of advancement of general public utility without a profit motive and was entitled to exemption under section 11 read with section 2(15) of the Income-tax Act, 1961.

Ratio Decidendi: For the purposes of section 2(15), the decisive inquiry is the predominant object of the activity; if that object is charitable or for the general public utility, incidental profit does not destroy the exemption.

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