Charitable purpose under section 2(15) upheld for a State-controlled industrial development body; section 11 exemption follows.

A statutory body engaged in orderly industrial development and operating under pervasive State control was found to pursue a public-purpose object rather than profit-making. On that record, the Tribunal's finding that the activity amounted to advancement of an object of general public utility was not shown to be perverse, so the proviso to section 2(15) of the Income-tax Act, 1961 was held inapplicable. The assessee therefore satisfied the conditions for exemption and was entitled to the benefit of section 11.

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Issues: Whether the proviso to section 2(15) of the Income-tax Act, 1961 applies to the assessee and, if not, whether the assessee is entitled to exemption under section 11 of the Income-tax Act, 1961.

Analysis: The assessee was a statutory body constituted for orderly establishment and development of industries and operated under pervasive control of the State Government. Its functions, as reflected in the enabling statute, were directed to public purpose and industrial development, and the material on record showed that the dominant object was not profit-making. The finding of the Tribunal that the assessee carried on charitable activity by advancement of an object of general public utility was based on appreciation of the record and was not shown to be perverse. In these circumstances, the Tribunal's view that the proviso to section 2(15) was inapplicable and that the assessee satisfied the conditions for exemption was accepted.

Conclusion: The proviso to section 2(15) of the Income-tax Act, 1961 does not apply to the assessee, and the assessee is entitled to the benefit of section 11 of the Income-tax Act, 1961.

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