Charitable exemption survives where training activities for the poor lack profit motive and remain funded by grants and donations.

An institution engaged in training and skill-development for poor communities in backward rural areas retained charitable character because its activities were supported by grants and donations and there was no material showing a profit motive. Mere receipt of consideration or supervision of grant utilisation did not make the activity trade, commerce or business, especially where no fees were charged beyond actual project cost. On those facts, the proviso to Section 2(15) was not attracted and exemption under Section 11 remained available; the concurrent factual findings also showed no perversity warranting interference.

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Issues: Whether the proviso to Section 2(15) of the Income-tax Act, 1961 was attracted so as to deny exemption under Section 11 of the Income-tax Act, 1961 to an institution engaged in training and skill-development activities for the poor.

Analysis: The institution was found to be engaged in upliftment of the poor through training and skill-development in backward rural areas, and it received grants and donations for carrying out those charitable activities. The mere receipt of consideration or supervision of grant utilisation did not establish that the activities were carried on as a trade, commerce or business. No material was brought on record to show any profit motive, and the assessee did not charge fees beyond actual project cost. The factual position was also consistent with earlier assessment years, and the concurrent findings of the appellate authorities contained no perversity warranting interference.

Conclusion: The proviso to Section 2(15) was not attracted and the exemption under Section 11 remained available to the assessee.

Final Conclusion: No substantial question of law arose, and the tax appeal was rejected.

Ratio Decidendi: An institution does not lose its charitable character merely because it receives fees or grants, unless the revenue establishes that the activities are carried on as regular business with a profit motive.

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