Trust exemption under section 11 upheld where kalyanamandapam receipts were treated as property income, not business income.

Income from letting out a kalyanamandapam held as an investment of trust funds was treated as property income, not business income, so the trust was not carrying on a business for profit. As the objects had already been accepted as advancement of education and relief to the poor, the exemption under section 11 was upheld. Section 13(1)(bb) did not apply on these facts because it is directed to business income, and the denial of exemption on that basis was unsustainable.

---

---

Issues: Whether the assessee-trust was entitled to exemption under section 11 of the Income-tax Act, 1961, and whether section 13(1)(bb) could be invoked to deny that exemption on the footing that the trust was carrying on business for profit.

Analysis: The trust objects had already been accepted as advancement of education and relief to the poor. The income in question arose from letting out a kalyanamandapam held as an investment of trust funds, and the finding was that the assessee was not carrying on any business activity. The receipts were treated as income from property, not business income, and section 13(1)(bb), being directed to business income, had no application on the facts.

Conclusion: The assessee-trust was rightly granted exemption under section 11, and the denial of exemption under section 13(1)(bb) was unsustainable.

---