Charitable trust auditorium letting held incidental; surplus alone did not trigger the section 2(15) proviso or deny section 11 exemption.

Letting of an auditorium by a charitable trust did not, on these facts, convert its predominant charitable activity into trade, commerce or business. The trust remained registered for education, medical relief, and promotion of music and arts, and the auditorium was used for its own charitable purposes, being hired out only when not required. The Tribunal treated the hiring activity as incidental to the main objects and held that mere surplus from such letting did not attract the proviso to section 2(15). Exemption under section 11 was therefore not denied, and the consequential application of section 13(8) did not arise.

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Issues: Whether the assessee's letting out of its auditorium attracted the proviso to section 2(15) of the Income-tax Act, 1961 so as to deny exemption under section 11 and trigger section 13(8).

Analysis: The assessee was registered as a charitable trust and carried on activities of education, medical relief, and promotion of music and arts. The auditorium was used for the assessee's own charitable activities and was let out only when not required. The Tribunal followed its decision in the assessee's own earlier year and held that the letting activity was incidental to the main charitable objects. On the facts, the receipts from auditorium hire did not establish that the assessee's predominant object had become trade, commerce or business, and the mere generation of surplus from such letting did not by itself attract the proviso to section 2(15). Accordingly, denial of exemption under section 11 was not justified, and the consequential application of section 13(8) did not arise.

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

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