Section 10(46) — the law in short
What the courts have decided on section 10(46), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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ACIT v Ahmedabad Urban Development Authority
Supreme CourtCuts both ways
We charge fees for our public utility work. Does that cost us charitable status under s.2(15)?
Only if the fees are pitched above cost. Charging on a cost or nominal mark-up basis is not trade, commerce or business; charges noticeably higher than cost are. Even permissible commercial activity must be carried on in the actual course of achieving the general public utility object, and receipts from it must stay within 20 per cent of total receipts.
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Greater Noida Industrial Development Authority v Union of India
High CourtHelps taxpayer
Our s.10(46) application has been rejected because we charge lease rent and fees. Does charging for what we do make us commercial and disentitle us?
Not where the charge is for the regulatory and administrative functions the body is obliged to perform. The Delhi High Court held that a body satisfying clause (a) of s.10(46) does not lose the exemption under clause (b) merely because it charges and receives money as fee, reimbursement, rent or consideration for transfer of rights in property, provided those receipts are directly connected with and have a nexus to the functions it is mandated to perform. The rejection order was quashed and a notification directed.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.
