Section 13(8) — the law in short
What the courts have decided on section 13(8), 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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Gujarat Maritime Board v DCIT (Exemption), Ahmedabad
ITATCuts both waysNo later treatment found
The Assessing Officer says my statutory authority's port charges and lease rentals are trade or business, so the proviso to s.2(15) denies exemption. How is that tested after Ahmedabad Urban Development Authority?
The size of the receipts and of the surplus is not the test. Applying the Supreme Court's framework in Ahmedabad Urban Development Authority, the Tribunal held that what matters is the statutory setting in which the receipts arise, the nature of the functions discharged, the manner in which the charges are fixed and regulated, and the destination of the surplus — and on that footing the Board continued to fall within 'advancement of any other object of general public utility' and remained entitled to exemption under ss.11 and 12.
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.
