The Tribunal after placing reliance on the CBDT Circular No. 11 of 2008 dated 19 December 2008 and the Finance Minister’s speech held that the applicability of proviso to section 2(15) of the Act is a question of fact and no generalisation is possible. Tribunal also further held that the said proviso does not apply to first 3 limbs of section 2(15) i.e. relief to poor, education or medical relief. Further Tribunal held that the proviso shall apply in cases where in the assessee is engaged in any activity in nature of trade, commerce or business and the object of general public utility is only to mask or hide the true purpose of the business activity.

As in the present facts of the case the AO had not brought any material to show that the assessee was conducting its affairs solely on commercial lines with a motive to earn profit. Also no material was brought to show that the assessee company had deviated from its objects for which it has been constituted. Therefore it was held that the proviso to section 2(15) of the act is not applicable to the present facts of the case and deleted the addition made by the AO.