Creative Museum Designers Vs ITO,Exemptions,Ward 1(1),Kolkata
Date-10th February 2022
Forum-Calcutta High court

Sub-Whether the activity of the petitioner of setting up of museums, science parks, planetariums, interactive galleries, exhibits and other forms of dissemination of knowledge through informal means, at the behest of other public bodies or entities, be regarded as commercial in nature and within the periphery of the proviso to Section 2(15) of the Income Tax Act, 1961?

The Calcutta high court in this case was considering Appeal u/s 260A of the Income-tax Act,1961 against order of the tribunal whereby based on the incidental objects of the Appellant Section 8 Company, it was held that the company was a contractor engaged in setting up museums etc for others and thus the exemption u/s 11 was denied. The Court observed that It is elementary principle that anything incidental or ancillary to the main object has to be read along with and in conjunction with the main object and the incidental objects cannot be read in isolation and thus same it was amply clear that the assessee company is a non-profit organisation established for the purpose of undertaking works for all kinds of museums/science centers etc. on turn-key basis which includes all activities incidental and ancillary to it. Finally distinguishing the appellant as being the curator of museum that has been established by the National Council of Science Museum, Ministry of Culture, Government of India, held that the activities of the appellant amounted to education within the meaning of Section 2(15) and merely because some surplus was generated while doing its activities, the same cannot be held to be commercial in nature. The appeal was thus allowed.

This judgement will be helpful to lot of NGOs, charitable entities who are facing similar actions.

Ramesh Patodia
14-02-2022