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In the context of a charities engaged in an object of general public utility the Supreme Court in (2022] 449 ITR 1 (SC) held that the assessing authorities in their case must on a yearly basis, scrutinize the record to discern whether the nature of the assessee’s activities amount to “trade, commerce or business” based on its receipts and income (i. e., whether the amounts charged are on cost-basis, or significantly higher). If it is found that they are in the nature of “trade, commerce or business”, then it must be examined whether the quantified limit (as amended from time to time) in proviso to section 2(15), has been breached, thus disentitling them to exemption.


This decision has left the charities in lot of uncertainty. Well what is ‘significantly higher’ may be understood as something say having a margin of 100% on costs as the word ‘ significant’ is often to be read as meaning extraordinarily high. 


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