(CIT v. Surat Art Silk Cloth Manufacturer's Association

2 SCC 31Reported decision1980#3346 most cited

What is (CIT v. Surat Art Silk Cloth Manufacturer's Association authority for?

For a trust to be considered charitable, its dominant intent must be charitable, even if it engages in non-charitable activities that generate incidental profits. These profits must be reinvested to further the dominant charitable object.

35

judgments rely on this decision, according to BharatTax’s citation analysis of 366,005 Indian tax judgments — from 2011 to 2025.

Also referred to as

Surat Art Silk Cloth Manufacturer's Association · section 2(15) · dominant intent · incidental profits · charitable object · application of profits · non-charitable activities · trust status · income tax act

Sections most often in play

Section 80GSection 12ASection 2(15)Section 12A(1)(ac)(iii)Section 12AASection 12ABSection 10(46)Section 11

Issues it is cited on

proviso to section 2(15)section 2(15)section 80gsection 12asection 12businessindianfac

Judgments citing (CIT v. Surat Art Silk Cloth Manufacturer's Association

M/S Deshpande Education Trust vs. The Assistant Commissioner of

In the result, the appeal is allowed

ITA/100009/2017HC Karnataka17 Dec 2025

Bench: S G PANDIT,GEETHA K.B.

Section 11Section 12ASection 142(1)Section 143(2)Section 143(3)Section 2(15)Section 260A

…that in both the AYs, there has been a surplus that has been generated. However, mere generation of surplus is not a ground to deny exemption to the appellant. The Hon’ble Apex Court in CIT v. Surat Art Silk Cloth Manufacturers' Assn., reported in (1980) 2 SCC 31 in paragraph 19 has held as under: “19. There is, however, one comment which is necessary to be made whilst we are on this point and that arises out of certain observations made by this Court in Sole Trustee, Loka Shikshana Trust case [(1976) 1 SCC 254 : 1976 SCC (Tax) 14 : (1975) 101 ITR 234] as well as Indian Chamber of Commerce case [(197…

Deputy Commissioner of Income Tax, New Delhi vs. Odia Samaj, New Delhi

In the result Cross objections raised by assessee is allowed

ITA 5638/DEL/2024[2020-21]Status: DisposedITAT Delhi15 Oct 2025AY 2020-21

Bench: Ms. Madhumita Roy & Shri Naveen Chandra

Section 12ASection 133(6)Section 143(3)Section 144BSection 194CSection 194JSection 2(15)Section 80G

…ourt Section 2(15) - in the wake of its several amendments between 2008 and 2015 - can be juxtaposed with the interpretation of the unamended section 2(15) by this Court. In Asstt. CIT v. Surat Art Silk Cloth Manufacturers Association [1980] 121 ITR 1/[1980] 2 SCC 31, the principle enunciated was that so long as the predominant object of GPU category charity is charitable, its engagement in a non-charitable object resulting in profits that are incidental, is permissible. The court also declared that profits and gains from such activities which were non-charitable had to be deployed or "fed" back to achieve the d…

Virudhunagar Hindu Tholan, Virudhunagar vs. CIT Exemptions, Chennai

In the result, appeal filed by the assessee in ITA

ITA 67/CHNY/2025[-]Status: DisposedITAT Chennai26 Sept 2025

Bench: Shri Aby T. Varkey & Shri Jagadish

For Appellant: Mr.P.M. Kathir, Advocate &For Respondent: Mr.Bipin C.N., CIT
Section 12ASection 2(15)Section 80G

…d as under; "190. It may be useful to conclude this section on interpretation with some illustrations. The example of Gandhi Peace Foundation disseminating Mahatma Gandhi's philosophy (in Surat Art Silk CIT v. Surat Art Silk Cloth Manufacturers' Assn., (1980) 2 SCC 31 : 1980 SCC (Tax) 170) through museums and exhibitions and publishing his works, for nominal cost, ipso facto is not business. Likewise, providing access to low-cost hostels to weaker segments of society, where the fee or charges recovered cover the costs (including administrative expenditure) plus nominal markup; or renting marriage halls for low am…

Virudhunagar Hindu Tholan, Virudhunagar vs. CIT, Exemptions, Chennai

In the result, appeal filed by the assessee in ITA

ITA 1943/CHNY/2025[-]Status: DisposedITAT Chennai26 Sept 2025

Bench: Shri Aby T. Varkey & Shri Jagadish

For Appellant: Mr.P.M. Kathir, Advocate &For Respondent: Mr.Bipin C.N., CIT
Section 12ASection 2(15)Section 80G

…d as under; "190. It may be useful to conclude this section on interpretation with some illustrations. The example of Gandhi Peace Foundation disseminating Mahatma Gandhi's philosophy (in Surat Art Silk CIT v. Surat Art Silk Cloth Manufacturers' Assn., (1980) 2 SCC 31 : 1980 SCC (Tax) 170) through museums and exhibitions and publishing his works, for nominal cost, ipso facto is not business. Likewise, providing access to low-cost hostels to weaker segments of society, where the fee or charges recovered cover the costs (including administrative expenditure) plus nominal markup; or renting marriage halls for low am…

Rasha Welfare Foundation, Delhi vs. CIT (Exemption), Delhi

In the result, appeals of assessee in ITA Nos

ITA 5191/DEL/2024[2024-25]Status: DisposedITAT Delhi04 Jul 2025AY 2024-25

Bench: Ms. Madhumita Roy & Shri Naveen Chandra

For Appellant: Shri Sanjeet Paliwal, AdvFor Respondent: Shri Monika Singh, CIT-DR
Section 12ASection 12A(1)(ac)Section 80G

…tion under Section 12A(1)(ac) (iii) of the Income Tax Act, 1961. 8. The ld AR relied on the Judgment passed by Hon'ble Supreme Court in Additional Commissioner of Income Tax, Gujarat, Ahmedabad Vs. Surat Art Silk Cloth Manufacturers Association Surat (1980) 2 SCC 31 wherein it held that it is not the activity per se, but the dominant intent that determines whether the trust is charitable. If the dominant object of Page 4 of 9 ITA No. 5191/DEL/2024 Rasha Welfare Foundation the trust is charitable then mere existence of profit does not necessarily negate charitable status as long as the profits are applied sol…

Rasha Welfare Foundation, Delhi vs. CIT (Exemption), New Delhi

In the result, appeals of assessee in ITA Nos

ITA 5180/DEL/2024[2024-25]Status: DisposedITAT Delhi04 Jul 2025AY 2024-25

Bench: Ms. Madhumita Roy & Shri Naveen Chandra

For Appellant: Shri Sanjeet Paliwal, AdvFor Respondent: Shri Monika Singh, CIT-DR
Section 12ASection 12A(1)(ac)Section 80G

…tion under Section 12A(1)(ac) (iii) of the Income Tax Act, 1961. 8. The ld AR relied on the Judgment passed by Hon'ble Supreme Court in Additional Commissioner of Income Tax, Gujarat, Ahmedabad Vs. Surat Art Silk Cloth Manufacturers Association Surat (1980) 2 SCC 31 wherein it held that it is not the activity per se, but the dominant intent that determines whether the trust is charitable. If the dominant object of Page 4 of 9 ITA No. 5191/DEL/2024 Rasha Welfare Foundation the trust is charitable then mere existence of profit does not necessarily negate charitable status as long as the profits are applied sol…

Commissioner of Income Tax (Exemptions) Delhi vs. Balaji Medical and Diagnostic Research Centre

ITA/81/2025HC Delhi04 Apr 2025

Bench: HON'BLE MR. JUSTICE VIBHU BAKHRU,HON'BLE MR. JUSTICE TEJAS KARIA

Section 11Section 12ASection 2(15)Section 260A

…In view of the above, no substantial questions of law arise in the captioned appeals. The appeals are, accordingly, dismissed. VIBHU BAKHRU, J TEJAS KARIA, J APRIL 04, 2025 M 1 [Assistant Commissioner v. Surat Art Silk Cloth Manufacturers’ Association: (1980) 2 SCC 31; In re Trustees of the ‘Tribune’: (1939) 7 ITR 415 decided on 13.06.1939; Commissioners for Special Purposes of Income-tax v. Pemsel: (1891) 3 TC 53 (HL)] This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Serv…

Assistant Commissioner of Income Tax (Exemptions) vs. Ahmedabad Urban Development Authority

C.A. No.-021762-021762 - 2017Supreme Court19 Oct 2022

Bench: HON'BLE THE CHIEF JUSTICE

…ioner v. Surat Art Silk Cloth Manufacturers’ Association14 (hereafter “Surat Art Silk”) was the most important decision rendered on the issue. Here a Section 25 (of the Companies Act, 1956 corresponding to Section 8 of the Companies Act, 2013) 14 (1980) 2 SCC 31 (hereafter “Surat Art Silk”) 12 non-profit company was established. It claimed exemption as an institution with charitable purposes as its objectives. The objects of the company included promoting commerce and trade in Art Silk yarn, raw silk, cotton yarn, Art Silk cloth, silk cloth, and cotton cloth, among other objects15.Clause 5(1) of th…

M/S New Noble Educational Society vs. The Chief Commissioner of Income Tax 1

The appeals are hereby dismissed, without order on costs

C.A. No.-003795-003795 - 2014Supreme Court19 Oct 2022

Bench: HON'BLE THE CHIEF JUSTICE

Section 10

…of general public utility. It was held that to “ascertain whether the institute is carried on with the object of making profit or not it is the duty of the 12 Additional Commissioner of Income Tax v Surat Art Silk Cloth Manufacturers’ Association, (1980) 2 SCC 31. 18 prescribed authority to ascertain whether the balance of income is applied wholly and exclusively to the objects for which the applicant is established”.13 28. The revenue also urged that the decision in American Hotel (supra) was wrong in holding that the stipulations in monitoring conditions set out in various provisos to Sectio…

Income Tax Officer (Exemptions), Ward, Jaipur vs. Rajasthan Cricket Association, Jaipur

In the result, appeal of the Department is dismissed

ITA 68/JPR/2022[2013-14]Status: DisposedITAT Jaipur21 Jun 2022AY 2013-14

Bench: The Hon’Ble Tribunal In The Interest Of Justice.

For Appellant: Shri Shyam Lal Agarwal, CAFor Respondent: Ms Manisha Chandra, CIT fu/kZkfjrh dh vksj ls@
Section 11Section 12ASection 143(3)Section 147Section 148Section 2(15)

…al society and ploughed back to construct its own premises would fall out of Section 10(23C) is to ignore the language of the section and to ignore the tests laid down in Surat Art Silk Cloth case (CIT v. Surat Art Silk Cloth Manufacturer's Association [1980] 2 SCC 31) Aditanar case (Aditanar Educational Institution v. CIT [1997] 3 SCC 346) and American Hotel & Lodging Association, Educational Institute v. CBDT [2008] 10 SCC 509). It is clear that when a surplus is ploughed back for educational purposes, the educational institution exists solely for educational purposes and not for purposes of profit." In that c…

Income Tax Officer (Exemption), Ward, Jaipur vs. Rajasthan Cricket Association, Jaipur

In the result, appeal of the Department is dismissed

ITA 67/JPR/2022[2012-13]Status: DisposedITAT Jaipur21 Jun 2022AY 2012-13

Bench: The Hon’Ble Tribunal In The Interest Of Justice.

For Appellant: Shri Shyam Lal Agarwal, CAFor Respondent: Ms Manisha Chandra, CIT fu/kZkfjrh dh vksj ls@
Section 11Section 12ASection 143(3)Section 147Section 148Section 2(15)

…al society and ploughed back to construct its own premises would fall out of Section 10(23C) is to ignore the language of the section and to ignore the tests laid down in Surat Art Silk Cloth case (CIT v. Surat Art Silk Cloth Manufacturer's Association [1980] 2 SCC 31) Aditanar case (Aditanar Educational Institution v. CIT [1997] 3 SCC 346) and American Hotel & Lodging Association, Educational Institute v. CBDT [2008] 10 SCC 509). It is clear that when a surplus is ploughed back for educational purposes, the educational institution exists solely for educational purposes and not for purposes of profit." In that c…

Income Tax Officer, Jaipur vs. Rajasthan Cricket Association, Jaipur

In the result, appeal of the Department is dismissed

ITA 66/JPR/2022[2005]Status: DisposedITAT Jaipur21 Jun 2022

Bench: The Hon’Ble Tribunal In The Interest Of Justice.

For Appellant: Shri Shyam Lal Agarwal, CAFor Respondent: Ms Manisha Chandra, CIT fu/kZkfjrh dh vksj ls@
Section 11Section 12ASection 143(3)Section 147Section 148Section 2(15)

…al society and ploughed back to construct its own premises would fall out of Section 10(23C) is to ignore the language of the section and to ignore the tests laid down in Surat Art Silk Cloth case (CIT v. Surat Art Silk Cloth Manufacturer's Association [1980] 2 SCC 31) Aditanar case (Aditanar Educational Institution v. CIT [1997] 3 SCC 346) and American Hotel & Lodging Association, Educational Institute v. CBDT [2008] 10 SCC 509). It is clear that when a surplus is ploughed back for educational purposes, the educational institution exists solely for educational purposes and not for purposes of profit." In that c…

A H Memorial Educational Trust vs. The State of Karnataka

WP/19423/2021HC Karnataka23 Dec 2021

Bench: The Hon'Ble Mr. Justice M. Nagaprasanna Writ Petition No.16323 Of 2021 (Lb-Res) C/W Writ Petition No.51640 Of 2017 (Lb- Tax) Writ Petition No.19423 Of 2021 (Lb- Tax) Writ Petition No.20385 Of 2021 (Lb- Res) Writ Petition No.21130 Of 2021 (Lb- Tax) In Writ Petition No.16323 Of 2021 Between: 1. Indus Trust Having Its Registered Office At Billapura Cross, Sarjapura, Bengaluru - 562 125 Represented By Its Group Chief Financial Officer Mr V.S.Kumar, S/O Late Rama Rao C., Aged About 59 Years. 2. Indus International School Private Limited (Iispl) Having Its Registered Office At Billapura Cross, Sarjapur, Bengaluru - 562 125 Represented By Its Group Chief Financial Officer, Mr V.S.Kumar

…ter under the definition of charitable purpose in Section 2(15). The next decision of the Supreme Court referred by Sri Shivashankar Bhat is: Additional Commissioner of Income-tax, Gujarath v. Surat Arts Silk Manufacturers' Association, Surat [(1980) 2 SCC 31 : AIR 1980 SC 387 : 101 ITR 796.] . The Supreme Court was interpreting the last category of charitable purpose, viz., the advancement of any other object of general public utility not involving the carrying of any activity for profit. 12. Though, we are not directly concerned in this case about the interpretation of Section 2(15) of the Inco…

M/S. Rajasthan Cricket Association, Jaipur vs. Add.CIT. Range-2, Jaipur

In the result, the matter is decided in favour of the assessee and against the Revenue and the ground of appeal so taken by the assessee society is thus allowed

ITA 284/JPR/2020[2011-12]Status: DisposedITAT Jaipur25 Nov 2020AY 2011-12
For Appellant: Shri Shyam Lal Agarwal (CA) &For Respondent: Smt. Rooni Paul (Addl.CIT) &

…आयकरअपीलीय अधिकरण] जयपुरन्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH ‘B’, JAIPUR Jhfot; ikyjkWo] U;kf;dlnL; ,oaJhfoØe flag ;kno] ys[kk lnL; ds le{k BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM vk;djvihy la-@ITA No. 1355 & 1356/JP/2018 fu/kZkj.ko"kZ@Assessment Years : 2010-11 & 2011-12. Income Tax Officer cuke Rajasthan Cricket Association, Vs. (Exemptions) North Block, SMS Stadium, Ward-1,Jaipur. Jan Path,Jaipur. LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No. AAATR 0798 J vihykFkhZ@Appellant izR;FkhZ@Respondent vk;djvihy la-@ITA No. 284/JP/2020 fu/kZkj.ko"kZ@Assessment Year: 2011-…

M/S. Bharathakshemam vs. The Principal Commissioner of Income Tax

ITA/36/2020HC Kerala13 Nov 2020

Bench: HONOURABLE MR.JUSTICE K.VINOD CHANDRAN,HONOURABLE MR. JUSTICE T.R.RAVI

For Appellant: M/S. BHARATHAKSHEMAMFor Respondent: THE PRINCIPAL COMMISSIONER OF INCOME TAX
Section 11Section 12ASection 2(15)

…IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR.JUSTICE T.R.RAVI FRIDAY, THE 13TH DAY OF NOVEMBER 2020 / 22ND KARTHIKA, 1942 I.T.A.No.36 OF 2020 AGAINST THE ORDER IN I.T.A.No.590/Coch/2019 DATED 08-01-2020 OF INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN [ASSESSMENT YEAR 2012-13] APPELLANT/ APPELLANT/ASSESSEE: M/S. BHARATHAKSHEMAM, BHARATHAKSHEMAM BUILDING, ST.THOMAS COLLEGE ROAD, THRISSUR-680 005, REPRESENTED BY ITS CHAIRMAN SHRI.P.M.THOMAS. BY ADVS. SRI.T.M.SREEDHARAN (SR.) SMT.NISHA JOHN SRI.V.P.NARAYANAN SMT.DIVYA RAVINDRAN SRI.R.BHASKARA…

Shri Vijay Makhija S/O Shri Govind Ram Makhija vs. The Principal Commissioner of Tax-I

ITA/81/2019HC Rajasthan29 Jul 2020

Bench: SABINA,PRAKASH GUPTA

For Appellant: Mr. Amit Chaudhary and Mr. Vijay ChawlaFor Respondent: Mr. Ashish Shrivastava, Senior Advocate with Mr
Section 2(15)Section 260ASection 3Section 38Section 38(1)Section 72

…hermore, a three-Judge Bench of the Supreme Court in Ahmedabad Urban Development Authority’s case (supra) has considered all its earlier judgments qua Section 2(15) of the 4 (1982) 2 SCC 542 : 1982 SCC (Tax) 151 : (1983) 140 ITR 1 5 (1965) 55 ITR 722 6 (1980) 2 SCC 31 : 1980 SCC (Tax) 170 : (1980) 121 ITR 1 Page 14 of 20 (Tax Case No.81/2019) Act of 1961 and summed up the conclusions as under: - “IV. Summation of conclusions 269. In view of the foregoing discussion and analysis, the following conclusions are recorded regarding the interpretation of the changed definition of “charitable purpose” (w.e…

The Commissioner of Income Tax - Exemption vs. Association of Third Party Administrators

The appeal is dismissed with no orders

ITA/1071/2018HC Delhi20 Jan 2020

Bench: HON'BLE MR. JUSTICE VIPIN SANGHI,HON'BLE MR. JUSTICE SANJEEV NARULA

Section 12ASection 260A

…n (supra), while dealing with the similar question relating to registration of an institute for charitable purpose, observed as under: “The decision of the Constitutional Bench of this Court in Addl. CIT v. Surat Art Silk Cloth Mfrs. Association [1980] 2 SCC 31 really clinches the issue. The assessee in Surat Art Silk Cloth Mfrs. Association's case (supra) was an association established to promote commerce and trade in Art Silk Yarn, Raw Silk, Cotton Yarn, Art Silk Cloth, Silk Cloth and Cotton Cloth. Its objects, as evidenced from the memorandum of association, included, inter alia, carrying on busin…

Income Tax Officer (Exemption), Ward-1, Jaipur vs. M/S Rajasthan Cricekt Association, Jaipur

In the result, the matter is decided in favour of the assessee and against the Revenue and the ground of appeal so taken by the assessee society is thus allowed

ITA 1356/JPR/2018[2011-12]Status: DisposedITAT Jaipur09 Dec 2019AY 2011-12
For Appellant: Shri Shyam Lal Agarwal (CA) &For Respondent: Smt. Rooni Paul (Addl.CIT) &

…आयकरअपीलीय अधिकरण] जयपुरन्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH ‘B’, JAIPUR Jhfot; ikyjkWo] U;kf;dlnL; ,oaJhfoØe flag ;kno] ys[kk lnL; ds le{k BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM vk;djvihy la-@ITA No. 1355 & 1356/JP/2018 fu/kZkj.ko"kZ@Assessment Years : 2010-11 & 2011-12. Income Tax Officer cuke Rajasthan Cricket Association, Vs. (Exemptions) North Block, SMS Stadium, Ward-1,Jaipur. Jan Path,Jaipur. LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No. AAATR 0798 J vihykFkhZ@Appellant izR;FkhZ@Respondent vk;djvihy la-@ITA No. 284/JP/2020 fu/kZkj.ko"kZ@Assessment Year: 2011-…

Income Tax Officer (Exemption), Ward-1, Jaipur vs. Rajasthan Cricket Association, Jaipur

In the result, the matter is decided in favour of the assessee and against the Revenue and the ground of appeal so taken by the assessee society is thus allowed

ITA 1355/JPR/2018[2010-11]Status: DisposedITAT Jaipur09 Dec 2019AY 2010-11
For Appellant: Shri Shyam Lal Agarwal (CA) &For Respondent: Smt. Rooni Paul (Addl.CIT) &

…आयकरअपीलीय अधिकरण] जयपुरन्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH ‘B’, JAIPUR Jhfot; ikyjkWo] U;kf;dlnL; ,oaJhfoØe flag ;kno] ys[kk lnL; ds le{k BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM vk;djvihy la-@ITA No. 1355 & 1356/JP/2018 fu/kZkj.ko"kZ@Assessment Years : 2010-11 & 2011-12. Income Tax Officer cuke Rajasthan Cricket Association, Vs. (Exemptions) North Block, SMS Stadium, Ward-1,Jaipur. Jan Path,Jaipur. LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No. AAATR 0798 J vihykFkhZ@Appellant izR;FkhZ@Respondent vk;djvihy la-@ITA No. 284/JP/2020 fu/kZkj.ko"kZ@Assessment Year: 2011-…

Deputy Commissioner of Income Tax (Exemption), Circle-1, Bengaluru vs. M/S. Mahatma Gandhi Vidyapeetha Trust, Bengaluru

In the result, appeal of the Revenue is dismissed while cross objection by the Assessee is allowed

ITA 2707/BANG/2017[2012-13]Status: DisposedITAT Bangalore15 Feb 2019AY 2012-13

Bench: Shri N.V. Vasudevan & Shri Jason P Boaz

For Appellant: Shri S Sukumar, AdvocateFor Respondent: Shri Pradeep Kumar, CIT
Section 11Section 12ASection 143(3)

…been elaborately noticed and extracted in a recent pronouncement i.e. Queen’s Educational Society vs. Commissioner of Income Tax (2015) 8 SCC 47. To the above principles, one further test as laid down in CIT vs. Surat Art Silk Cloth Manufacturers’ Assn (1980) 2 SCC 31 and culled out in American Hotel and Lodging Association Educational Institute vs. Central Board of Direct Taxes and Others (2008)10 SCC 509 may be added which is as follows: “In order to ascertain whether the institute is carried on with the object of making profit or not it is the duty of the prescribed authority to ascertain whether the balance o…