Educational Institution-Investment in Trust publishing magazines dealing with education ancillary to main object of running educational institution ‐ trust is entitled to exemption

The assessee was allowed the benefit u/s. 11 of the I.T Act 1961, till 1985‐86. But, for the asst. years 1986‐87 and 1987‐88, the A.O. denied the exemption for the reason that (i) the assessee was not a public charitable trust; its objects were limited for the benefit of a few people; (ii) the assessee was running educational institution only for the purpose of commerce; and (iii) there was violation of the provisions of section 11(5) of the Act, inasmuch as the assessee invested the monies in two organizations publishing magazines and thereby infringed section 13(1)(c). The Commissioner (Appeals) and the Tribunal held that the assessee was entitled to exemption. On appeal the High Court held that the A.O. did not give any clear finding regarding violation of section 11(5) except making such a comment. Investing monies in the two organizations publishing magazines could not be said to be commercial ventures. They were incidental and ancillary to the main activities of the trust. The assessee was entitled to exemption under sec. 11.The Supreme Court in Yogiraj Charity Trust (1976) 103 ITR 777 (SC) held that if the primary or dominant purpose of a trust is charitable, another object which by itself may not be charitable but which is merely ancillary or incidental to the primary or dominant purpose would not prevent the trust from being a valid charity. (A.Ys. 1986‐88, 1987‐88, 1988‐89) 
CIT v. Vijaya Vani Educational Trust (2012) 349 ITR 280(AP)(High Court)