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In this writ petition, the Petitioner has challenged the Assessment Order dated 27.03.2024 for the Assessment Year 2022-23 passed under Section 143(3) r/w. Section 144B of the Income Tax Act, 1961 (hereinafter referred to as 'IT Act').

2. Relevant Portion of the Impugned Assessment Order dated 27.03.2024 reads as under:

“4. The Judgment of Hon'ble Supreme Court of India in the case of Civil Appeal No.21762 of 2017 ACIT (Exemption) Vs. Ahemedabad Urban Development Authority should be perused in this regard. The order pertains to applicability of tax exemption to charitable trust and institutions engaged in commercial (revenue based) activities in the sixth category of “Charitable purpose” as laid down under Section 2(15) of the Income Tax Act, 1961 viz., “The advancement of any other object of general purpose utility (GPU)” i.e., charitable activity other then relief of the poor, education, yoga, medical relief, preservation of environment and preservation of monuments or places or objects of artistic or historic interest. As per section 2(15)(ii) and as per the judgment of the Hon'ble Supreme Court, in the course of achieving the object of GPU the receipt of such business, commercial activity or service should not exceed the quantified limit as amended over the year(s). The amended limit w.e.f. 01.04.2016 stands at 20% of the total receipts of the assessee trust. Here, it is important to state that the assessee trust is engaged in the activity of manufacturing or helping to produce or manufacture medical equipment including, ophthalmic instruments, lenses, surgical equipment and other accessories that are necessary for the treatment of patients. The assessee has himself stated that in attainment of object of the trust “nothing hereinafter stated shall be deemed to include any object or purpose which is not a “charitable purpose” within the meaning of section 2(15) of Indian Income Tax Act, 1961”. Since the objective of manufacturing or helping to produce medical instrument can only be stated to have been covered under the object of “General Public Utility” as stated u/s.2(15) of the Income Tax Act. The object of GPU is restricted to the quantum as https://www.mhc.tn.gov.in/judis ( Uploaded on: 24/06/2025 11:22:20 am ) stated in section 2(15)(ii). The aggregate receipts from GPU should not exceed 20% of the toal receipts of the trust. In case of the assessee trust, the quantum of receipt from sale of medical equipments [rendered in the form of GPU] is much beyond the statutory limit of 20% [as per limit prescribed u/s.2(15)(ii) and also illucidated by the Hon'ble Supreme Court in its judgment]. Therefore, the activity of assessee trust is violative of the statutory limit propounded in section 2(15)(ii) as also propounded by the Hon'ble Supreme Court in its above discussed order.
170.1. Section 11(1) relates to application of income towards the objects of the trust and exempts income of trusts with objects wholly charitable or religious, or parts of income which relate to such objects.

Section 11(1-A) provides for exemption of capital gains derived by trusts. Section 11(1-B), speaks of failure to apply income as per option under Explanation (2) to Section 11(1). Section 11(2) relates to setting apart or accumulation of income. Section 11(3) deals with consequences of misapplication of income or improper investment, while Section 11(3-A) https://www.mhc.tn.gov.in/judis ( Uploaded on: 24/06/2025 11:22:20 am ) relates to modification of purposes specified in Form 10 under Section 11(2). Sections 11(4) and 11(4-A) relate to business income of charitable trusts. Lastly, Section 11(5) provides for the prescribed modes of investment in regard to the said trusts.