Madras H.C : Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the donations of Rs. 7,26,000 made by the assessee to other institutions would tantamount to application of income for charitable purposes, thus, satisfying the requirements of s. 11 ?

High Court Of Madras

CIT vs. Shri Aurobindo Memorial Fund Society

Sections 11(1)(a), 11(1A)

Asst. Year 1984-85

R. Jayasimha Babu & Mrs. A. Subbulakshmy, JJ.

TC Nos. 849 & 850 of 1990

25th March, 1999

Counsel Appeared

C.V. Rajan, for the Applicant : P.S. Janarthana Raja, for the Respondent

JUDGMENT

MRS. A. SUBBULAKSHMY, J. :

At the instance of the Revenue, the following questions of law have been referred to us for our consideration : (a) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the donations of Rs. 7,26,000 made by the assessee to other institutions would tantamount to application of income for charitable purposes, thus, satisfying the requirements of s. 11 ? and (b) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the capital gains of Rs. 28,000 arising out of sale of Bhagalpur Garden should be exempted under s. 11(1A) ? During the asst. yr. 1984-85, the assessee trust has donated funds amounting to Rs. 7,25,000 to Matriseva Trust, Aurobindo Action and Service Trust. The assessee-trust claim deduction. The ITO, rejected the claim of the assessee-trust. On appeal, the CIT(A) allowed the claim of the assesseetrust holding that the donations made by the assessee-trust were for charitable purposes. The Tribunal confirmed the order of the CIT(A).

This Court in the case of CIT vs. Thanthi Trust (1981) 23 CTR (Mad) 155 : (1982) 137 ITR 735 (Mad) : TC 23R.737 has held that the trust which has applied the money for charitable purposes was entitled to exemption under s. 11 of the Act. So, the assessee was entitled to claim exemption under s. 11 of the Act.

Following the aforesaid decision of this Court and for the reasons stated therein, we answer the first question referred to us in favour of the assessee and against the Revenue.

With regard to the second question, the assessee-trust during the asst. yr. 1984-85 sold the garden at Bhagalpur and obtained a sum of Rs. 28,000 and claimed exemption under s. 11(1A) of the Act. The ITO rejected the claim of the assessee-trust. The appeal preferred by the assesseetrust was also dismissed by the CIT(A). On further appeal, the Tribunal directed the ITO to extend the benefit of exemption under s. 11(1A) of the Act to the assessee with regard to the amount of sale proceeds.

In the decision in CIT vs. Ambalal Sarabhai Trust (1988) 71 CTR (Guj) 30 : (1988) 173 ITR 683 (Guj) : TC 23R.1310, the Gujarat High Court has held that the assessee being a charitable trust was entitled to exemption from tax on the capital gains arising on the sale of the shares, as the provisions of s. 11(1A) of the Act were fully satisfied.

Following the aforesaid decision of Gujarat High Court and for the reasons stated therein, we answer the second question in favour of the assessee and against the Revenue.

[Citation : 247 ITR 93]

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