Madras H.C : Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the CIT(A) had given a finding that the income received by the assessee from investments made after 1st June, 1973 was from the Banks and other approved investments, and hence there is no violation of the provisions of s. 11(5) r/w s. 13(1)(d)?

Counsel Appeared

C.V. Rajan, for the Petitioner : None, for the Respondent

ORDER

N.V. BALASUBRAMANIAN, J. :

This is a petition filed by the Director of Income-tax (Exemptions), Madras, to direct the Tribunal to state a case and refer the following questions of law under s. 256(2) of the IT Act, 1961, (hereinafter referred to as “the Act”) for the asst. yr. 1985-86.

“(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the CIT(A) had given a finding that the income received by the assessee from investments made after 1st June, 1973 was from the Banks and other approved investments, and hence there is no violation of the provisions of s. 11(5) r/w s. 13(1)(d)?”

2. “Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in upholding the CIT(A)’s order wherein it was held that the assessee was entitled to exemption under s. 11 in respect of that part of the income which did not violate the provisions of s. 11(5) r/w s. 13 (1)(d)?” The assessee is a Trust. The assessee filed a return on 30th Sept., 1995 claiming that its income was exempt from income-tax as the assessee- trust is a charitable trust. The ITO restricted the exemption only to a sum of Rs. 43,441 and negatived the claim of the assessee for exemption on the ground that the assessee-trust was holding investments in contravention of the provisions of s. 11(5) of the Act and hence the assessee was not entitled to claim exemption in respect of other income. The assessee carried the matter in appeal to the CIT(A) and the CIT(A) held that none of these assets of the assessee were invested in non-specified investments, and hence the assessee was entitled to exemption as provided under the Act. The Revenue preferred an appeal before the Tribunal against the finding of the CIT(A), to the effect that none of the assets of the assessee were invested in non-specified investments. The Tribunal also found that in respect of the total income of Rs. 43,441 the assets were invested prior to 1st June, 1973 and they are not covered by the provisions of s. 11(5) of the Act. In respect of the income received by the assessee in respect of other investments, the Tribunal affirmed the factual finding of the CIT(A) that they were invested in Banks and other approved investments. In this view of the matter, the Tribunal found that there was no violation of the provisions of s. 11(5) r/w s. 13(1)(d) of the Act. The Tribunal also noticed that the Department was not able to produce any material to prove that the assessee had invested its assets in any non-approved securities. Against this order, the Revenue preferred an application to direct the Tribunal to state a case and refer the questions of law as set out above. The Tribunal rejected the reference application on the ground that the finding given by the Tribunal was purely a finding of fact and the same did not give rise to any referable question of law. Mr. C.V. Rajan, learned counsel for the Revenue, fairly brought to our notice the findings of the Tribunal The finding is clear that the assessee was not holding the assets in non-specified investments and in so far as other investments of the Trust is concerned, the Tribunal found that they were invested in Banks and other approved investments. The Tribunal also found that there was no violation of the provisions of s. 11(5) r/w s. 13(1)(d) of the Act. In the absence of any material produced by the Revenue to controvert the finding of the Tribunal, we are of the view that the Tribunal has come to the correct conclusion that the assessee is entitled to exemption provided under s. 11(1) of the Act. In this view of the matter, we hold that the findings of the Tribunal are based on the facts of the case and no referable question of law arises out of the order of the Tribunal. Hence, this tax case petition is dismissed. No costs.

[Citation : 246 ITR 466]