C I T vs. M/S HARYANA C M RELIEF FUND

ITA/609/2007HC Punjab & HaryanaPHHC01073324200715 December 2008Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE L.N. MITTAL3 pages
AI SummaryDismissed

What were the facts?

The Revenue, represented by the Commissioner of Income-tax, Panchkula, filed an appeal under Section 260A of the Income Tax Act, 1961, against an order dated April 25, 2007, passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench 'B'. The appeal pertained to Assessment Year 2004-05. The assessee, M/s Haryana C.M. Relief Fund, Chandigarh, is a registered society registered under Section 12-A of the Act. The Assessing Officer had sought to tax the interest income earned by the assessee on bank deposits. The assessee claimed exemption under Section 11 of the Act, a claim that was upheld by the lower appellate authorities and affirmed by the Tribunal.

What did the High Court hold?

The High Court held that the interest income earned by the assessee on bank deposits was exempt under Section 11(1)(a) of the Act. The Court noted that it was not disputed that the interest was earned on a deposit which was the property of the assessee and that Section 11 clearly exempts income derived from property wholly for charitable purposes to the extent it is applied for such purposes. Regarding the Revenue's contention about the absence of a 'legal obligation', the Court referred to the explanation to Section 13(1) of the Act, which defines 'Trust' to include any other legal obligation, thereby encompassing the assessee's situation. The Court also clarified that the assessee was not seeking exemption on account of voluntary contributions under Section 12(1), but on account of interest income from property under Section 11(1)(a). Therefore, the Court found no substantial question of law and dismissed the appeal.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the interest income derived by the assessee on bank deposits is exempt under Section 11(1)(a) of the Income Tax Act, 1961, despite the absence of material evidence of a 'legal obligation' as per explanation (1) to Section 13 of the Act. 2. Whether the interest on bank deposits is exempt under Section 12(1) of the Income Tax Act, 1961, even though these are not voluntary contributions as required by the said section. The Revenue argued that there was no material evidence of a 'legal obligation' for the exemption under Section 11(1)(a) and that the interest income was not from voluntary contributions as required under Section 12(1). The assessee contended that the interest income was derived from property held for charitable purposes and was applied for such purposes, thus eligible for exemption under Section 11(1)(a). The assessee also argued that the exemption was sought under Section 11(1)(a) and not Section 12(1) based on voluntary contributions.

Which sections of the Income-tax Act were involved?

Section 260A,Section 11(1)(a),Section 13,Section 12(1)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. Case No. : I. T. A. No. 609 of 2007 Date of Decision : December 15, 2008. The Commissioner of Income-tax, Panchkula .... Appellant Vs.

M/s Haryana C. M. Relief Fund, Chandigarh .... Respondent CORAM : HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE L. N. MITTAL * * * Present : Mr. Yogesh Putney, Senior Standing Counsel for the Revenue. Mr. Akshay Bhan, Advocate and Mr. Sandeep Goyal, Advocate for the assessee. * * * ADARSH KUMAR GOEL, J. (Oral) :

1.

Revenue has preferred this appeal under Section 260A of the Income Tax Act, 1961 (for short, “the Act”) against the order dated 25.4.2007 of the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench`B', Chandigarh passed in ITA No. 601/CHANDI/2006 for the Assessment Year 2004-05, proposing to raise following substantial questions of law :- “a) Whether in the facts and circumstances of the case, the Hon'ble ITAT was right in holding that the interest income derived by the assessee on bank deposits earned by the assessee are exempt u/s 11(1)(a) whereas there is no material evidence on

The order continues below.

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