C.I.T. vs. SMT. KAMLADEVI NARAYANPRASAD CHARITABLE TRUST

TAXAP/286/2004HC GujaratGJHC24025830200413 November 2014Author: HONOURABLE MR. JUSTICE KS JHAVERI,HONOURABLE MR. JUSTICE K.J.THAKER4 pages
AI SummaryDismissed

Facts

The revenue has appealed against an order of the Income Tax Appellate Tribunal (ITAT) dated December 22, 2003, concerning Tax Appeal No. 284 of 2004 and related appeals. The assessee, a charitable trust assessed as an Association of Persons (AOP), invested Rs. 3,85,000 in Gujarat Loyd Finance Ltd. The Assessing Officer disallowed this investment as a specified investment eligible for exemption under Section 11(5) of the Income Tax Act, adding it to the total income for Assessment Year 1996-97 and Rs. 3,50,000 for Assessment Year 1997-98. Exemption for interest earned on these investments was also denied. The CIT(A) confirmed the AO's order. The ITAT, however, deleted these additions for both assessment years. The revenue is aggrieved by the ITAT's decision.

Held

The High Court, in view of Circular No. 2/2005 dated October 24, 2005, issued by the Central Board of Direct Taxes, held that the present appeals do not survive as the amount involved is below the monetary limits prescribed by the Central Board. Furthermore, the Court noted that even otherwise, the appeals are without merits. Therefore, the appeals were disposed of. The issue is answered in favour of the assessee and against the revenue. The operative direction is that the appeals stand dismissed on the grounds of monetary limit and lack of merits, with the decision favoring the assessee.

Key Issues

1. Whether the Tribunal erred in deleting the additions made by the Assessing Officer regarding the assessee's investment in Gujarat Loyd Finance Ltd. for Assessment Years 1996-97 and 1997-98, and consequently, the denial of exemption for interest earned on such investments. This issue turns on the interpretation and application of Section 11(5) of the Income Tax Act, 1961. Assessee's contentions: Not recorded in the judgment. Revenue's contentions: The Tribunal committed an error in deleting the additions. The revenue relied on the decisions in Director of Income Tax (Exemptions) Vs. Sheth Mafatlal Gagalbhai Foundation Trust (2001, 249 ITR 533) and Commissioner of Income Tax Vs. Panna Knitting Industries (2002, 253 ITR 656).

Sections Cited

11(5)

AI-generated summary — verify with the full judgment below

O/TAXAP/284/2004 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 284 of 2004 With TAX APPEAL NO. 285 of 2004 TO TAX APPEAL NO. 286 of 2004 FOR APPROVAL AND SIGNATURE:

HONOURABLE MR.JUSTICE KS JHAVERI

and HONOURABLE MR.JUSTICE K.J.THAKER =========================================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ C.I.T.....Appellant(s) Versus SMT. KAMLADEVI NARAYANPRASAD CHARITABLE TRUST....Opponent(s) ================================================================ Appearance: MR PRANAV G DESAI, ADVOCATE for the Appellant(s) No. 1 MRS SWATI SOPARKAR, ADVOCATE for the Opponent(s) No. 1 ========================================

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