COMMISSIONER OF INCOME-TAX vs. SARABHAI FOUNDATION

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ITR/96/1991HC GujaratGJHC24013329199116 October 2001Author: HONOURABLE MR. JUSTICE MOHIT S. SHAH,HONOURABLE MR. JUSTICE D.A.MEHTA2 pages
AI SummaryRemanded

What did the High Court hold?

The Gujarat High Court answered both referred questions in the affirmative, in favour of the assessee and against the revenue. The Court noted that the issue was concluded by its own previous decisions in CIT vs. Insaniat Trust (173 ITR 248) and CIT vs. Ambalal Sarabhai Trust No.30 (Income Tax Reference No.301 of 1985, decided on 5th March 1998). It was common ground between both sides that these precedents covered the issue. Therefore, following these decisions, the Court held that the ITAT was correct in its findings. The operative direction was to answer the questions in favour of the assessee, disposing of the reference accordingly without any order as to costs.

What were the facts?

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench 'B', referred two questions to the Gujarat High Court at the instance of the revenue. The revenue's case was that the assessee was not entitled to exemption under Section 11 of the Income Tax Act, 1961, due to the provisions of Section 13(2)(h). The Commissioner of Income Tax (Appeals) had held that Section 13(2)(h) was not attracted, and the ITAT confirmed this appellate order. The matter came before the High Court as an Income Tax Reference No. 96 of 1991.

What were the issues?

The Tribunal had to decide the following questions of law: 1. Whether the Tribunal erred in law and on facts in holding that the Income Tax Officer (ITO) was not justified in invoking the provisions of Section 13(2)(h) of the Income Tax Act, 1961. 2. Whether the Tribunal erred in law and on facts in allowing the exemption under Section 11 of the Income Tax Act, 1961, to the assessee. Arguments: Assessee: The assessee contended that Section 13(2)(h) was not attracted, and therefore, the exemption under Section 11 was rightly allowed. This position was confirmed by the CIT(A) and the ITAT. Revenue: The revenue argued that by virtue of Section 13(2)(h), the assessee was not entitled to exemption under Section 11. They sought to invoke this provision to deny the exemption.

Which sections of the Income-tax Act were involved?

Section 11,Section 13(2)(h),Section 256(2)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No 96 of 1991 For Approval and Signature: Hon'ble MR.JUSTICE M.S.SHAH and Hon'ble MR.JUSTICE D.A.MEHTA ============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements? 2. To be referred to the Reporter or not? : NO 3. Whether Their Lordships wish to see the fair copy : NO of the judgement? 4. Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? 5. Whether it is to be circulated to the Civil Judge? : NO -------------------------------------------------------------- COMMISSIONER OF INCOME-TAX Versus SARABHAI FOUNDATION -------------------------------------------------------------- Appearance: 1. INCOME TAX REFERENCE No. 96 of 1991 MR AKIL KURESHI with MR MANISH R BHATT for Petitioner No. 1 MR RK PATEL for Respondent No. 1 -------------------------------------------------------------- CORAM : MR.JUSTICE M.S.SHAH and MR.JUSTICE D.A.MEHTA Date of decision: 16/10/2001 ORAL JUDGEMENT (Per : MR.JUSTICE D.A.MEHTA) The Income Tax Appellate Tribunal, Ahmedabad Bench `B' has referred the following two questions under section 256 (2) of the Income Tax Act, 1961 for the opinion of this Court at the instance of the revenue:- (i) Whether the Tribunal has not erred in law and on facts in holding that the ITO was not justified in invoking the provisions of sec. 13 (2)(h) of the I.T. Act, 1961 ? (ii) Whether, the Tribunal has not erred in law and on facts in allowing the exemption u/s.11 of the I.T. Act, 1961 to the assessee ? 2. The case of the Department was that by virtue of provisions of sec. 13 (2)(h) of the Act, the assessee was not entitled to exemption under section 11 of the Act. In appeal, the CIT (Appeals) held that section 13 (2)h) was not attracted and the Tribunal confirmed the

appellate order.

3.

We have heard Mr. Akil Kureshi learned counsel zgs/-

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