COMMISSIONER OF INCOME-TAX vs. NIRMALA BAKUBHAI FOUNDATION

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ITR/238/1991HC GujaratGJHC24013471199116 January 2001Author: HONOURABLE MR. JUSTICE J.M.PANCHAL,HONOURABLE MR. JUSTICE MOHIT S. SHAH2 pages
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What did the High Court hold?

The High Court held that the question of law raised in the reference was concluded by a previous Division Bench decision of the same court in Commissioner of Income Tax v. Nirmala Babubhai Foundation, (1997) 226 ITR 394. In that case, the assessee, also a trust, had made contributions to the B.M. Institute, and the High Court had upheld the assessee's claim for exemption under Section 11 of the Income Tax Act, 1961. Therefore, following this precedent, the High Court answered the reference in favour of the assessee and against the Revenue. The operative direction was to dispose of the reference accordingly, with no order as to costs. No issue was expressly left undecided.

What were the facts?

The Revenue (Commissioner of Income-tax) has referred a question of law to the High Court concerning the assessee, Nirmala Bakubhai Foundation, for Assessment Years 1981-82 and 1982-83. The assessee claimed exemption under Section 11 of the Income Tax Act, 1961, for contributions made to the B.M. Institute, amounting to Rs. 2,59,550.67 for AY 1981-82 and Rs. 59,000 for AY 1982-83, asserting these were proper applications of income for the trust's objects. The Income Tax Officer disallowed these contributions. However, the Commissioner of Income-tax (Appeals) allowed the claim, and this decision was confirmed by the Income Tax Appellate Tribunal. The High Court is now asked to rule on the validity of this exemption.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the assessee was entitled to claim exemption under Section 11 of the Income Tax Act, 1961, in respect of the contributions of Rs. 2,59,550.67 and Rs. 59,000 in AY 1981-82 and 1982-83 respectively as proper application of income under Section 11 of the Income Tax Act, 1961? (Question of law) The Revenue contended that these contributions were not a proper application of income for the trust's objects. The Assessee argued that the payments to B.M. Institute were for the development and maintenance of the institute and should be allowed as application of income towards the trust's objectives. The judgment does not explicitly record arguments for the Revenue beyond the reference question, but it implies their disagreement with the lower authorities' findings. The Assessee's contention is that the contributions were for the trust's purposes.

Which sections of the Income-tax Act were involved?

Section 11

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 238 of 1991

For Approval and Signature:

Hon'ble MR.JUSTICE J.M.PANCHAL and Hon'ble MR.JUSTICE M.S.SHAH

============================================================ 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 NIRMALA BAKUBHAI FOUNDATION -------------------------------------------------------------- Appearance: MR MANISH R BHATT for Petitioner MR RK PATEL for Respondent No. 1

--------------------------------------------------------------

CORAM : MR.JUSTICE J.M.PANCHAL and MR.JUSTICE M.S.SHAH

Date of decision: 16/01/2001

ORAL JUDGEMENT (Per : MR.JUSTICE J.M.PANCHAL)

At the instance of the Revenue, Income Tax Appellate Tribunal has referred following question of law for opinion of this Court in respect of Assessment Years 1981-82 and 1982-83 :

"Whether, on the facts and in the circumstances of the case, the assessee of the case was entitled to claim exemption u/s.11 of the I.T.Act, 1961 in respect of the contributions of Rs. 2,59,550.67 ps. and Rs. 59,000/- in A.Y. 1981-82 and 1982-83 respectively as proper application of income u/s. 11 of the I.T.Act, 1961 ?"

2.

It was claimed by the assessee that out of its income for the years under consideration, amounts of Rs.2,59,550.67 ps. and Rs. 59,000/- were applied to the objects of the Trust and payment of the said amounts for the purposes of development and maintenance of B.M.Institute should be allowed. The Income Tax Officer disallowed contribution of Rs. 2,59,550.67 ps. and Rs. 59,000/- made by the assessee to B.M. Institute. C.I.T. (Appeals) granted allowance as claimed by the assessee and the Tribunal has confirmed the decision of the C.I.T. (Appeals).

3.

We have heard the learned counsel for the parties. The learned counsel for the parties state at the Bar that the controversy raised in the present Reference is concluded by the Division Bench of this Court in Commissioner of Income Tax v. Nirmala Babubhai Foundation, (1997) 226 ITR 394. In the said case also the assessee which was a trust, had made contribution to B.M.Institute and the High Court has upheld the assessee's claim for exemption under section 11 of the Income Tax Act, 1961. In view of the decision referred to above, the Reference is answered in favour of the assessee and against the Revenue. The Reference accordingly stands disposed of, with no order as to costs.

(J.M.Panchal,J.) (M.S.Shah, J.)

(patel)

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