COMMISSIONER OF INCOME-TAX vs. BAKUBHAI MANSUKHBHAI CHARITY TRUST

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ITR/237/1991HC GujaratGJHC24013470199116 January 2001Author: HONOURABLE MR. JUSTICE J.M.PANCHAL,HONOURABLE MR. JUSTICE MOHIT S. SHAH2 pages
AI SummaryAllowed

What did the High Court hold?

The High Court of Gujarat, in its oral judgment, answered the referred question of law in favour of the assessee and against the Revenue. The Court noted that the controversy was concluded by a previous Division Bench decision of the same High Court in the case of Commissioner of Income Tax v. Nirmala Babubhai Foundation, (1997) 226 ITR 394. In that precedent case, the High Court had upheld an assessee trust's claim for exemption under Section 11 for a contribution made to B.M. Institute. Therefore, applying the ratio decidendi of the Nirmala Babubhai Foundation case, the High Court held that the assessee was entitled to claim exemption under Section 11 for the contribution of Rs. 90,000/-. The Reference was disposed of accordingly, with no order as to costs.

What were the facts?

The Revenue (Commissioner of Income-tax) has filed an Income Tax Reference before the High Court of Gujarat at Ahmedabad concerning Assessment Year 1981-82. The assessee, Bakubhai Mansukhbhai Charity Trust, claimed exemption under Section 11 of the Income Tax Act, 1961, for a contribution of Rs. 90,000/- made to B.M. Institute, asserting it was applied for the trust's objects, specifically for the development and maintenance of the institute. The Income Tax Officer disallowed this contribution. However, the Commissioner of Income-tax (Appeals) granted the exemption, and this decision was confirmed by the Income Tax Appellate Tribunal. The High Court is now considering the question of law referred by the Tribunal at the instance of the Revenue.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the assessee was entitled to claim exemption u/s.11 of the I.T.Act, 1961 in respect of the contribution of Rs.90,000/- made to B.M. Institute? (Question of law) Assessee's Contention: The assessee argued that the contribution of Rs. 90,000/- to B.M. Institute was applied towards the objects of the Trust, specifically for its development and maintenance, and therefore, should be allowed as an application of income for charitable purposes, entitling them to exemption under Section 11. Revenue's Contention: The Revenue, through the Income Tax Officer, disallowed the contribution. The specific arguments of the Revenue before the High Court are not explicitly recorded, but their challenge to the Tribunal's order implies disagreement with the allowance of the exemption. The Revenue relied on the Income Tax Officer's disallowance and sought to overturn the decisions of the CIT(A) and the Tribunal.

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 237 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? :

-------------------------------------------------------------- COMMISSIONER OF INCOME-TAX Versus BAKUBHAI MANSUKHBHAI CHARITY TRUST -------------------------------------------------------------- Appearance: MR RK PATEL for Petitioner SERVED BY RPAD - (N) 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 Year 1981-82 :

"Whether, on the facts and in the circumstances of the case, the assessee was entitled to claim exemption u/s.11 of the I.T.Act, 1961 in respect of the contribution of Rs.90,000/- made to B.M. Institute ?"

2.

It was claimed by the assessee that out of its income for the year under consideration, an amount of Rs. 90,000/- was applied to the objects of the Trust and payment of the said amount for the purposes of development and maintenance of B.M.Institute should be allowed. The Income Tax Officer disallowed contribution of Rs. 90,000/- 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. (patel) (J.M.Panchal,J.) (M.S.Shah, J.)

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