COMMISSIONER OF INCOME-TAX vs. BAKUBHAI MANSUKHBHAI CHARITY TRUST

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ITR/227/1992HC GujaratGJHC24015568199216 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, at the instance of the Revenue, was considering a reference on the question of whether the donation of Rs. 1,11,000/- to Nirmala Bakubhai Foundation was a proper application of income under Section 11. Both parties informed the Court that the controversy was concluded by a previous Division Bench decision of the same High Court in Commissioner of Income Tax v. Nirmala Babubhai Foundation, (1997) 226 ITR 394. In that prior case, the High Court had upheld the assessee's claim for exemption under Section 11 when a trust made a contribution to B.M. Institute. Therefore, following this precedent, the High Court answered the reference in favour of the assessee and against the Revenue. The reference was disposed of accordingly, with no order as to costs.

What were the facts?

The assessee, Bakubhai Mansukhbhai Charity Trust, claimed that a donation of Rs. 1,11,000/- made to Nirmala Bakubhai Foundation was a proper application of income under Section 11 of the Income Tax Act for the Assessment Year 1982-83. The Income Tax Officer disallowed this contribution. The Commissioner of Income-Tax (Appeals) allowed the claim, and the Income Tax Appellate Tribunal confirmed the decision of the CIT(Appeals). The Revenue has filed a reference to the High Court of Gujarat at Ahmedabad against the Tribunal's order.

What were the issues?

1. Whether the Appellate Tribunal is right in law and on the facts in holding that donation of Rs. 1,11,000/- given to Nirmala Bakubhai Foundation is a proper application of income under section 11 of the Income Tax Act? Assessee's Contention: The assessee argued that the payment of Rs. 1,11,000/- for the development and maintenance of B.M. Institute constituted a proper application of income for the objects of the Trust. Revenue's Contention: The Revenue, through the Income Tax Officer, disallowed the contribution of Rs. 1,11,000/- made by the assessee to B.M. Institute. The specific arguments of the Revenue before the Tribunal or the High Court are not detailed in the judgment, other than the disallowance made by the ITO.

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 227 of 1992

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 BAKUBHAI MANSUKHBHAI CHARITY TRUST -------------------------------------------------------------- Appearance: MR MANISH R BHATT for Petitioner NOTICE SERVED 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 1982-83 :

"Whether, the Appellate Tribunal is right in law and on the facts in holding that donation of Rs. 1,11,000/- given to Nirmala Bakubhai Foundation is a proper application of income under section 11 of the Income tax Act ?"

2.

It was claimed by the assessee that out of its income for the year under consideration, an amount of Rs. 1,11,000/- was applied to the objects of the Trust and payment of the amount for the purposes of development and maintenance of B.M.Institute should be allowed. The Income Tax Officer disallowed contribution of Rs. 1,11,000/- 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.)

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