COMMISSIONER OF INCOME-TAX vs. NIRMALA BAKUBHAI FOUNDATION

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ITR/132/1985HC GujaratGJHC24012264198521 September 2000Author: HONOURABLE THE CHIEF JUSTICE MR. JUSTICE D.M.DHARMADHIKARI,HONOURABLE MR. JUSTICE ANIL R. DAVE2 pages
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What did the High Court hold?

The High Court held that the questions raised in the reference were covered by a previous Division Bench decision of the same court in the case of the same assessee for the assessment year 1978-79, reported in 226 ITR 394 (CIT vs. Nirmala Bakubhai Foundation). In that prior decision, all three questions were answered in favour of the assessee and against the revenue. Therefore, for the assessment year in question, the High Court also answered the questions in favour of the assessee and against the revenue. The reasoning is based on the precedent set by the earlier judgment. The operative direction is that the reference is disposed of accordingly, with no order as to costs. No issues were expressly left undecided.

What were the facts?

This case involves a reference made by the Commissioner of Income-tax to the High Court of Gujarat concerning the Nirmala Bakubhai Foundation. The reference pertains to assessment year(s) not explicitly stated but implied to be the same as a prior decision. The order under challenge is that of the Income-tax Appellate Tribunal. The revenue is the petitioner (Commissioner of Income-tax), and the respondent is the assessee (Nirmala Bakubhai Foundation). The dispute revolves around the taxability of interest received on a fixed deposit and a contribution made to B.M.Institution, and consequently, the applicability of exemptions under Sections 11 and 12 of the Income-tax Act, 1961. The procedural history indicates that the High Court is opining on questions of law referred by the revenue under Section 256(1).

What were the issues?

The Tribunal had to decide the following questions of law: 1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal erred in law in holding that the interest received on a fixed deposit from Shahibag Entr. Pvt. Ltd. was not covered under Section 13(2)(h) and Section 13(2)(a) of the Income-tax Act, 1961. 2. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal erred in law in holding that a contribution of Rs. 3,10,424/- made to B.M. Institution was an application of income of the trust. 3. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal erred in law in holding that exemption under Sections 11 and 12 of the Income-tax Act, 1961, is applicable on interest income and the amount contributed to B.M. Institute. Contentions: Assessee: The assessee argued that the Tribunal's findings on all three issues were correct and that the exemptions under Sections 11 and 12 were applicable. Revenue: The revenue contended that the Tribunal had erred in law in its findings regarding the interest income and the contribution to B.M. Institution, and that the exemptions under Sections 11 and 12 were not applicable.

Which sections of the Income-tax Act were involved?

Section 256(1),Section 13(2)(h),Section 13(2)(a),Section 11,Section 12

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 132 of 1985

For Approval and Signature:

Hon'ble CHIEF JUSTICE MR DM DHARMADHIKARI and Hon'ble MR.JUSTICE A.R.DAVE

============================================================ 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 Akil Qureshi with Mr MANISH R BHATT for Petitioner Mr R.K.Patel and Mr. B.D Karia for the respondent --------------------------------------------------------------

CORAM : CHIEF JUSTICE MR DM DHARMADHIKARI and MR.JUSTICE A.R.DAVE

Date of decision: 21/09/2000

ORAL JUDGEMENT

Following questions of law have been referred at the instance of the revenue under section 256 (1) of the Income tax Act, 1961, for our opinion:

(1) Whether on the facts and in the circumstances of the case, the Income tax Appellate Tribunal has not erred in law in holding that the interest received on fixed deposit from Shahibag Entr.Pvt.Ltd was not covered under section 13 (2) (h) and 13 (2)(a) of the Income tax Act, 1961 .

(2) Whether on the facts and in the circumstances of the case, the Income tax Appellate Tribunal has not erred in law in holding that contribution of Rs. 3,10,424/- made to B.M.Institution was an application of income of the trust ?

(3) Whether on the facts and in the circumstances of the case, the Income tax Appellate Tribunal has not erred in law in holding that exemption under sections 11 and 12 of the Income tax Act,1961 is applicable on interest income and the amount contributed to B.M.Institute?

Learned counsel appearing for the revenue and the assessee agree that the questions raised are covered by the Division Bench decision of this court in the case of the same assessee for the assessment year 1978-79 . The parekh

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