1997 (4) TMI 19 - HC - Income Tax

Summary

Issues:
1. Interpretation of provisions of section 11(5) and section 13(1)(d) of the Income-tax Act, 1961.
2. Entitlement of the assessee-trust to exemption under section 11.
3. Rejection of reference application by the Appellate Tribunal.

Analysis:
The judgment pertains to a petition filed by the Director of Income-tax (Exemptions), Madras, seeking direction for the Income-tax Appellate Tribunal to state a case and refer questions of law under section 256(2) of the Income-tax Act, 1961, for the assessment year 1985-86. The primary issue was whether the assessee-trust was entitled to exemption under section 11 of the Act despite allegations of holding investments in contravention of section 11(5). The Income-tax Officer initially restricted the exemption claimed by the assessee, contending that the investments were in violation of section 11(5), thereby disqualifying the trust from claiming exemption on other income.

Upon appeal, the Commissioner of Income-tax (Appeals) found that the assets of the assessee were not invested in non-specified investments, thereby upholding the trust's entitlement to exemption under the Act. Subsequently, the Appellate Tribunal affirmed the Commissioner's findings, stating that the assets were invested in approved avenues, and there was no violation of the relevant provisions. The Tribunal also noted the absence of evidence from the Revenue to challenge the findings.

The High Court, in its judgment, concurred with the Tribunal's conclusions, emphasizing that the trust had not breached the provisions of section 11(5) and section 13(1)(d) of the Act. The Court highlighted that the Tribunal's decision was based on factual analysis, and no question of law arose from the order. Consequently, the Court dismissed the tax case petition, asserting that the trust was indeed entitled to the exemption provided under section 11(1) of the Income-tax Act, 1961. The judgment concluded by rejecting the Revenue's application and ordering no costs to be incurred.

In summary, the judgment clarified the interpretation of relevant provisions, affirmed the trust's entitlement to exemption under section 11, and upheld the Tribunal's factual findings, leading to the dismissal of the reference application by the Revenue.