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Issues Involved:
1. Entitlement to exemption u/s 11 of the Income-tax Act, 1961. 2. Application of the principle of res judicata. 3. Interpretation of "charitable purpose" u/s 2(15) of the Act. Summary: 1. Entitlement to Exemption u/s 11 of the Income-tax Act, 1961: The primary issue was whether the assessee-trust was entitled to exemption u/s 11 for the assessment years 1971-72, 1972-73, 1974-75 to 1977-78. The Assessing Officer initially granted exemption but later reopened the assessments, concluding that the trust's objects involved activities for profit, thus falling outside the scope of "charitable purpose" as defined u/s 2(15) of the Act. The Commissioner of Income-tax (Appeals) upheld this view, noting that some objects were non-charitable and the trustees had discretion to use funds for these non-charitable objects. The Tribunal confirmed this decision, referencing the Supreme Court's ruling in CIT (Addl.) v. Surat Art Silk Cloth Manufacturers Association [1980] 121 ITR 1 and the Delhi High Court's decision in Jaipur Charitable Trust v. CIT [1981] 127 ITR 620. 2. Application of the Principle of Res Judicata: The assessee argued that the Revenue was bound by its earlier decision granting exemption u/s 15B of the 1922 Act and could not change its stance without new facts. The court rejected this argument, stating that the doctrine of res judicata does not strictly apply to tax proceedings and that the amended definition of "charitable purpose" in the 1961 Act allowed the Assessing Officer to reconsider the trust's nature. 3. Interpretation of "Charitable Purpose" u/s 2(15) of the Act: The court examined the definition of "charitable purpose" and noted that it includes relief of the poor, education, medical relief, and advancement of any other object of general public utility not involving the carrying on of any activity for profit. The court found that the trust's objects, such as establishing nursing homes, dairies, and small-scale industries, involved profit-making activities. Since the trust deed allowed trustees to use funds for both charitable and non-charitable purposes, the trust could not be considered charitable. The court emphasized that if any object of the trust is non-charitable and the trustees have discretion to apply funds to any object, the entire trust fails to qualify for exemption. Conclusion: The court concluded that the assessee-trust was not entitled to exemption u/s 11 of the Act for the relevant assessment years. The Tribunal's decision was upheld, and the question referred was answered in the affirmative, in favor of the Revenue and against the assessee. The court also clarified that the principle of res judicata did not apply in this case due to the amended definition of "charitable purpose."
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