1993 (1) TMI 32 - HC - Income Tax

Summary

Issues involved:
The judgment involves the interpretation of whether the provisions of section 13(1)(c) of the Income-tax Act, 1961 are applicable, specifically in relation to the exemption of trust income under section 11(1) of the Act.

Summary:
The case pertains to an assessee-trust created by a company for charitable purposes, with a dispute arising over the application of trust income. The Income-tax Officer contended that since part of the income was spent on employees of the company, the trust was disqualified from seeking exemption under section 11(1)(b) of the Act. However, the Appellate Assistant Commissioner and the Tribunal ruled in favor of the trust, stating that the income was applied for charitable purposes as per the trust deed, without any obligation to benefit company employees specifically.

The Tribunal found that the trust was not created for the purpose of granting relief to company employees, and any relief provided was based on fulfilling relevant conditions for charitable assistance. The judgment analyzed relevant provisions, emphasizing that the trust's income was exclusively applied for charitable purposes as per the trust deed, meeting the statutory requirements for exemption under section 11(1)(a) of the Act.

The judgment highlighted that for a trust to qualify for exemption under section 11(1)(a), it must demonstrate that the trust's purpose is charitable and that no income benefits specified persons under section 13(3) of the Act. It was established that the trust was established solely for charitable purposes, benefiting the general public, and that the employees of the company did not fall within the specified categories under section 13(3), thus not disentitling the trust from claiming exemption.

In conclusion, the court ruled in favor of the assessee, stating that the trust met the requirements for exemption under section 11(1)(a) of the Act. Costs were awarded to the assessee, and the judgment was to be communicated to the Income-tax Appellate Tribunal, Patna Bench.

Separate Judgment:
There was no separate judgment delivered by the judges in this case.