1991 (7) TMI 20 - HC - Income Tax

Summary

Issues involved: Interpretation and implementation of Income-tax Appellate Tribunal's order, recomputation of total income by Income-tax Officer.

Interpretation and implementation of Tribunal's order: The case involved a trust claiming exemption under section 11(1)(a) of the Income-tax Act, 1961. The Income-tax Officer initially did not allow the exemption claimed by the trust. Upon appeal, the Appellate Assistant Commissioner determined the trust to be charitable and subject to the conditions of section 11(1)(a). However, the Income-tax Officer, in a subsequent order, included most of the income as taxable, stating it had not been applied to charitable purposes. The trust contended that its income had been attached by the Tax Recovery Officer, thus not physically received, and therefore could not be applied as per section 11(1)(a). The Appellate Assistant Commissioner dismissed the appeal, leading the trust to appeal to the Income-tax Appellate Tribunal.

Recomputation of total income by Income-tax Officer: The Income-tax Appellate Tribunal reversed the Appellate Assistant Commissioner's decision and directed the Income-tax Officer to pass an order under section 251/154 of the Income-tax Act, 1961. Subsequently, the Income-tax Officer redetermined the taxable income, adding the share income from a firm, Messrs. J. K., Calcutta, despite it being subject to attachment and not physically received by the trust. The Appellate Assistant Commissioner accepted the trust's claim for the assessment year 1968-69, excluding the share income due to the attachment.

Judgment: The Income-tax Appellate Tribunal's findings were considered binding between the parties. The Tribunal's directions were to be followed by the Income-tax Officer without going beyond the scope of the order. The Tribunal's decision was final, and the Income-tax Officer erred in recomputing the total income of the trust. The High Court upheld the Tribunal's decision, answering the questions in favor of the assessee and directing each party to bear their own costs.