9911796707
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Issues involved:
The judgment addresses two main issues raised by the Revenue regarding the Income-tax Act, 1961. Issue 1: Exemption under section 11(2) - The first issue pertains to whether the assessee was entitled to the exemption of Rs. 8,910 under section 11(2) of the Income-tax Act, 1961. - The Income-tax Officer taxed the accumulated income as the trustees had not given a notice for accumulation as required by section 11(2). - The Appellate Assistant Commissioner held that the notice should have been given before the close of the accounting year and the income should have been invested in specified securities within four months, based on rule 17. - The Tribunal found no time limit in section 11 or rule 17 for making the application or investment, and allowed the assessee's appeal. - The High Court agreed with the Tribunal's view, citing precedents from other High Courts, and answered the first question in favor of the assessee. Issue 2: Application of section 13(4) - The second issue concerns the benefit contemplated by section 13(4) in relation to the assessment year 1971-72. - The Income-tax Officer invoked section 13(2)(a) due to a loan advanced to a concern with substantial interest from the trust, forfeiting the exemption on the entire income. - The Appellate Assistant Commissioner applied section 13(4) and withdrew the exemption only on the interest earned from the concern. - The Tribunal upheld the Appellate Assistant Commissioner's decision, considering the provisions of section 11 and section 13. - The High Court concurred with the Tribunal's interpretation, emphasizing the interplay between section 13(2) and section 13(4), and answered the second question in favor of the assessee. The judgment clarifies the application of sections 11(2) and 13(4) of the Income-tax Act, 1961, in determining exemptions for charitable trusts, emphasizing the absence of specific time limits in certain provisions and the importance of statutory interpretation in tax matters.
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