2012 (6) TMI 913 - HC - Income Tax

Summary

Issues involved:
The issues involved in this case are the entitlement for exemption u/s.11 of the Income Tax Act and whether the activities of the assessee trust are attracted by the provisions of section 13(1)(a) and 13(1)(b) of the Income Tax Act, 1961.

Entitlement for Exemption u/s.11 of the Income Tax Act:
The case involved a Jain Derasar Trust registered under the Bombay Public Trust Act, 1950, seeking exemption under Section 11 of the Income Tax Act, 1961. The Assessing Officer disallowed the claim for exemption citing provisions of Section 13(1)(a) and 13(1)(b) of the Act, alleging the activities of the Trust were limited to a particular Jain sect. The assessee contended that it was engaged in public charitable activities and had previously been allowed exemption under Section 11. The CIT(A) allowed a rectification application based on earlier Tribunal orders supporting the charitable nature of the trust's activities.

Activities of the Assessee Trust under Section 13(1)(a) and 13(1)(b) of the Income Tax Act:
The Tribunal relied on previous assessment years where the trust was considered a public charitable trust engaged in charitable activities beyond religious services. Citing the Supreme Court's observation in Chandra Charitable Trust case, the Tribunal emphasized that if a trust is engaged in charitable activities beyond religious services, it qualifies as a charitable trust and is not subject to Section 13(1)(b). The Tribunal found no reason to deny the trust the benefit of exemption under Section 11 for the assessment year in question, as the trust's character as a public charitable trust had been accepted in previous years.

Legal Precedent and Conclusion:
The Supreme Court's decision in Radhasoami Satsang v. CIT was referenced to highlight that when a fundamental aspect remains consistent across assessment years and is not challenged, it should not be changed in subsequent years. The Tribunal's decision to uphold the trust's entitlement to exemption under Section 11 was deemed appropriate, with no substantial question of law arising for consideration. Consequently, the Tax Appeal was dismissed by the High Court.