2009 (8) TMI 38 - HC - Income Tax

Exemption u/s 11(1)(a) capital expenditure incurred on fixed assets application of income Held that - There may be conceptual difference in the constitution of a Trust or any other Institution if such difference has relevance having regard to statutory scheme for exemption. In the present case expression used in Section 11 (1) (a) is income derived from property held under Trust irrespective of the fact whether income is derived by a Trust or any other Institution. Requirement is only of holding the property under Trust. The Commissioner referring to the definition of person under Section 2 (31) of the Act observed that neither society was specified as a separate category nor trust was specified as a separate category and both were covered by the expression association of persons in clause (v) or by residue clause (vii). Exemption allowed appeal dismissed.

Summary

The High Court of Punjab and Haryana heard an appeal under Section 260-A of the Income Tax Act, 1961, against a decision made by the Income Tax Appellate Tribunal. The case involved a charitable trust registered under the Society Registration Act, 1860, and Section 12A of the Act. The dispute was over whether the trust was entitled to exemption under Section 11(1)(a) of the Act for capital expenditure incurred on fixed assets as a charitable purpose. The Assessing Officer initially rejected the claim, arguing that the trust did not qualify for the exemption as it was registered under the Societies Act, 1860, not the Indian Trust Act, 1882. However, the CIT(A) and the Tribunal both ruled in favor of the trust, citing precedents and emphasizing that the property must be held under a trust for the exemption to apply. The Tribunal also noted that the Assessing Officer needed to verify the claimed expenditures. The High Court dismissed the appeal, stating that the distinction between a trust and an institution did not affect the exemption criteria as long as the property was held under a trust, regardless of the type of entity holding it. The court found that the question raised was not a substantial question of law and upheld the decision in favor of the trust.