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Issues Involved:
1. Entitlement to exemption under Section 11 of the IT Act, 1961. 2. Violation of Section 13(3) of the IT Act, 1961. 3. Application of Section 11(4A) of the IT Act, 1961. 4. Charging of interest under Section 234B of the IT Act, 1961. Issue-wise Detailed Analysis: 1. Entitlement to Exemption under Section 11 of the IT Act, 1961: The primary issue revolves around whether the assessee-trust is entitled to exemption under Section 11 of the IT Act, 1961. The trust, established by a trust deed dated 17th August 1977, claimed exemption on the grounds of being a public charitable trust with the objective of promoting Punjab, Punjabi, and Punjabiath. The AO denied the exemption, arguing that the trust's activities were pervaded by a profit motive, citing the Supreme Court judgment in Sole Trustee Lok Shikshan Trust vs. CIT. The CIT(A) upheld the AO's decision, stating that the trust's activities did not fulfill the charitable purpose as none of the trust's objectives had been partially fulfilled over 20 years. The Tribunal, however, noted that the main object of the trust was to promote Punjab, Punjabi, and Punjabiath, which could be considered an object of general public utility. The Tribunal referenced the case of Trustees of the Tribune, In re, which held that running a newspaper could be an object of general public utility. The Tribunal concluded that the trust's activities were indeed charitable in nature and that the trust was entitled to exemption under Section 11. 2. Violation of Section 13(3) of the IT Act, 1961: The AO and CIT(A) argued that the trust violated Section 13(3) by making payments to specified persons, including trustees and relatives of the author of the trust. Payments included Rs. 12,000 to Bibi Parkash Kaur, Rs. 2,44,379 to S. Barjinder Singh, and rent payments to S. Barjinder Singh and Smt. Sarabjit Kaur. The Tribunal found that the payments were not excessive and were made for services rendered, thus not violating Section 13(3). The Tribunal emphasized that the payments were reasonable and necessary for the trust's operations. 3. Application of Section 11(4A) of the IT Act, 1961: The AO and CIT(A) contended that the trust did not fulfill the conditions of Section 11(4A), which requires that the business should be incidental to the attainment of the objectives of the trust and that separate books of accounts should be maintained. The Tribunal noted that the amended provisions of Section 11(4A), effective from 1st April 1992, were more beneficial to the trust. The Tribunal concluded that the trust's business of running a newspaper was incidental to its main objective and that separate books of accounts were maintained, thus fulfilling the conditions of Section 11(4A). 4. Charging of Interest under Section 234B of the IT Act, 1961: The issue of charging interest under Section 234B was deemed consequential in nature by both parties. The Tribunal ordered accordingly. Conclusion: The Tribunal concluded that the assessee-trust was entitled to exemption under Section 11 of the IT Act, 1961, as its activities were charitable in nature and incidental to its main objective of promoting Punjab, Punjabi, and Punjabiath. The Tribunal also found that the trust did not violate Section 13(3) and fulfilled the conditions of Section 11(4A). The issue of charging interest under Section 234B was deemed consequential. The appeals were partly allowed.
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