1999 (3) TMI 34 - HC - Income Tax

Summary

Issues involved: Interpretation of u/s 11 for exemption on donation and set-off of funds deficiency u/r earlier year's surplus.

Interpretation of u/s 11 for exemption on donation: The assessee-trust donated Rs. 31,050 to another charitable trust during the assessment year 1984-85, seeking exemption u/s 11 of the Act. The Income-tax Officer initially rejected the claim, but the Commissioner (Appeals) allowed it. The Tribunal upheld the Commissioner's decision. Citing a previous case, the court emphasized that a trust applying money for charitable purposes is eligible for exemption under u/s 11, regardless of how the transferee institution handles the funds. Consequently, the court ruled in favor of the assessee against the Revenue.

Set-off of funds deficiency u/r earlier year's surplus: The Tribunal determined that the trust could offset the excess application amount from the previous year against the Rs. 82,516 deficiency in the current assessment year. Referring to similar cases in Rajasthan and Gujarat High Courts, where the questions were resolved in favor of the assessee, the court followed suit. Consequently, the court ruled in favor of the assessee against the Revenue based on the precedents set by the Rajasthan and Gujarat High Courts.