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TMI Blog1987 (6) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... entitled to exemption under section 11 of the Income-tax Act, as the deed of rectification to the Trust Deed was held to be not valid. The assessee has filed a nil return on 29-6-1979. After discussion of the case with the assessee's representative, the assessment is made as shown below : The assessee has made total donations of Rs. 25,500 during the previous year. A sum of Rs. 10,000 made to Andhra Mahila Sabha is exempt under section 5(1)(v). Rs. Total gifts 25,500 Less : Exemption u/s 5(1)(v) as mentioned above 10,000 ------------------ 15,000 Less: Exemption u/s 5(2) 5,000 ------------------ Taxable gift 10,000 ------------------ Gift-tax thereon 525 ------------------ This should be paid as per demand notice a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned departmental representative submitted that the matter had gone up to the High Court for the assessment year 1976-77 and the case was reported as Sakthi Charities v. CIT [1984] 149 ITR 624 (Mad.). The Madras High Court has stated that the trust deed was executed on 25-6-68 and there were certain objectives which were considered to be not charitable and a rectification deed was executed on 31-1-69. The ITO had held that the assessee was not entitled to exemption because of the existence of the original offending objectionable clauses and, according to him, the subsequent rectification deed was not valid. During the pendency of the appeal for the assessment year 1976-77 before the Tribunal, the assessee filed a suit u/s 92 of the C.P.C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant, read as under : " 45. The provisions of this Act shall not apply to gifts made by--- (e) any institution or fund the income whereof is exempt from income-tax under section 11 of the income-tax Act. Explanation 3 : For the removal of doubts, it is hereby declared that the exemption admissible under clause (e) in relation to gifts made by an institution or fund referred to in that clause shall not be denied merely on either or both of the following grounds, namely : (i) that, subsequent to the gift, any part of the income of the institution or fund has become chargeable to tax due to non-compliance with any of the provisions of section 11 of the Income-tax Act ; (ii) that, under clause (c) of sub-section (1) of section 13 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption u/s 11 was accepted and the assessment was made on nil income). But the ITO did not accept the same and made an assessment on 5-8-81 on a total income of Rs. 4,60,129. That was contested in appeal and the CIT (A) by his order dt. 15-1-82 held that the reopening was bad in law since there was no non-disclosure of any material facts. The effect, therefore, for the assessment year 1970-71 for income-tax purposes is that the assessee was held to be exempt u /s 11. When we come, to section 45(e) of the Gift-tax Act, we have to look to the completed assessment for the assessment year 1970-71 as it stands today. Since the re-assessment was cancelled by the CIT (A) for the assessment year 1970-71 by his order dt. 15-1-82 and under the origina ..... X X X X Extracts X X X X X X X X Extracts X X X X
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