Law:

Section:

Section 5(1)(v) of the Gift-tax Act, 1958, read with section 80G of the Income-tax Act, 1961 - Exemptions - Donations to charitable/religious institution - Assessment year 1985-86 - Assessee, a political party, during relevant assessment year made donation to trust - Assessing Officer on finding that trust had utilized amount for setting off earlier year's losses and for repayment of loans taken from assessee; that certificate exempting donation under section 80G of 1961 Act was valid upto 31-3-1982 and that there was no renewal of certificate thereafter and also that trust was engaged in business of printing press, levied gift tax subject to exemption under section 5(1)(v) of 1958 Act - Whether since it was only Finance (No. 2) Act of 1991 which laid down that with effect from 1-10-1991 institution must have approval of Commissioner by way of grant of certificate for donor to claim exemption in respect of donation made by it, authorities erred in taxing donation on ground that there was no renewal of certificate of exemption under section 80G of 1961 Act for relevant assessment year - Held, yes - Whether mere fact that trust was engaged itself in running of printing press, it could not be held that income should be taxable and also it could not be said that donation was utilized to set off past losses - Held, yes - Whether, therefore, provisions of 1958 Act would not be attracted to donation made by assessee - Held, yes FACTS During the accounting period relevant to assessment year 1985-86, the assessee a political party, made a donation to a trust towards the corpus of the trust. The Assessing Officer, finding from the accounts of the trust, that the trust had utilized the amount for setting off the earlier years losses and for repayment of loans taken from the assessee; that the certificate exempting donations under section 80G of the 1961 Act was valid only up to 31-3-1982; and the trust having itself been seen to have engaged in business, held that the provisions of the 1958 Act would be attracted to the donation made by the assessee. The Assessing Officer, accordingly, levied gift-tax subject to exemption under section 5(1)(v) of the 1958 Act. The…

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