Law:

Section:

Section 13 of the Income-tax Act, 1961 - Charitable or religious trust - Denial of exemption Where for earlier year Tribunal had allowed assessee's claim for exemption under section 11 holding that application of income of trust had been towards cherished and avowed objects and purposes of assessee trust, for assessment year in question Assessing Officer was not justified in disallowing assessee's claim on ground that there was violation of provisions of section 13(1)(bb) Although the assessee-trust was allowed exemption under section 11 till 1976-77 but for the first time exemption from income-tax was disallowed in view of the provisions of section 13(1)(bb) by the Assessing Officer. However, the appellate authority allowed the claim of the assessee for entitlement of exemption under section 11. Thereafter, for the assessment year in question i.e. 1981-82, the Assessing Officer again disallowed the assessee-trust exemption under section 11 on the ground that there was violation of provisions of section 13(1)(bb) inasmuch as the assessee-trust was carrying on business which was not for primary purposes of the trust. The Assessing Officer also held that the assessee had violated the provisions of section 13(1)(c) because it had rented out two cinema halls to one KC which, in their turn, gave the management and exhibition of films to one RE. The Assessing Officer further held that the assessee was not managing the trust property. Held that in the instant case in all assessment proceedings from 1969 onwards, the character and objects of the trust were not disputed and had always been accepted by the Assessing Officer, the Commissioner (Appeals) and the up to the Tribunal. Both the appellate authority and the Tribunal fully dealt with the matter at length in the appeal against the assessment order for the years 1978-79,1979-80 and 1980-81 with regard to applicability of section 13(1)(bb). The Tribunal held that the application of the income of the trust had been towards the cherished and avowed objects and purposes of the assessee trust. In view of this the Assessing Officer was not justified in disallowing the assessee's claim for exemption for the assessment year…

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