Law:

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[2010] 195 Taxman 232 (Madras)/[2011] 330 ITR 24 (Madras)/[2011] 238 CTR 306 (Madras) [2010] 195 TAXMAN 232 (MAD.) HIGH COURT OF MADRAS Director of Income-tax (Exemptions), Madras v. Willington Charitable Trust F.M. IBRAHIM KALIFULLA AND M.M. SUNDRESH, JJ. TAX CASE (APPEAL) NOS. 1812, 2112 TO 2116 OF 2008 AND 468 OF 2010 OCTOBER 8, 2010 Section 11 of the Income-tax Act, 1961 - Charitable or religious trust - Exemption of income from property held under - Assessment years 1995-96 to 1998-99, 2000-01, 2002-03 and 2005-06 - Whether section 11(4A) and section 11(4) are complementary to each other and section 11(4A) does not restrict power under section 11(4) - Held, yes - Whether when a business income is used towards achievement of an object of a trust, it would amount to being incidental to achievement of object of trust, notwithstanding profit and gain involved therein and would be eligible for exemption under section 11(4A) - Held, yes - Whether in order to satisfy himself as to entitlement of income eligible for exemption under section 11(4A), Assessing Officer has to necessarily go through relevant records like application, accumulation, deployment of income in specified assets, utilization of income, etc., and if he finds that income shown in return has not been actually utilized for a charitable purpose as claimed by assessee, then exemption claimed of said income cannot be allowed - Held, yes Interpretation of statute : Rule of harmonious construction FACTS The assessee was a charitable trust. Its main objects were to establish, run or maintain educational, technical or technological institutions of all kinds in India for the benefit of the public; to award scholarships and stipends for education; to institute lectureships and arrange lectures and establish endowments for such purposes; and to institute and maintain or support hospitals, dispensaries, etc. It owned a building which being old was demolished and two halls were constructed by the assessee. The assessee let out said halls as marriage halls and auditoriums. A part of the building was used for running a hostel for women and another part of it had been let out to a bank on a rental basis. For the…

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