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SECTION 256(2) OF THE INCOME-TAX ACT, 1961 - REFERENCE - QUESTION OF LAW - ITO GRANTED EXEMPTION TO THE ASSESSEE, A CHARITABLE TRUST, UNDER SECTION 11 - COMMISSIONER SET ASIDE THE ASSESSMENT ORDER ON THE GROUND THAT LOANS WERE ADVANCED TO PERSONS FALLING UNDER SECTION 13(3) WHICH WOULD DISQUALIFY THE TRUST FROM EXEMPTION, AND DIRECTED ITO TO EXAMINE THIS POINT - TRIBUNAL, HOWEVER, HELD THAT WHEN ITO GRANTED EXEMPTION, HE HAD ALREADY CONSIDERED ALL RELEVANT FACTS - REVENUE SOUGHT REFERENCE ON THE GROUND THAT THERE WAS NO MATERIAL AVAILABLE ON RECORD TO SUPPORT TRIBUNAL'S CONCLUSION - WHETHER A QUESTION OF LAW ARISES - HELD, ON FACTS, YES Facts The ITO had granted exemption to the assessee, a charitable trust, under section 11 of the Income-tax Act, 1961. The Commissioner, however, taking the view that because of certain loans having been advanced to persons who fell within the category referred under section 13(3), the trust would be disqualified from exemption, set aside the assessment under section 263 and directed the ITO to examine this point. On appeal, the Tribunal held that the ITO had examined the entire record and had granted exemption after considering all facts and making thorough enquiries about the applicability of section 13(1)(c ). The revenue's application for a reference on the ground that there was no material available on record to support the Tribunal's conclusion was also rejected by the Tribunal. On application under section 256(2): Held A question of law did arise out of the Tribunal's order, viz., whether on the basis of material available on record, the Tribunal was right in holding that the ITO had granted exemption under section 11 after making thorough enquiries about the applicability of section 13(1)( c). The Tribunal was, therefore, directed to state the case. JUDGMENT Shukla, J. -This is an application under section 256(2) of the Income-tax Act, 1961 ('the Act') seeking a direction to the Tribunal, Indore, to state the case and refer it for decision of certain questions stated in the application. 2. The assessee is a public…

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