Law:

Section:

Section 11, read with section 13(1), of the Income-tax Act, 1961 - Charitable or religious trust - Exemption of income from property held under - Commissioner acting under section 263, set aside ITO's assessments on ground that ITO had allowed exemption under section 11 without examining in detail applicability of provisions of section 18(1)(c)(ii) and directed ITO to make assessments afresh - On appeal, Tribunal Sound that ITO was alive to relevant provisions of law and facts before passing orders of assessment and Commissioner had not given any finding that assessee was not entitled to exemption under section 11 -Whether Tribunal was justified in setting aside Commissioner's order - Held, yes Facts For the relevant assessment years, on scrutiny of records, the Commissioner found that the debtors of the assessee-public charitable trust were persons to whom the provisions of section 13(3) were applicable, and that the income of the assessee would be deemed to have been used for the benefit of those persons, as provided by section 13(2). He was of the view that the ITO had allowed exemption under section 11, without examining in detail the applicability of the provisions of section 13(1)(c)(ii). The Commissioner, accordingly set aside the orders of assessment and directed the ITO to assess afresh. On appeal, the Tribunal, after examining the record, found that to the audit objections that the assessee was not entitled to the exemption, by virtue of the provisions of section 13(1), the ITO had given detailed replies showing that the ITO was alive to the relevant provisions of law and the facts before passing orders of assessment. Further, it set aside the Commissioner's order on the ground that the Commissioner had not given any Ending that the assessee was not entitled to exemption under section 11. On reference : Held The Commissioner had not found that the ITO's order was erroneous inasmuch as the assessee was not entitled to claim the exemption under section 11. The Commissioner's finding that the ITO had not applied his mind to the question about the assessee's entitlement of exemption under section 11 in view of the provisions of section 13(1), was not…

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