Law:

Section:

Section 256 of the Income-tax Act, 1961 - Reference - Question of fact - For assessment years 1971-72 and 1975-76, ITO allowed assessee-trust exemption of income under section 11 - However, Commissioner initiated proceedings under section 263 on ground that ITO did not make enquiry as to whether the sole selling agency for sale of sugar through which assessee earned commission, was renewed or not and since period of agency being five years had elapsed, said agency could be presumed to be not available-was involved in activities for profit, it was not entitled to exemption under section (1) - For year 1971-72, Commissioner pointed out that assessee had declared certain income as being sugar rate difference which indicated that it was income from speculative business - On appeal, Tribunal set aside Commissioner's order holding, inter alia, (i) that sole selling agency from which assessee earned commission could be extended for more than five years and conclusion reached by Commissioner in that regard was totally unwarranted, and (ii) that as regards sugar rate difference unless Commissioner categorically said that there was some income from speculative business which could not qualify for deduction, much less exemption under section 11, it could not be said that there was exemption in ITO's order relating to year 1971-72 - Whether findings recorded by Tribunal were purely findings of fact and no question of law arose - Held, yes Facts The assessee, a charitable trust, for the assessment years 1971-72 and 1975-76 filed its return treating the entire income as exempt under section 11. The ITO, treating the assessee as charitable trust within the meaning of section 2(15), granted exemption under section 11. The Commissioner, however, held the assessments made by the ITO was erroneous and initiated proceedings under section 263 on the ground that the ITO did not even make enquiry as to whether the sole selling agency for sale of sugar through which the trust earned commission was renewed or not and since period of agency being five years had elapsed, the said agency could be presumed to be not available to the assessee in the relevant assessment years. The…

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