Law:

Section:

Section 11 of the Income-tax Act, 1961 - Charitable or religious trust - Exemption of income from property held under - Whether giving preference to poor relatives would militate against charitable nature of objects of assessee trust and disentitled assessee to exemption under section 11 - Held, yes - Whether where income set apart for augmenting trust properties was invested for acquisition and construction of properties and buildings and not for investment and deposit in specified securities as mentioned in section 11(2), assessee was not entitled to exemption under section 11 - Held, yes FACTS The Tribunal held that one-fourth of the income set apart for augmenting the trust properties of the assessee-trust was entitled to exemption under section 11, and that giving preference to poor relatives did not to militate against the charitable nature of the objects and entitled the assessee to exemption under section 11. On application under section 256(2) : HELD In the light of the decision of the same High Court in CAIT v. Abdul Sathar Haji Moosa Sait [1971] 81 ITR 230 (Ker.), as confirmed by the Supreme Court in A.S.H. Mossa Sait Dharmastapanam v. CAIT [1973] 91 ITR 5 it was to be held that giving preference to poor relatives militated against charitable nature of objects and disentitled the assessee-trust to exemption under section 11. With regard exemption of one-fourth of income set apart for augmenting the trust properties, it was clear that one-fourth of the income set apart for augmenting the trust properties did not attract the provisions of section 11(2) because that money was invested for acquisition and construction of properties and buildings and not for investment and deposit in specified securities as mentioned in the sub-section. In the circumstances, the assessee was not entitled to exemption under section 11. Note : The decision is against the assessee. CASE REVIEW Commissioner of Agrl. I.T. v. Abdul Sathar Haji Moosa Sait [1971] 81 ITR 230 (Ker.) and A.S.H. Moosa Sait Dharmastapanam v. Commissioner of Agrl. I.T. [1973] 91 ITR 5 (SC) followed and relied upon CASES REFERRED TO CAIT v. Abdul Sathar Haji Moosa Sait [1971] 81 ITR 230 (Ker.) and…

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