Law:

Section:

I. Section 11 of the Income-tax Act, 1961 - Charitable or religious trust - Exemption of income from property held under - Whether assessee-trust was a public charitable and religious trust and its income was exempt from tax under section 11 - Held, yes II. Section 47 of the Income-tax Act, 1961 - Capital gains - Transaction not regarded as transfer - Whether where difference between actual consideration for transfer of property and its fair market value had been brought to tax under Gift-tax Act, no capital gains tax could be levied on such difference amount - Held, yes FACTS (i)The Tribunal held that the respondent assessee, a trust created by the instrument, was a public charitable and religious trust and its income was exempt from tax under section 11. (ii)The difference between the fair market value of the assets and the actual consideration was brought to tax under the Gift-tax Act. A copy of the gift-tax assessment order was also placed before the Tribunal. Acting upon the same and applying clause (iii) of section 47, the Tribunal held that no capital gains tax could be levied upon the said difference amount. On reference : HELD (i)Following the decision of the same High Court in CIT v. Surji Devi Kunji Lal Jaipuria Charitable Trust (No. 2) [1990] 186 ITR 745 , it was held that the assessee trust was a public charitable and religious trust and its income was exempt from tax under section 11. (ii )The Tribunal was right in holding that no capital gains tax could be levied upon the difference between the fair market value of the assets and the actual consideration. Note : The decision is in favour of the assessee. CASE REFERRED TO CIT v. Surji Devi Kunji Lal Jaipuria Charitable Trust (No. 2) [1990] 186 ITR 745 (All.). JUDGMENT B.P. Jeevan Reddy, CJ.- Two questions are stated under section 256 of the Income-tax Act, 1961. They are: "1.Whether, on. the facts and in the circumstances of the case, the repondent assessee, a trust created by the instrument executed on April 24, 1958, is a public charitable and…

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