Law: Income Tax Act, 1961

Section: 11

(a) Income-tax-----Charitable, purposes--- Charitable trust---Exemption---No evidence that trust had contravened any law---Exemption could not be withdrawn---Indian Income Tax Act, 1961, S.11. (b) Income-tax--- ----Reference---Income---Accrual of income---Time of accrual---Income from lottery received on March 22, 1986---Tribunal justified in holding that income was assessable in assessment year 1986-87---No question of law arose---Indian Income Tax Act, 1961, S.256. (c) Income-tax--- ----Reference---Business---Income---Lottery---Lottery conducted by charitable trust---Finding that there was no separate and continuous exercise of such a profession---Tribunal justified in holding that income from lottery did not constitute business income of trust---No question of law arose--­Indian Income Tax Act, 1961, S.256. The assessee was a public charitable, trust registered under section 12 of the Income Tax Act, 1961. It received grant-in-aid of Rs.10 lakhs in the assessment year 1987-88 from the Government of M.P. for construction of a stadium for indoor games. The said amount of Rs.10 lakhs as also the donation of Rs.88,301 and interest income of Rs.64,948 were treated by the Assessing Officer as income of the trust. The assessee was held disentitled to the benefit of section 11. On appeal, the Commissioner of Income-tax (Appeals) observed that section 13 nowhere stated that exemption could be withdrawn for contravention of any of the provisions of any law. He, therefore, held that withdrawal of exemption on the ground that the assessee had contravened the provisions of the M.P. Lottery (Niyantran Tatha Kar) Adhiniyam, 1973, and the provisions of the Income-tax Act (by failure of deduct tax at source) was not in conformity with law. This order 'was upheld by the Tribunal. On a reference: Held, that exemption once earned was not lost lightly. There was no proof of any contravention, secondly, the assessee could not be denied the benefit of promissory estoppel as well. The Commissioner of Income-tax (Appeals) and the Tribunal both on appreciation of facts concluded that the assessee was entitled to the benefit of exemption under section 11. The conclusion was not shown…

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