Law: Income Tax Act, 1961

Section: 11

Income-tax-----Charitable purposes --Charitable trust---Donation given to trust -for specific purpose of organising a rally of agriculturists---Not spent for a charitable purpose---Not entitled to exemption---Indian Income Tax Act, 1961; S.11. The assessee was a charitable trust which enjoyed the benefit of exemption under section 11 of the Income Tax Act, 1961. It had received Rs.1,50,000 as donation in the accounting year relevant to the assessment year 1982-83. The Income-tax Officer held that this amount was not entitled to exemption. The Tribunal found that the donations amounting to Rs.1,50,000 sent by K.M. Oil Industries or by Ganesh Twine Mills, were sent with specific directions to be spent on organising "Kisan-Rally" and not for the purpose of organising and utilising the corpus for the trust itself. Therefore, the Tribunal upheld the order of the Income-tax Officer. On a reference: Held, that since the amounts of Rs.1,50,000 had been given to the trust. specifically for organising the rally by agriculturists at Delhi, it would have to be treated to be income of the institution and had to be taxed accordingly. JUDGMENT A. K. MATHUR, C. J.---This is a reference under section 256(1) of the Income Tax Act, 1961 (hereinafter referred to as "the Act"), at the instance of the assessee and the following two questions of law have been referred by the Tribunal for answer of this Court, which read as under: "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the amount of Rs:1,50,000 received by the assessee is income of the trust? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the amount of Rs.1,50,000 spent towards Kisan-Rally is not in nature of amount spent towards charitable purpose?" The brief facts giving rise to this reference are: that the assessee is a charitable trust and enjoys benefits under sections 11 to 13 of the Act, as a charitable institution. The assessee had filed a return for deficit of Rs.3,774.50 for the assessment year 1982-83. The original assessment under section 143(3) of the Act was done on September 27, 1985,…

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