Law: Income Tax Act, 1961

Section: 11,13

Income-tax----Charitable trust---Exemption---Trust for looking after family members of employees who due to accident expired or became invalid---Section 13(1)(bb) not applicable---Question regarding invoking R. 17 read with S.11 cannot be raised for first time in reference---Trust entitled to exemption---Indian Income Tax Act, 1961, Ss. 11 & 13---Indian Income Tax Rules, 1962, R.17. The assessee was a trust formed with the object of looking after the family members of the employees of the Bhilai Steel Plant, who owing to accident had expired or had been rendered invalid. The assessment was completed on a total income of Rs.90,990 applying the provisions of section 13(1(bb) of the Income Tax Act, 1961. The Appellate Assistant Commissioner allowed the appeal of the assessee holding that it was a charitable trust and that section 13(1)(bb) was not applicable to the case of the assessee and that the assessee was entitled to exemption under section 11 of the Act. The Tribunal upheld the order of the Appellate Assistant Commissioner. On a reference: Held, that both the Appellate Assistant Commissioner and the Tribunal had held that the charitable trust was engaged in the activity of helping the poor and the destitute. The persons who were employed by the trust were benefited by the trust. They were carrying on activities for their own benefit and it had no intention of carrying on any business. The entire activity was for the benefit of the persons who were engaged in the business activity carried on by the trust. Hence, the assessee was entitled to exemption under section 11 of the Act. Held also, that the question regarding invoking of rule 17 of the Income Tax Rules, 1962 read with section 11 of the Act could not be raised for the first time in the reference. JUDGMENT This is an Income-tax reference at the instance of the Revenue under section 256(1) of the Income Tax Act, 1961. The following question of law have been referred by the Tribunal for answer by this Court: "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee-trust is entitled to claim of exemption under section 11 when declaration was…

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