COMMISSIONER OF INCOME TAX vs SHRI AUROBINDO MEMORIAL FUND SOCIETY

Subbulakshmy, J.

At the instance of the revenue, the following questions of law have been referred to us for our consideration :

Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in holding that the donations of Rs. 7,25,000

made by the assessee to other institutions would tantamout to application of income for charitable purposes, thus, satisfying the requirements of

section 11 ?

Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in holding that the capital gains of Rs. 28,000

arising out of sale of Bhagalpur Garden should be exempted u/s 11 (1A)?

During the assessment year 1984-85, the assessee-trust has donated funds amounting to Rs. 7,25,000 to Matriseva Trust, Aurobindo Action and

Service Trust. The assessee-trust claimed deduction. The Income Tax Officer rejected the claim of the assessee-trust. On appeal, the

Commissioner (Appeals) allowed the claim of the assessee-trust, holding that the donations made by the assessee-trust were for charitable

purposes. The Tribunal confirmed the order of the Commissioner (Appeals).

This court in the case of Commissioner of Income Tax Vs. Thanthi Trust, , has held that the trust which has applied the money for charitable

purposes was entitled to exemption u/s 11 of the Income Tax Act, 1961 (hereinafter referred to as ''the Act''). So, the assessee was entitled to

claim exemption u/s 11.

Following the aforesaid decision of this court and for the reasons stated therein, we answer the first question referred to us in favour of the

assessee and against the revenue.

With regard to the second question, the assessec-trust during the assessment year 1984-85 sold the garden at Bhagalpur and obtained a sum of

Rs. 28,000 and claimed exemption u/s 11 of the Act. The Income Tax Officer rejected the claim of the assessee-trust. The appeal preferred by the

assessee-trust was also dismissed by the Commissioner (Appeals). On further appeal, the Tribunal directed the Income Tax Officer to extend the

benefit of exemption u/s 11 to the assessee with regard to the amount of sale proceeds.

In the decision in Commissioner of Income Tax Vs. Ambalal Sarabhai Trust No. 3, , the Gujarat High Court has held that the assessee being a

charitable trust was entitled to exemption from tax on the capital gains arising on the sale of the shares, as the provisions of section 11 were fully

satisfied.

Following the aforesaid decision of the Gujarat High Court and for the reasons stated therein, we answer the second question in favour of the

assessee and against the revenue.