Income‑tax‑‑‑

‑‑‑‑Trust‑‑‑Income from business in chit fund‑‑‑Business carried on not in course of actual carrying out primary purpose of trust‑‑‑Not entitled to exemption‑‑‑Indian Income Tax Act, 1961, Ss. l l & 13(1)(bb).

Held, that the assessee , was not eligible for exemption' under section 11 of the Income Tax Act, 1961, in respect of the income from the chit business for the period subsequent to April 1, 1977, in view of the express statutory bar created by section 13(1)(bb) of the Act, as the business carried on was not in the course of actual carrying out of the primary purpose of the trust, but would be entitled to get exemption in respect of the other income, for the assessment years _1978,79 and 1980‑81, Dasa Balinjika Seva Sangam v. CIT (No1) (1999) 24(1 ITR 854 (Mad.) fol.

P.P.S. Janarthana Raja for the Assessee.

S.V. Subramaniam for the Commissioner.

JUDGMENT

N.V. BALASUBRAMANIAN, J.‑‑‑‑At the instance of the assessee, the Income‑tax Appellate Tribunal has referred the following common question of law relating to the assessment years 1979‑80 and 1980‑81 for our opinion under section 256(1) of the Income Tax Act, 1961.

"Whether the Income‑tax Appellate Tribunal is correct in law in concluding that the assessee is not entitled to exemption under section 11 of the Income‑tax Act, on the ground that the assessee is carrying on business in chit funds, ignoring the fact that the business is carried on in the course of advancing the primary purpose of the trust?"

The assessment involved is as we have seen for the year 1978‑79 and 1980‑81.

The assessee claimed exemption relating to his income, for the assessment of two years which was rejected by the Income‑tax Officer for the reasons stated by him in the earlier assessment year 1977‑78. The view of the Income‑tax Officer as well as the Appellate Assistant Commissioner was confirmed by the Income‑tax Appellate Tribunal by following earlier orders of the Appellate Tribunal for the earlier assessment years 1974‑75, 1975‑76 and 1979‑80. The earlier order of the Appellate Tribunal for the assessment years 1974‑75, 1975‑76 and 1979‑80 is the subject‑matter of the tax references before this Court in T.C. Nos.1357 to 1359 of 195‑‑‑Dasa Balinjika Seva Sangam v. CIT (No. 1) (1999) 240 ITR 854, and w,, have in the judgment rendered by the said tax case on April 28; 1998, held that the assessee would be entitled to exemption under section 11 of the Act for the period prior to April 1, 1977, and for the subsequent period from April 1, 1977, the assessee is not entitled to exemption under section 11 of the Act in view of the express statutory bar created by section 13(1)(bb) of the Act as the business carried on by the assessee .vas not in the course i,f actual carrying out the primary purpose of the trust. The assessee is, there fore, in eligible to get exemption in respect of the income derived from the chit business. The assessment years involved in the present tax cases are 1978‑79 and 1980‑81 and the claim for exemption under section 11 of the Act is barred by the provisions of section 13(1)(bb) of the Act. Following the judgment of the Tax Cases Nos. 1357 to 1359 of the 1985‑‑‑Dasa 11alinjika Seva Sangam v. CIT (No.l) (1999) 240 ITR 854 of this Court, dated April 28, 1998, we hold that the Tribunal was right in its view that the assessee is not eligible for exemption under section 11 of the Act in respect of the income from the chit business, but would be entitled to get exemption in respect of the other income. Accordingly, we answer the question in the affirmative and against the assessee. No costs.

M.B.A./388/FCReference answered.