COMMISSIONER OF INCOME-TAX VS MATRISEVA TRUST
2002 P T D 1308
[242 I T R 20]
[Madras High Court (India)]
Before R. Jayasimha Babu and Mrs. A. Subbulakshmy, JJ
COMMISSIONER OF INCOME-TAX
Versus
MATRISEVA TRUST
Tax Case No.787 of 1990 (Reference No.337 of 1990), decided on 25/03/1999.
(a) Income-tax---
----Charitable purposes---Charitable trust---Exemption---Donation by assessee-trust to another charitable trust would amount to application of income for charitable purposes---Entitled to exemption---Indian Income Tax Act, 1961, S.11.
(b) Income-tax---
-----Charitable purposes-- -Charitable trust---Exemption---Deficiency of funds of following year could be set off against earlier year's surplus-- Indian Income Tax Act, 1961, S.11.
For the assessment year 1984-85, the assessee-trust had donated a sum of Rs.31,050 to another charitable trust known as the service trust. The assessee-trust claimed exemption under section 11 of the Income-tax Act, 1961, which was rejected by the Income-tax Officer. On appeal, the Commissioner (Appeals) had allowed the claim of the assessee. On further appeal, the Tribunal affirmed the order of the Commissioner (Appeals). On a reference:
Held, (i) that the Tribunal was right in holding that the donation of Rs.31,050 made by the assessee-trust to another charitable trust would amount to application of income for charitable purposes, thus satisfying the requirements of section 11.
CIT v. Thanthi Trust (1982) 137 ITR 735 (Mad.) fol.
(ii) that the assessee-trust was entitled to set off the amount of excess application of the last year against the deficiency of the present year.
CIT v. Maharana of Mewar Charitable Foundation (1987) 164 ITR 439 (Raj.) and CIT v. Shri Plot Swetamber Murti Pujak Jain Mandal (1995) 211 ITR 293 (Guj.) fol.
C.V. Rajan for the Commissioner.
Nemo for the Assessee.
JUDGMENT
MRS. A. SUBBULAKSHMY, J.----At the instance of the Revenue, the following questions have been referred to us for our consideration:
"(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in holding that the donation of Rs.31,,050 made by the assessee to another institution, would tantamount to application of income for charitable purposes, thus satisfying the requirements of section 11? and
(2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in holding that the deficiency of funds of this year could be set off against the earlier year's surplus?"
During the assessment year 1984-85, the assessee-trust had donated a sum of Rs.31,050 to another charitable trust known as the service trust. The assessee-trust claimed exemption under section 11 of the Act, which was rejected by the Income-tax Officer. On appeal, the Commissioner. (Appeals) had allowed the claim of the assessee. The Tribunal had confirmed the order of the Commissioner (Appeals).
With regard to the first question this Court in the decision reported in CIT v. Thanthi Trust (1982) 137 ITR 735, had held that the trust which has applied the money for charitable purposes was entitled to exemption without having to show how the money had been dealt with by the transferee institution. This Court has answered the question referred there in favour of the assessee and against the Revenue.
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 Tribunal has held that the trust is entitled to set off the amount of excess application of the last year against the deficiency of Rs.82,516 of the present assessment year.
When similar questions came up before the Rajasthan High Court and the Gujarat High Court in the case of CIT v. Maharana of Mewar Charitable Foundation (1987) 164 ITR 439 and CIT v. Shri Plot Swetamber Murti Pujak Jain Mandal (1995) 211 ITR 293, respectively, both the Rajasthan High Court and the Gujarat High Court have answered the questions in favour of the assessee and against the Revenue.
Following the aforesaid decisions of the Rajasthan and Gujarat High Courts, we answer the second question referred to us in favour of the assessee and against the Revenue.
M.B.A./662/FCReference answered.