2000 (2) TMI 75 - HC - Income Tax

Summary

Issues Involved:
The judgment involves a reference by the Revenue challenging the cancellation of an order by the Commissioner of Income-tax u/s 263 of the Income-tax Act, 1961, regarding exemption claimed by a public charitable trust u/s 11 of the Act for the assessment year 1975-76.

Facts Leading to the Present Reference:
The Income-tax Officer initially accepted the trust's claim for exemption, departing from his earlier view for the previous assessment year based on the Supreme Court decision in CIT v. Dharmodayam Co. The Commissioner set aside the assessment order, stating that the trust did not acquire funds to start a business but possessed a running business donated to it, directing a reassessment.

Appeal to the Income-tax Appellate Tribunal:
The Tribunal found that the Income-tax Officer had considered all relevant materials and applied his mind to grant exemption, concluding that the Commissioner lacked jurisdiction to revise the assessment. The Tribunal set aside the Commissioner's order and allowed the trust's appeal.

Question of Law Referred:
The Tribunal referred the question of whether it was right to set aside the Commissioner's order u/s 263 and restore the Income-tax Officer's assessment for 1975-76.

Court's Analysis and Decision:
The High Court upheld the Tribunal's decision, stating that the Income-tax Officer had properly considered all relevant materials and applied his mind to grant exemption. The Court found that the Commissioner lacked jurisdiction to revise the assessment, as the material he relied on would not have altered the Income-tax Officer's final conclusion. The Court emphasized that the power of revision should correct errors prejudicial to revenue, not for conducting purposeless inquiries leading to the same result.

Conclusion:
The Court held that the Commissioner's revision lacked justification, as it did not show any error in the Income-tax Officer's order. The Court affirmed the Tribunal's decision, ruling in favor of the trust and awarding costs.