1987 (2) TMI 43 - HC - Income Tax

Summary

Issues involved:
The issue involves the grant of exemption under section 11 to a public charitable trust by the Income-tax Officer, and the applicability of section 13(1) of the Income-tax Act, 1961.

Summary:

The High Court of Madhya Pradesh was tasked with providing an opinion on whether the Income-tax Officer had correctly granted exemption under section 11 to a public charitable trust after considering the provisions of section 13(1) of the Income-tax Act, 1961. The Commissioner of Income-tax had raised concerns regarding the applicability of section 13(1)(c)(ii) to the trust's debtors. The Commissioner set aside the assessment orders, directing a fresh assessment by the Income-tax Officer. The trust appealed to the Tribunal, which overturned the Commissioner's decision, stating that the Income-tax Officer had conducted a thorough examination before granting the exemption. The Revenue's subsequent application for reference was initially rejected but later allowed under section 256(2) of the Act, leading to the question being referred to the High Court.

The Tribunal found that the Income-tax Officer had indeed considered the relevant provisions of law and facts before granting the exemption, contrary to the Commissioner's assertion that proper examination had not taken place. The Tribunal concluded that the Income-tax Officer had made detailed inquiries into the applicability of section 13(1) before granting the exemption. Therefore, the High Court ruled in favor of the trust, affirming that the Income-tax Officer had appropriately granted the exemption after due consideration of section 13(1) of the Act. The court held that the Revenue's contention against the Tribunal's decision was not valid, and each party was directed to bear their own costs in this reference.