1981 (8) TMI 120 - AT - Income Tax

Summary

Issues:
1. Whether the Tribunal erred in not confirming the finding that the trust's income is not exempt from tax.
2. Whether the trust qualifies as a charitable trust under Section 2(15) of the IT Act, 1961.

Analysis:
1. The case involved applications related to the assessment years 1973-74, 1974-75, and 1976-77, consolidated and disposed of together by a combined order. The CIT, Jaipur, sought to refer common questions to the High Court regarding the Tribunal's decision. The Tribunal, however, found no question of law arising from its order and refused to refer the questions to the High Court.

2. The trust in question was created in 1964 with specific objects outlined in the trust deed. The trust received income from various sources during the relevant assessment years, including share of profits, commission, interest income, and dividends. The trust claimed exemption under Section 11 of the IT Act, 1961, but the Income Tax Officer (ITO) denied the exemption based on the trust's activities not aligning with the provisions of Section 2(15).

3. The ITO's decision was upheld by the CIT (A), who concluded that the trust was not entitled to exemption under Section 11. The CIT (A) found that the trust's business activities were not subservient to its charitable objects, making the business a dominant object of the trust. The CIT (A) highlighted that the trust's net income was to be utilized for charitable purposes without specifying any particular charitable activity.

4. Upon further appeal, the Tribunal directed the CIT (A) to reconsider the matter in light of the observations made in the order. However, as no conclusive finding was given by the Tribunal, the High Court refused to draw up a statement of the case and refer the questions posed by the CIT, Jaipur. The Tribunal's decision was based on the lack of a clear finding on the trust's entitlement to exemption under Section 11.

In conclusion, the Tribunal's decision not to confirm the finding that the trust's income is not exempt from tax and its determination of the trust's charitable status under Section 2(15) of the IT Act, 1961, were central issues in this case. The refusal to refer the questions to the High Court was based on the absence of a question of law arising from the Tribunal's order.