TMI Blog1997 (1) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... case in brief are as follows : The respondent/assessee-company was being held to be a charitable institution entitled to claim exemption under section 11(1) till the assessment year 1983-84. For the year 1984-85, the assessing authority took the view that the company is not eligible for exemption under section 11(1) in respect of the income earned from its kury business in view of the introduction of section 11(4A). The assessee has computed its net profit from kury business at Rs. 2,64,939 and deducted the amount spent for charity, scholarship, etc., from the business income. The assessing authority took the view that in the light of section 11(4A) deductions claimed by the assessee are not admissible and the entire amount would be subj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was held under trust for promotion of its objects. It has been so held by the Supreme Court in CIT v. Dharmodayam Co. [1977] 109 ITR 527. Therefore, according to the assessee, the introduction of section 11(4A) will not make any difference to the claim put forward by it under section 11(1). This court had occasion to consider the claim made by the assessee-company for exemption of its income from the kury business under section 4(3)(i) of the Indian Income-tax Act, 1922, as amended by Act 25 of 1953 in Dharmodayam Co. v. CIT [1962] 45 ITR 478 (Ker). The relevant provisions of section 4(3) read as follows : "4. (3) Any income, profits or gains falling within the following classes shall not be included in the total income of the person re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from such a business will fall within the ambit of the exclusion granted by clause (i) of sub-section (3) of section 4. After referring to an earlier decision of this court in CIT v. Krishna Warriar [1962] 44 ITR 828, this court rejected the contention raised by the Department that such an income received by the assessee would be governed by the proviso as well and thus brought back into the net of taxation. In CIT v. Dharmodayam Co. [1977] 109 ITR 527, the Supreme Court considered the case of the assessee after the Income-tax Act, 1961, came into force. The relevant provisions under the Income-tax Act, 1961, read as follows : "11. Income from property held for charitable or religious purposes. -- (1) Subject to the provisions of sections ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 's activity remained what it was when this court gave its judgment in Dharmodayam Co. v. CIT [1962] 45 ITR 478 (Ker). The Supreme Court, therefore, held that the decision of this court in Dharmodayam Co. v. CIT [1962] 45 ITR 478, concluded the point that the kury business is not conducted by the assessee in order to advance or for the purpose of advancing any object of general public utility. Reference was also made to an earlier decision of the Supreme Court in CIT v. P. Krishna Warriar [1964] 53 ITR 176, where the provisions contained under section 4(3)(i) of the Indian Income-tax Act, 1922, were considered and it was held that clause (b) of the proviso to the section did not apply to cases in which the business itself was held in trust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or sub-section (3) or sub-section (3A) shall not apply in relation to any income, being profits and gains of business, unless-- (a) the business is carried on by a trust wholly for public religious purposes and the business consists of printing and publication of books or publication of books or is of a kind notified by the Central Government in this behalf in the Official Gazette ; or (b) the business is carried on by an institution wholly for charitable purposes and the work in connection with the business is mainly carried on by the beneficiaries of the institution." Along with the introduction of sub-section (4A), section 13(1)(bb) which read as follows : "(bb) in the case of a charitable trust or institution for the relief of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (4A) would take in profits and gains of any business including a business held in trust cannot be accepted in the light of the clear language of the section. By sub-section (4A) the benefit due to an assessee in the case of an income from a business held in trust is extended to an income from a business carried on by it on its satisfying the conditions laid down under clauses (a) and (b). The Tribunal has correctly held that the assessee is entitled to claim exemption under section 11(1) of the Income-tax Act, 1961, in respect of its income from the kury business. In the light of the above, we answer the question in the affirmative, in favour of the assessee and against the Revenue. A copy of this judgment under the seal of the court an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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