Commissioner of Income Tax vs Matriseva Trust

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 u/s 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 Commissioner of Income Tax Vs. Thanthi Trust, , 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 Commissioner of Income Tax Vs.

Maharana of Mewar Charitable Foundation, and Commissioner of Income Tax Vs. Shri Plot Swetamber Murti Pujak Jain Mandal, , 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.