Director Of Income-Tax ... vs Agrim Charan Foundation
2001 Latest Caselaw 1179 Del

JUDGMENT

Arijit Pasayat C.J.

1. This is an appeal under Section 260A of the Income-tax Act, 1961 (in short "the Act").

2. The dispute relates to the assessment year 1995-96 in respect of an assesses, which is a charitable trust.

3. The controversy lies in a very narrow compass.

4. For the assessment year in question, the assessed filed its return of income along with the audit report, balance-sheet, etc. The Assessing Officer noted that for the purpose of claiming exemption under Section 11 of the Act, certain deposits made with S. M. Finance Limited and Unitech Limited were included. These two were not public undertakings, and, therefore, according to the Assessing Officer, the deposits were made in violation of the provisions contained in Section 11(5) of the Act and therefore the benefit under Sections 11 and 12 read with Section 13(1)(d) of the Act was denied. The petitioner filed an appeal before the Commissioner of Income-tax (Appeals) (in short "the CIT(A)"). The same was dismissed ex parte holding that there was no compliance on the date fixed and there was nothing wrong with the order of the Assessing Officer. The assessed preferred an appeal before the Income-tax Appellate Tribunal, Delhi Bench "B", Delhi (in short the "Tribunal").

5. The factual position that was highlighted before the Tribunal was that after incorporation of the trust and its registration, charitable work was being undertaken. The donations for the corpus of the trust were obtained by account payee cheques. Such corpus funds have been invested as fixed deposits with public sector undertakings, viz., UTI, SAIL, NTPC, etc. During the year under consideration, the two concerns, viz., Unitech Ltd. and S. M. Finance Ltd., gave forms to the appellant inviting deposits. In the forms it was specifically mentioned that these concerns were authorised to accept deposits from charitable trusts. On the basis of this information certain deposits were made with these two concerns. An advice was sought for from a chartered accountant, who advised that the deposits could be kept with these two concerns and exemption under Sections 11 and 12 would be available. However, when, at the time of assessment, the Assessing Officer pointed out to the chairman of the trust that these two concerns did not have necessary approval from the Government to accept deposits from charitable trusts, the assessed immediately withdrew the deposits from these two concerns. However, exemption was denied on the ground that there was violation of the provisions. The Tribunal noted that this was a case where the two concerns may have flouted the Government rules and the assessed in the absence of any mala fides and being not linked with the concerns, should not be denied the

benefits. The Tribunal, keeping in view the objects for which Section 11(5) has been enacted and the factual background, more particularly, the mention made in the forms of the two concerns, and the act of the assessed in immediately withdrawing the amounts on being made aware that the two concerns were not permitted to receive deposits, allowed the assessed's appeal.

6. Learned counsel for the Revenue submitted that there has been a breach of the statutory provisions and, therefore, the bona fides should not have weighed with the Tribunal.

7. We have considered the submissions made. We find that the Tribunal has referred to various factual aspects as elaborated above in coming to the conclusion that the assessed could not be faulted for the misrepresentation of those two concerns. We do not find any infirmity in the order of the Tribunal to warrant interference.

8. The appeal is accordingly disposed of.