By K. B. Bhujle | Advocate
New Page 1
Reported:
43 Charitable trust: Exemption u/s. 11 of I. T. Act, 1961: A
Ys. 1990-91 and 1991-92: Educational trust: Trust deed empowering trust to start
educational agencies for earning income to achieve objectives of trust:
Educational agencies earning income: Section 11(4A) not applicable: Trust is
entitled to exemption u/s. 11:
CIT Vs Brihdaranyak Mandal (Trust): 319 ITR 363 (All):
The assessee is a trust with the objectives to educate the
general masses about the ancient glory and cultural heritage of the country; to
acquaint them with nature and environment; to impart Vedic education; and to
work in order to spiritually uplift the masses in general, leading them to
involve in social welfare activities. The author was unable to get funds by way
of donations. Clause (4) of the trust deed empowered the trust to start
educational agencies for earning income to achieve the aims and objectives of
the trust. Thus, the author started educational agencies and raised funds. For
the A Y 1990-91, the Assessing Officer held that the trust is not valid on the
ground that the author in his individual capacity earned funds and, hence, the
provisions of section 11(4A) were applicable. The Commissioner (Appeals) held
that the trust was valid but its income could not be exempted u/s. 11 because it
was hit by sub-section (4) of section 11. For the AY 1991-92, the Assessing
Officer made a protective assessment. The Commissioner (Appeals) accepted the
trust as a valid one and that its income was from business; and, hence, the
provisions of section 11(4A) were not applicable. The Tribunal held that the
trust was valid and was entitled to exemption u/s. 11.
On appeal by the Revenue, the Delhi High Court upheld the
decision of the Tribunal and held as under:
“The Revenue had not sought reference in questioning the
validity of the findings recorded by the Tribunal. The Tribunal had found that
the activities of the educational agency were carried out by the trust as clause
(4) of the trust deed empowered the trust to start educational agencies for
earning income to achieve the aims and objectives of the trust. The Tribunal had
further found that the surplus was transferred to the trust and utilized in the
purchase of land and construction of a sabha bhavan. Thus section 11(4A) was not
applicable.”
