COMMISSIONER OF INCOME TAX Vs. RAM FOUNDATION

JUDGEMENT

(1.) These references made by Income-tax Appellate Tribunal, New Delhi (in short, the Tribunal) involve identical points for adjudication in relation to Sir Shri Ram Foundation, hereinafter referred to as assessee for the assessment years 1971-72, 1972-73 and 1974-1974. Following question has been referred under Section 256(1) of the Income-tax Act, 1961 (in short, the Act)

(2.) Factual position in a nutshell is as follows: Assessee is a public charitable trust which was originally registered as a society under the name "Sri Sri Ram & Sons Charitable Trust Society" under the Societies Registration Act, 1860 on 7-5-1941. Name of the trust was changed to its present name "Sir Sri Ram Foundation" as per certificate of registration dated 30-5-196 granted by the Registrar of Societies. There were seven subscribers to the Memorandum of Association of whom three, namely, Sir Sri Ram, L. BharatRam and L. Charat Ram constituted Board of Trustees. On 10-2-1955, L. Charat Ram donated to the Trust 200 shares of Bharat Ram Charat Ram Pvt Ltd (hereinafter referred to as 'BRCRP Ltd') of the face value of Rs. 100.00 each. On the said date Smt Bharat ram also donated 90 shares of BRCRP Ltd. In respect of these 290 shares received as donation by the Trust, BRCRP Ltd issued 870 bonus shares and thus the Trust came to hold 1160 shares of BRCRP Ltd. The total shareholding of BRCRP Ltd consisted of 19,997 shares, of which 11359 shares were held by relatives of L. BharatRamand L. Charat Ram who were the founder members of the Trust and were treated by the revenue authorities as "excluded persons" in terms of clause (b) of Section 13(3) of the Act. Thus the percentage of shares held by excluded persons came to 56.79% while that of shares held by the Trust worked out to 5.8%.

(3.) On being moved for reference, question, as set out above, has been referred for opinion of this Court. We have heard the learned counsel for revenue and for the assessee.