COMMISSIONER OF INCOME TAX Vs. THOMAS CATHEDRAL CHURCH

JUDGEMENT

(1.) These Income Tax Reference cases were registered on the basis of references made by the Income Tax Appellate Tribunal, Cochin Bench in RA Nos. 332, 333, 334 and 335 (Coch)/1998, arising out of the decision in I.T. Appeal Nos.730, 731, 261 and 262 (Coch)/1994. The assessee is common in all these cases and the assessments are with respect to the years 1986-1987, 1988- 1989, 1990-1991 and 1991-1992. The questions of law upon which the references were made are common, which is extracted below;

(2.) The issue to be decided is, whether the income derived out of Kuri business conducted by the Charitable Trust is eligible for exemption or not, in view of sub-section (4A) introduced to Section 11 of the Income Tax Act with effect from 01-04-1984. A Division Bench of this court in Commissioner of Income Tax V. Dharmodayam Co. (1997) 225 ITR 686 held that, if the Kuri business is held in trust, the income therefrom would not be governed by sub-section (4A) as has been held by the hon'ble Supreme Court in CIT V. Dharmodayam Co. (1977) 109 ITR 527 (SC). In the said decision this court held that the Tribunal has correctly held that, the assessee is entitled to claim exemption under Section 11 (1) of the Income Tax Act with respect to its income from Kuri business. It is pointed out that decision of this court in (1997) 225 ITR 686 was set aside by the hon'ble Supreme Court in the decision in Commissioner of Income Tax V. Dharmodayam Co. and another (2001) 248 ITR 816. It was held that until the introduction of Section 11 (4A) with effect from 1st April, 1984, the case of the assesse therein was governed by the decision of the Supreme Court reported in (1977) 109 ITR 527 (SC). But sub-section 11 (4A) has introduced certain conditions in the matter of application of sub-sections (1), (2) (3) and (3A) of Section 11. The apex court observed that, the Tribunal had not applied its mind to those conditions; nor the High Court had given due considerations to those aspects. Therefore inorder to decide whether the assessee is entitled to the benefit of the exemption under Section 11, it is necessary for the Tribunal to determine whether it satisfy the requirement of Section 11 (4A).

(3.) Learned counsel appearing for the respondent had pointed out that, pursuant to the remand made by the hon'ble Supreme Court in the matter of Dharmodayam Co., the Income Tax Appellate Tribunal, Cochin Bench had reconsidered the matter and allowed the exemptions. Therefore it is submitted that the reference need to be answered in favour of the assessee.