COMMISSIONER OF INCOME TAX Vs. SEETHAKATHI TRUST

JUDGEMENT

(1.) THE above tax case appeals are directed against the common order of the Income-tax Appellate Tribunal in ITA Nos.1188 and 1189/Mds/2004 dated 8.3.2006, raising the following substantial questions of law: "1. Whether in the facts and circumstances of the case, the Tribunal was right in holding that the assessee is entitled for exemption under section 10(22) of the Income Tax Act? 2. When the assessee has utilised the funds of the Trust for purposes that are not in consonance with the objects of the Trust, is not the assessing officer right in denying exemption to the assessee under section 10(22) of the Income Tax Act?"

(2.) THE Revenue is the appellant. THE relevant assessment years are 1996-97 and 1997-98. THE assessee is a public charitable trust, which runs three educational institutions and a medical centre. THEy claimed exemption under Section 10(22) of the Income Tax Act for three assessment years, viz., 1995-96, 1996-97 and 1997-98. For the assessment year 1996-97, the assessee filed a return on 5.2.97 declaring excess of expenditure over income of Rs.1,05,25,645/-. Since the similar expenditure was disallowed for the assessment year 1995-96, the assessing officer denied the exemption for the assessment year 1996-97 also by order dated 31.3.2003. THE assessing officer was of the opinion that the assessee has violated the provisions of Section 11(5) read with 13(1)(d) of the Act and accordingly, denied the benefits of Sections 11 and 12 of the Act, consequent to which, the assessing officer computed the income of the assessee at Rs.73,25,645/-. Similarly, for the assessment year 1997-98, the assessee filed a return on 15.4.98 declaring excess of expenditure over income of Rs.80,50,210/- and for the same reason that weighed the assessing officer with regard to the rejection of exemption under Section 10(22) of the Act for the assessment year 1996-97, the assessing officer denied the exemption under Section 10(22) of the Act and also denied the benefits of Sections 11 and 12 of the Act holding that the assessee violated the provisions of Section 11(5) read with 13(1)(d) of the Act for the assessment year 1997-98 also, by the same order dated 31.3.2003.