LAWS(MAD)-1997-3-118

THANTHI TRUST Vs. WEALTH TAX OFFICER

Decided On March 12, 1997
THANTHI TRUST Appellant
V/S
WEALTH-TAX OFFICER Respondents

JUDGEMENT

(1.) ALL the above writ petitions have been filed by the Thanthi Trust and more or less raise a common question and they can be disposed of conveniently by a common order.

(2.) BY an instrument of declaration of trust, dated March 1, 1954, the Tamil newspaper Daily Thanthi was established as an organ of educating the public and disseminate news on all matters of public interest through the said newspaper. The claim of the trust for exemption under section 4(3) of the Indian Income-tax Act, 1922, had been upheld for the assessment years 1955-56 to 1961-62. BY a supplementary deed, dated June 28, 1961, the founder of the trust directed that the surplus income of the said trust, after defraying all the expenses should be devoted, by the trustees for establishing certain educational institutions, providing scholarships for students and for running orphanages. In a Civil Suit No. 90 of 1961, by judgment dated March 2, 1962, it was held that the trustees were bound by the supplementary document to utilise the surplus funds of the Thanthi Trust for the educational purposes mentioned in the supplementary document. For the assessment year 1968-69, the trust claimed exemption under section 11 of the Income-tax Act on the ground that seventy per cent. of the income had been applied for charitable purposes. A similar claim was made for the assessment year 1969-70. The claim of exemption was denied for the assessment years 1968-69 and 1969-70. The trust filed appeals and even while the appeals were pending, an attempt was made to reopen the assessments for the earlier years 1956-57 to 1961-62 as also 1965-66 and 1967-68. BY judgment dated December 21, 1972, the reopening of the assessment for the earlier years was held to be invalid, so far as the assessment years 1956-57, 1958-59, 1960-61 and 1961-62 in the writ petitions filed by the trust. However, the reopening of the assessments for the years 1957-58, 1959-60, 1965-66, 1966-67 and 1967-68 were held to be valid, subject to certain conditions. The said judgment is in Thanthi Trust v. ITO . In respect of the appeals preferred for the assessment years 1968-69 and 1969-70, the matter went up to the High Court and by judgment dated January 29, 1981, all the questions were answered in favour of the petitioner, holding that the petitioner-trust is a public charitable trust and can claim the exemption under section 11 of the Income-tax Act. Therefore, it is contended by the petitioner-trust that it is by now well-settled that the petitioner is a public charitable trust within the meaning of the Income-tax Act.

(3.) IT is unfortunate that in spite of what transpired in the court on March 27, 1991, the respondent had passed an order on March 25, 1991, itself in the presence of the auditors of the petitioner-trust, holding that there was violation of section 13(1)(d) of the Income-tax Act and that, therefore, the assessee-trust was not entitled to exemption under section 11 of the Income-tax Act and, consequently, the trust forfeits the exemption under the Wealth-tax Act, by virtue of section 21A of the Wealth-tax Act and proceeded to pass an order of assessment for all the three years, viz., 1986-87 to 1988-89. In the meanwhile, Writ Miscellaneous Petitions Nos. 7622, 7624 and 7626 of 1991 were filed seeking a stay of the assessment orders, dated March 25, 1991. The following order was passed by the learned judge on April 3, 1991 :