NACHIMUTHU INDUSTRIAL ASSOCIATION Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a common reference arising out of the order of the Income -tax Tribunal for the assessment year 1965 -66. Three questions have been referred under s. 256(1) of the I.T. Act, 1961, two, at the instance of the asseseee, and one, at the instance of the Commissioner. The following are the two questions which have been referred at the instance of the assessee (1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the amount of Rs. 2, 50, 000 could not be said to have been applied for charitable or religious purposes in India within the meaning of section 11 (1) of the Income -tax Act, 1961, in the accounting period relevant to the assessment year 1965 -66 ? (2) If the answer to question No. (1) is in the negative, whether the assessee was entitled to any further exemption from tax of any portion of its income for the assessment year 1965 -66 ?

(2.) THE assessee appealed to the Tribunal, and the Tribunal held that having regard to the accounting between the assessee and the polytechnic, an educational institution, the assessee had not satisfied the requirements of s. 11 and, therefore, confirmed the order of the AAC. It is this order of the Tribunal that has given rise to the present reference at the instance of the assesseeThe other question referred at the instance of the Commissioner arises out of the penalty proceedings for non -payment of tax for the same year, and we shall deal with it later on Section 11 (1)(a) is the material provision and it runs as follows"

(3.) RESOLVED that the profits of the association for the year ending 31 -3 -1965, so permitting, a sum of Rs. 2, 50, 000 be given as donation to Nachimuthu Polytechnic from out of the profits of the aforesaid year.