COMMISSIONER OF INCOME TAX Vs. HINDUSTHAN CHARITY TRUST

JUDGEMENT

(1.) It appears that the assessee is a trust. The assessment year in this reference is 1960-61. There was a trust. It applied for refund under Section 48 of the Indian I.T. Act, 1922, for the assessment year 1960-61, the relevant accounting period ending on March 31, 1960. The income derived by the trust was from dividends. The asses-see had paid on March 9, 1960, a sum of Rs. 18,950 to another trust called Lakshmi Nath Seva Trust. While the ITO scrutinised the statement filed, he came across this item. According to him, this Lakshmi Nath Seva Trust was a private trust. He observed that the assessee could not prove that the donation was for any public charitable or religious purpose. He, therefore, taxed the sum of Rs. 10,850 at the maximum rate.

(2.) Before the AAC, on appeal, the assessee contended that the donation to the trust was made under the belief that it was a charitable trust and that if a donation was made in good faith, it could not be said that the money had been applied for non-charitable purposes. In the alternative, it was pointed out that in the case of Shri Lakshmi Nath Seva Trust the AAC had held, in his order for the assessment year 1961-62, dated April 28, 1964, that the trust was a religious and charitable trust although he had dismissed the appeal of the said trust on the ground that the deed of endowment was not a valid document. The AAC in disposing of these contentions held that for getting the benefit of exemption, the onus was on the assessee to prove that the money contributed had been applied for religious am haritable purpose and that the assessee had failed to do so. Hence, the claim was considered to be not tenable.

(3.) Thereafter, the assessee went up on appeal to the Tribunal. It was submitted that the conclusion drawn by the I.T. authorities was wrong and that the trust had been held to be a valid public charitable trust by the Tribunal in its order in ITA No. 4143 of 1964-65, dated April 18, 1967. It was, therefore, urged that the basis of the reasoning of the ITO and the AAC could no longer be taken as valid. The Revenue submitted that the conclusion of the I.T. authorities on the materials on record was correct.