COMMISSIONER OF INCOME-TAX Vs. KRISHNA TENT HOUSE

JUDGEMENT

(1.) KRISHNA Tent House, Bhiwani, the assessee, is a public charitable trust and it has several objects but we are concerned, for the decision of this reference, only with the following two objects :

(2.) THE assessment was framed by the Income-tax Officer and exemption was granted under Section 11 of the Income-tax Act, 1961 (for short "the Act" ). Later on, the assessments were reopened for the assessment years 1972-73 to 1975-76 under Section 147 (b) of the Act in regard to the income earned by the public charitable trust from the business of Krishna Tent House, in view of the Supreme Court decisions in Indian Chamber of Commerce v. CIT [1975] 101 ITR 796 and Sole Trustee, Loka Shikshana Trust v. CIT [1975] 101 ITR 234. In the reassessments, the Income-tax Officer held that exemption was not permissible and brought to tax the income derived from Krishna Tent House. The Appellate Assistant Commissioner upheld the order of the Income-tax Officer, but on further appeal to the Income-tax Appellate Tribunal, Delhi, relief was granted to the assessee exempting the income of the firm, following the later decision of the Supreme Court in Dharmadeepti v. CIT [1978] 114 ITR 454, that the purposes of the trust in Clauses (i) and (j) reproduced above are the purposes of relief of the poor and education and exemption was allowable for such purposes even if an activity for profit is carried on in the course of the actual carrying out of the primary purpose of the trust or institution. It also relied upon the later decision of the Supreme Court in Addl. CIT v. Surat Art Silk Cloth Manufacturers Association [1980] 121 ITR 1.

(3.) ON the aforesaid facts, the Tribunal has referred the following common question for the assessment years referred to above, for the opinion of this court :