COMMISSIONER OF INCOME-TAX Vs. KARIMIA TRUST

JUDGEMENT

(1.) BY this application under Section 256(1) of the Income -tax Act, 1961, the following questions of law have been referred to this Court for opinion:

(2.) THE facts of the case, which are relevant for answer the questions of law, are as under.

(3.) ALTHOUGH the assessee was allowed exemption under Section 11 of the Act till 1976 -77 but for the first time exemption from income tax was disallowed in view of provisions of Section 13(1)(bb) of the Act by the Assessing Officer. However, the appellate authority allowed the claim of the assessee for entitlement of exemption under Section 11 of the Act. Thereafter, for the assessment years in question i.e. 1981 -82, the Assessing Officer again disallowed the assessee -trust exemption under Section 11 of the Act on the ground that there was violation of provisions of Section 13(1)(bb) of the Act inasmuch as the assessee -trust was carrying on business which is not for primary purposes of the trust. The Assessing Officer also held that the assessee has violated the provisions of Section 13(1)(c) of the Act because it has rented out the two cinema halls to one M/s. Kapur Chand Private Limited which, in their turn, gave the management and exhibition of films to one M/s. Ruhee Enterprises of jamshedpur. The Assessing Officer further held that the assessee is not managing the trust properly.