Director Of Income-Tax … vs Apparel Export Promotion Council … on 1 May, 2000

Delhi High Court
Director Of Income-Tax … vs Apparel Export Promotion Council … on 1 May, 2000
Equivalent citations: 2000 244 ITR 736 Delhi
Bench: A Kumar, D Jain


JUDGMENT

1. By this petition under Section 256(2) of the Income-tax Act, 1961 (for short “the Act”), the Revenue seeks a direction to the Income-tax Appellate Tribunal to state the case and refer the following questions, arising out of ITA No. 2843/Delhi of 1996 and said to be questions of law, for our opinion:

“1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in granting the benefit of Section 11 in view of the provisions of Section 11(4A) of the Income-tax Act?

2. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in holding that the forfeited amount cannot be treated as property of the assessee and is not the income of the assessee ?”

2. Having heard learned counsel for the parties we are of the view that the Tribunal was justified in declining to make a reference on the proposed questions.

3. The petition pertains to the assessment year 1992-93. The respondent-assessee is a society registered under Section 25 of the Companies Act, 1956. It filed its return of income for the relevant assessment year in the status of association of persons and claimed exemption under Section 11 of the Act. The Income-tax Officer, however, denied the benefit under the said section keeping in view the provisions of Section 11(4A) of the Act which was initially inserted by the Finance Act, 1983, with effect from April 1, 1984, and was later substituted by the Finance (No. 2) Act, 1991, with effect from April 1, 1992. The Assessing Officer also added to the income of the assessee that amount of earnest money forfeited by it.

4. The assessee’s appeal to the Commissioner of Income-tax (Appeals) was unsuccessful. However, in the second appeal, the Tribunal, relying on its earlier order for the assessment year 1991-92, held that the assessee was entitled to exemption under Section 11 of the Act. While holding so the Tribunal held that the assessee did not carry on any activity for earning profit and, therefore, it did not carry on any “business” as the term is understood in common parlance. The Tribunal accordingly held that the assessee was a public charitable institution to which the provisions of section 11 were applicable. The Revenue’s application under Section 256(1) having been dismissed, the present petition has been filed.

5. It is strenuously argued, by Mr. Jolly, learned counsel for the Revenue, that the proposed questions are questions of law as the Tribunal has failed to take into consideration the newly inserted Sub-section (4A) of Section 11 of the Act with effect from April 1, 1992. Having perused the said newly inserted section we do not find any substance in the contention of learned counsel. In view of the finding recorded by the Tribunal that the assessee did not carry on any “business”, the amendment in the said section, namely, the exclusion of any income of a trust as profits and gains of business, unless the business is incidental to the attainment of the objectives of the trust, from the provision of Sub-section (4A) does not materially alter the view taken by the Tribunal on the basis of its order for the assessment year 1991-92, particularly when the Revenue has not challenged the aforenoted finding” of fact recorded by the Tribunal by raising” a specific question in that behalf. Following the order of this court dated May 5, 1998, for the assessment year 1991-92 in ITC No. 46 of 1997, we dismiss this petition as well. No costs.

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