COMMISSIONER OF TAXES, ASSAM versus M/S. JALANNAGAR SOUTH ESTATE LTD.

Citation: [1972] 1 S.C.R. 17 · Decided: 04-08-1971 · Supreme Court of India · Bench: K.S. HEGDE · Disposal: Appeal(s) allowed

Judgment (excerpt)

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COMMISSIONER OF TAXES, ASSAM 
v. 
M/S. JALANNAGAR SOUTH ESTATE LTD. 
& ORS. 
August 4, 1971 
[K. S. HEGDE AND A. N. GROVER, JJ.] 
17 
Assam Agricultural Income-tax Act (Assam Act 9 of 1939) and 
Rules made thereunder, s. 8 and r. 2-Contribution to a charily trust-
!/ exemption can be claimed with respect to amount. 
Exemption granted by Assistant Commissioner-Larger deduction 
claimed by assessee in appeal to Board-Jurisdiction~( Board to express 
opinion on correctness of finding of Assistant Commissioner as to the 
right to claim exemption. 
The assessees made donations to a Charity Trust and claimed that 
the amount should be considered as "amounts actually spent for chari-
table purposes" under r. 2 of the. rnles frame,d under the Assam Agri-
cultural Ince me-tax Act, 1939, and therefore exempt from assessment 
to tax. The Income-tax Officer rejected the claim but on appeal, the 
Assistant Commissioner granted exemption to the extent of 60 % of 
the amounts donated. The Department had no further right of appeal, 
but the assessees exercised their right of appeal to the Board of Revenue 
claiming full exemption .. The Board of Revenue held that, (I) the 
assessees were not entitled to any exemption under the Act, but as the 
order of the Assistant Commissioner had become final, the assessees 
were entitled to retain the exemption granted; and (2) even if they 
were entitled to some exemption, what was granted was more than what 
they were entitled to. 
The High Court, on reference, held that: (I) the Board was 
not competent in the assessees' appeal to question the finding of the 
Assistant Commissioner that the amounts donated to the Charity 
Trust were actually spent for charitable purposes and (2) the Board 
was not justified in holding that only 60 % of the amounts donated, 
were admissible as deduction 
Allowing the appeals, 
HELD : (I) Since there was no right of appeal to the Depart-
ment an exemption granted by the Assistant Commissioner could not 
be interfered with by the Board, but while considering whether the 
assessees were entitled to the full exemption claimed, the Board had to 
examine the true legal position under the Act and the rules for the 
purpose of deciding the matter in issue. Therefore the Board was 
competent to determine whether the Assistant Commissioner took 
the correct view in law. [20B-DJ 
(2) 
Under r. 2 (I) read with s. 8 (g) of the Acl an assessee is 
entitled to deduct from his income only the sum actually spent by 
him for charitable purposes as defined in the rule. Assuming that 
;\n assessee may rely on an expenditure through an agency and not 
18 
SUPREME COURT REPORTS 
[ 1972j 1 S.C.R. 
by himself, and that the objects of the Charity Trust are charitable 
purposes as defined, it had to be established to the satisfaction of the 
assessing authority that the amounts were actually spent for such 
chantable purposes. Mere contribution to a charity fund would not 
entitle an assessee to the exemption when it was not proved that the 
Charity Trust had in fact expended the amounts donated for any such 
charitable purpose. [20G,H;21'A-E] 
CIVIL APPELLArE J1m1so1cT10N : Civil Appeals No. 
1873 to 1876 of 1967. 
Appeals by special leave from the judgment and order 
dated August 8, 1966 of the Assam and Nagaland High 
Court in Ref. Nos. 2 to 4 of 1965. 
S. T. Desai, Naunit Lal and Sirnranjit Sodhi, for the 
appelJant (in all the appeals). 
M. C. Chagla, S. C. Majumdar and R. K. Jain, for 
the respondents (in all the appeals). 
The Judgment of the Court was delivered by 
Hegde J,-These appeals by special leave arise from 
the decision of the High Court of Assam and Nagaland 
A 
B 
c: 
D 
in Tax References Nos. 2 to 4 of 1965 on its file wherein 
the High Court of Assam and Nagaland answered the two 
questions of law referred to it by the Assam Board of Re-
E 
venue under s. 28(2) of the Assam Agricutural Income-tax 
Act, 1939 (Assam Act IX of 1939) (to t e hereinafter re-
ferred to as the Act) in the negative. The two questions 
referred for the advisory opinion of the High Court are 
0) Whether on the facts and in the cir-
cumstances of the case the Board was competent 
in course of appeals preferred by the assessee to 
question the finding of Assistant Commissioner 
of Taxes to the effect that the amount donated 
to Jalan Charity Trust were amounts actually 
spent for 'Charitable purposes' within the mean-
ing of Assam Agricultural l ncome-Tax Act. 

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