S. RM. M.CT. M. TIRUPPANI TRUST versus THE COMMISSIONER OF INCOME TAX

Citation: [1998] 1 S.C.R. 653 · Decided: 04-02-1998 · Supreme Court of India · Bench: SUJATA V. MANOHAR, D.P. WADHWA · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

, 
S. RM. M.CT. M. TIRUPPANI TRUST 
A 
v. 
- 'f 
THE COMMISSIONER OF INCOME TAX 
FEBRUARY 4, 1998 
[MRS. SUJATA V. MANOHAR AND D.P. WADHWA, JJ.] 
B 
~-
Income Tax Act. 1961 : 
Sll(J)(a)-lncome from property held for charitable or religious 
purposes-Resolution by trustees to accumulate income of trust for 10 years c 
cominencing from April 1961 for charitable purposes-Form JO as required 
u/s 11 (2) filed-During assessment year J 970-7 J Rs. 8 lakhs realised from 
a firm to which the amount was advanced and invested by trust in building 
a hospital-Trust also earned other income of Rs. l,64,2 JO in that assessment 
---""< 
year-Exemption claimed u/s 11 (J) in respect of both the amounts-High 
' 
-f 
Court holding that sum of Rs. 8 lakhs was an asset acquired in realisation D 
...._ 
of an outstanding due and could not be included in income of assessee for 
purpose of s. 11(1)-Also, since balance income of Rs. J,64210 was not 
invested by assessee in accordance with declaration filed u/s ! I (2), assessee 
could not claim exemption in respect thereof-Held, assessee is entitled to 
claim benefit u/s 11 (l)(a). 
E 
Additional Commissioner of Income-Tax & Anr. v. A.l.N. Rao 
Charitable Trust, (1995) 216 ITR 697, relied on. 
CIVIL APPELLATE JURISDICTION': Civil Appeal No. 1699 of 
1984. 
F 
,.. 
1 
·From the Judgment and Order dated 13.11. 79 of the Madras High-Court 
in S.C.P. No. 44/80 in T.C. No. 993 of 1977. 
Aman Hingorani, for Hingorani & Associates for the Appellant. 
Harish Chandra and C.V.S. Rao for B.K. Prasad for the Respondent. 
G 
' 
y 
The following Judgment of the Court was delivered : 
This appeal pertains to assessment year 1970-71. The following question 
was refe.rred to the High Court of Judicature at Madras by the Income-Tax 
Appellate Tribunal under Section 256(1) of the Income-Tax Act, 1961 : 
H 
653 
A 
654 
SUPREME COURT REPORTS 
[ 1998) l S.C.R. 
"Whether, on the facts and in the circumstances of the case, the 
income of the assessee is exempt from tax under Section 11 of the 
Income-Tax Act for the assessment year 1970-71 ?" 
The assessee is a Charitable Trust for carrying out Thiruppani or repairs 
to old Hindu temples, building new ones, giving aid to or establishing hostels, 
B educational and industrial institutions etc. It is not in dispute that the objects 
of the Trust are charitable. On March I, 1963, the trustee resolved that the 
income of the Trust should be. accumulated for a period of ten years 
commencing from April 13, 1961 for the various charitable purposes which are 
set out in the Resolution. The assessee accordingly filed Form I 0 with the 
Income-Tax Officer as required under Section 11(2) of the Income-Tax Act, 
C 1961. The income was accordingly being accumulated every year and invested 
in Government securities. 
For the year ending April 12, 1970 which is the accounting year relevant 
to assessment year 1970-71, the amount of Rs. 7,82,792.44 which was shown 
in the earlier balance sheet (as on 1.4.1969} as advance to S. RM. M. CT. M. 
Y-
D Firm, Rangoon on the "Assets" side was substituted by "Building for Rs. 8 
lakhs" on the Assets side. It was the case of the assessee that during the 
Jtr
assessment year 1970-71, the advance to the said firm at Rangoon was in 
effect realised and invested in a building for the purpose of starting a hospital. 
The Trust had also earned during that assessment year other income amounting 
to Rs. I, 64,210.03. 
E 
The assessee claimed exemption for the total income of Rs. 8 lakhs plus 
Rs. 1,64,210.03 under Section 11(1) of the Income-Tax Act, 1961. The Income-
Tax Appellate Tribunal by a majority of 2 : I held that the sum of Rs. 8 lakhs 
was to be treated as income of the assessee for the purposes of Section 11. 
The Tribunal gave the benefit of Section 11 (I) to the assessee for the 
assessment year 1970-71 in respect of the entire income consisting of Rs. 8 
· F lakhs plus Rs. 1,64,210.03. On a Reference to the High Court, the High Court 
has held that the sum of Rs. 8 lakhs was an asset acquired in realisation of 
an outstanding due and hence, sum of Rs. 8 lakhs cannot be included in the 
income of the assessee for the purposes of Section 11 (I). Since the balance 
income of Rs. 1,64,210.03 was not invested by the assessee in accordance 
with the declaration filed by the assessee under Section 11 (2), the assessee 
G could not'clai.m exemption from tax in respect of Rs. 1,64,210.03. 
The material part of Section 11, at the relevant t

Excerpt shown. Read the full judgment & AI analysis in Lexace.