| Case ID |
2329d31a-2a26-4270-9576-4ecb1eb51598 |
| Body |
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| Case Number |
Tax Cases Nos. 1357 to 1359 of 1985 (References No |
| Decision Date |
Apr 28, 1998 |
| Hearing Date |
|
| Decision |
The Madras High Court ruled in favor of the assessee for the assessment years 1974-75 and 1975-76, granting exemption under section 11 of the Income Tax Act, 1961. However, for the assessment year 1979-80, the court found that the trust's separate chit fund business violated section 13(1)(bb), thereby denying exemption for that year. The decision emphasized that while the trust's primary objects were charitable, engaging in independent profit-making activities could jeopardize its tax-exempt status. |
| Summary |
In the landmark case of DASA BALINJIKA SEVA SANGAM Vs. COMMISSIONER OF Income Tax (No. 1), the Madras High Court deliberated on the eligibility of a charitable trust for tax exemption under the Indian Income Tax Act, 1961. The trust, established with objectives focused on education and relief of the poor, engaged in a chit fund business to support its charitable activities. The Income Tax Officer initially denied exemption for three assessment years, citing violations of sections 11 and 13 of the Act due to profit-making activities. While the Appellate Assistant Commissioner favored the trust, the Appellate Tribunal upheld the denial of exemption for the year 1979-80, emphasizing the separation of primary charitable objectives from independent business ventures. The Supreme Court's precedents, including Thiagarajar Charities v. CIT and CIT v. Virudhunagar Hindu Nadars Abiviruthi Panchukadai Mahamai, were pivotal in the court's analysis. Ultimately, the High Court granted tax exemption for the initial years, recognizing the trust's genuine charitable purpose, but retracted for the later year due to non-aligned business activities. This case underscores the delicate balance between charitable endeavors and profit-generating activities, highlighting the strict adherence required to maintain tax-exempt status under Indian law. |
| Court |
Madras High Court
|
| Entities Involved |
C.V. Rajan,
P.P.S. Janarthana Raja,
DASA BALINJIKA SEVA SANGAM,
COMMISSIONER OF Income Tax (No. 1),
TPC,
P. Thangavel,
N. V. Balasubramanian
|
| Judges |
N. V. BALASUBRAMANIAN,
P. THANGAVEL
|
| Lawyers |
P.P.S. Janarthana Raja for the Assessee,
C.V. Rajan for the Commissioner
|
| Petitioners |
DASA BALINJIKA SEVA SANGAM
|
| Respondents |
COMMISSIONER OF Income Tax (No. 1)
|
| Citations |
2001 SLD 487,
2001 PTD 3197,
(1999) 240 ITR 854
|
| Other Citations |
Thagarajar Charities v: CIT (Addl.) (1997) 225 ITR 1010 (SC),
CIT v. Virudhunagar Hindu Nadars Abiviruthi Panchukadai Mahamai (1996) 219 ITR 303 (Mad.),
CIT (Addl.) v. Surat Art. Silk Cloth Manufacturers Association (1980) 121 ITR 1 (SC),
Addl. CIT v. Surat Art Silk Cloth Manufacturers Association (1980) 121 ITR 1 (SC),
Thiagarajar Charities v. CIT (1997) 225 ITR 1010
|
| Laws Involved |
Indian Income Tax Act, 1961
|
| Sections |
2(15),
13,
13(1)(c),
13(2)(a),
13(1)(bb),
13(3)
|