Itxa/358/2006 Of The Dirctor Of Income-Tax v. Sadharmik Utkarsh Trust

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL (L) NO. 1007 OF 2006WITHINCOME TAX APPEAL (L) NO. 1006 OF 2006 The Director of Income Tax... Appellant Sadharmik Utkarsh Trust... Respondent Mr. Shiv Motariya for the appellant.Mr. Prakash Jhaveri, Trustee of respondent in personpresent. P.C. .These two appeals are filed by the Director ofthe Income Tax (Exemption) concerning the assessmentof the respondent trust for the Assessment Year1994-95 and 1996-97. What has happened in both thesematters is that the Income Tax Appellate Tribunal hasaccepted the submission of the respondent trust thatit is a religious trust and, therefore, is entitled tothe benefit under section 11 of the Act. It wascontended on behalf of the Revenue that the Assesseecannot get the benefit in view of the provisions undersection 13(1)(b) of the Act. Now, what is to be notedis that the restriction under section 13 (1)(b) willapply to a Charitable Institution, if its activitiesare restricted to a particular religious community. Section 11 of the Act under which the benefit issought by the respondent trust is available withrespect to the income from the property held by atrust for charitable or religious purposes. Thebenefit is available to the trust which is wholly forreligious purpose. In a situation where the trust isdeclared to be a charitable trust, but collects moniesfrom different communities and it restricts benefit toa particular community, the restriction under section13(1)(b) will come to apply. A trust which declaresitself to be a religious trust and undoubtedly,therefore, collects its contribution from a particularcommunity, the benefit under section 11 cannot bedenied and the restriction under section 13 (1)(b),cannot be brought into application.In thecircumstances, we do not find any error in the orderpassed by the Tribunal.Both the appeals aredismissed. [H.L. GOKHALE, J.] [V.R. KINGAONKAR, J.]