The Deputy Director Ofincome Tax (Exemption I)Chennai v. The Willington Charitable Trust18/D, Rukmani Lakshmipathy Roadchennai – 600 008

IN THE HIGH COURT OF JUDICATURE AT MADRAS CORAM THE HONOURABLE MR. JUSTICE F.M.IBRAHIM KALIFULLAANDTHE HONOURABLE MR. JUSTICE M.M.SUNDRESH The Director of Income-Tax (Exemptions)Madras... Appellant in TC (A) NosNos.2112 to 2116 & 1812/2008 The Deputy Director ofIncome Tax (Exemption I)Chennai..Appellant in TC (A) 468/10 Versus The Willington Charitable Trust18/D, Rukmani Lakshmipathy RoadChennai – 600 008...Respondent in T.C.Nos.2112 to 2116/08 The Willington Charitable trust Chettinad House, Raja AnnamalaipuramChennai-28...Respondent in T.C.Nos.1812/08 & 468/2010 Tax Case Appeals filed Under Section 260-A of the Income-Tax Act,1961, against the order of the Income-Tax Appellate Tribunal "B"Bench, Chennai, passed in I.T.A.No.1484/Mds/2000, dated 30.06.2006. I.T.A.No.1485/mds/2000 dated 30.6.2006, I.T.A.NO.1237/mds/2001 dated30.6.2006,I.T.A.No.1739/mds/2002,dated30.6.2006andI.T.A.NO.238/mds/2003 dated 30.6.2006 and order of the Income -TaxAppellate Tribunal Madras 'C' Bench, passed in I.T.A.No.1422/mds/2006dated 31.10.2007 and the order of the Income Tax Appellate Tribunal,'D' Bench, Chennai, passed in I.T.ANo.2225/mds/2008, dated 26.6.2009respectively. against the Order of the Commissioner of Income-Tax(Appeals -IX)Chennai in I.T.A. Nos.197/98-99 & 39/2000-01 dated 26.6.2000 for thethe Assessment years 1996-97 and 1997-98 in ITA No.31/2001-02 dated29.5.2001 for the Assessment Year 1998-99; the Commissioner of https://hcservices.ecourts.gov.in/hcservices/ Income- Tax(Appeals.XI) Chennai -34 in I.T.A.Nos.20 & 28/2002-03dated 11.12.2002 for the Assessment Years 1995-96 and 2000-2001; inI.T.A.No.10/2004-05 and 71/2005-06 dated 23.2.2006 for the AssessmentYear 2002-03; and the Commissioner of Income Tax(Appeals -XII)Chennai in I.T.A.No.388/2007-08 dated 21.8.2008 for the AssessmentYear 2005-06 respectively. against the order of the Assistant Director of Income Tax (Exemption-I) Chennai-600 034 dt.4.12.1998 in PAN/GIR No.1646-T for theAssessment Year 1996-97,Deputy Director of Income Tax (Exemption-I)Chennai 600 034 dt.30.3.2000 for the Assessment Year 1997-98dt.30.3.2001 for the Assessment year 1998-99, the Assistant Directorof Income Tax (Exemption-I), Chennai-34, dt.27.3.2002 for theAssessment Year 1995-96 and dt.22.3.2002 for the Assessment Year2000-2001; dt.31.3.2005 for the Assessment Year 2002-2003: and theDeputy Director of Income Tax (Exemption-I) Chennai -34 dt.3.12.2007for the Assessment Year 2005-06 respectively. In view of the common issues involved in all these appealsbetween the same parties, they have been taken up together forpassing a common judgment. 2.Challenging the orders of the Tribunal for the assessmentyears, 1995-96, 1996-97, 1997-98, 1998-99, 2000-01, 2002-03 and 2005-06, respectively, the Revenue has come forward to file these appealsby raising the following substantial questions of law:"(i)When Section 11(1) read with Section 11(4) of theIncome Tax Act exempts income from the business undertakingof the Trust to the extent it is applied for charitable orreligious purpose, can Section 11(4)(A) of the Income TaxAct can be construed to have been incorporated for the verysame purpose or to be construed restricting the scope ofSection 11(4) of the Income Tax Act. (ii)When the Tribunal reverses the findings of thelower authorities to hold that a joint reading of Section11(1), 11(4) and 11(4)(a) would mean to give exemption ofthe income from the business of the Trust irrespective ofthe nature of the business, if the income derived from the https://hcservices.ecourts.gov.in/hcservices/ business is applied to the objects and purposes of theTrust in the light of the fact by the Tribunal holding thatthere is no finding regarding the application of the incomederived from the business can the Tribunal allow the appealof the assessee instead of remanding the same for want offinding as to the applicability of the income." 3.Facts in brief:- (ii)When the Tribunal reverses the findings of thelower authorities to hold that a joint reading of Section11(1), 11(4) and 11(4)(a) would mean to give exemption ofthe income from the business of the Trust irrespective ofthe nature of the business, if the income derived from the https://hcservices.ecourts.gov.in/hcservices/ business is applied to the objects and purposes of theTrust in the light of the fact by the Tribunal holding thatthere is no finding regarding the application of the incomederived from the business can the Tribunal allow the appealof the assessee instead of remanding the same for want offinding as to the applicability of the income." 3.Facts in brief:- 3.1.A Trust was started in the year 1924, by name "TheWillington". The said Trust acquired a property bearing Door No.1/4,Marshalls Road, Egmore, Chennai – 600 008. Thereafter, a resolutionwas passed by the Trust on 27.02.1971 to constitute a CharitableTrust in the name of "The Willington Charitable Trust". Theassessee's Trust Deed mentioned the objects such as, to establish,run or maintain educational, technical or technological institutionsof all kinds in India for the benefit of the public, to awardscholarshiips and stipends for education, to institute Lectureshipsand arrange lectures and establish endowments for such purposes andto institute and maintain or support hospitals, dispensaries etc. TheHonourable High Court of Madras in C.S.No.76 of 1973 by its orderdated 08.03.1973 has confirmed the consideration of the assesseeTrust on the acquisition of the property mentioned above as the onevested with it as a Trust property. The assessee Trust is alsoregistered under Section 12A(a) of the Income Tax Act, 1961(hereinafter referred as "the Act". 3.2.The property purchased being an old building wasdemolished and two halls have been constructed by the assessee whichhave been let out as marriage halls and auditoriums. A part of thebuilding is also used for running a hostel for women and another partof it has been used by letting it out to a bank on a rental basis. 3.3.The assessee filed its return claiming that the Incomederived from the property held in Trust by the assessee is eligiblefor exemption under Section 11 of the Act. However, the assessingofficer for the assessment years, 1995-96, 1996-97, 1997-98, 1998-99,2000-01, 2002-03 and 2005-06, respectively has rejected the exemptionsought for by the assessee by holding that in as much as the assesseewas carrying on a commercial activity which is not incidental to theobject of the Trust as required under Section 11 of the Act, theexemption cannot be granted. It was also held that the assessee hasnot complied with the provisions contained under Section 11(4)(A) ofthe Act by not maintaining separate books of accounts in respect ofits income assessable under the said business. 3.4.The Commissioner of Income Tax (Appeals) has confirmedthe order of the assessing officer for the years, 1995-96 and 2000-01. However for the assessment years, 1996-97, 1997-98, 1998-99,2002-03 and 2005-06, the appeals filed by the assessee were allowed. https://hcservices.ecourts.gov.in/hcservices/ Both the assessee as well as the revenue filed further appeals beforethe Tribunal for the above mentioned years. The appeals ended infavour of the assessee. Challenging the same, the revenue has filedthe present appeals. 4.Findings of the Assessing Officer: 3.4.The Commissioner of Income Tax (Appeals) has confirmedthe order of the assessing officer for the years, 1995-96 and 2000-01. However for the assessment years, 1996-97, 1997-98, 1998-99,2002-03 and 2005-06, the appeals filed by the assessee were allowed. https://hcservices.ecourts.gov.in/hcservices/ Both the assessee as well as the revenue filed further appeals beforethe Tribunal for the above mentioned years. The appeals ended infavour of the assessee. Challenging the same, the revenue has filedthe present appeals. 4.Findings of the Assessing Officer: 4.1.The Assessing Officer while rejecting the exemptionssought for by the assessee under Section 11 of the Act has held thatin as much as the income has been derived by commercial activitiessuch as, letting the building as marriage halls and auditoriums,apart from using the same for rental purposes and running a ladieshostel, such commercial activities cannot be termed as incidental tothe objects of the Trust. Secondly, the Assessing Officer has heldthat the second condition required under Section 11(4)(A) of the Actof maintaining separate books of accounts is not satisfied. It washeld by the Assessing Officer that the assessee is maintaining thebooks of accounts relating to the activities of letting out theauditoriums owned by it and it has been crediting the income of rentfrom Indian Bank and interest on fixed deposits etc., in the saidaccount. The assessee has kept separate accounts only in respect ofother activity of running the hostel for ladies and therefore, it hasto be held that the second condition that the assessee shouldmaintain separate books of accounts in respect of its incomeassessable under head "Business" is not satisfied. The AssessingOfficer has also found that the assessee has filed an applicationunder Form-10B as required under Section 11 of the Act foraccumulating of the income for specified charitable purposes –towards the establishment of ladies college and construction ofschool building. 5.Findings of The Commissioner of Income Tax (Appeals): 5.1.The Commissioner of Income Tax (Appeals) has held thatthe assessee has been maintaining three sets of accounts such as, oneset of books for the income from auditoriums as well as for interestreceipts, one set of books for the income of the trust, wherein itaccounts donations and interest receipt. The assessee accounted it'sdonation receipts from the occupants of the auditoriums in thesebooks only. The assessee finally consolidated both the above accountsand prepared it's income and expenditure account as well as itsBalance Sheet and one set of books for the income from the ladieshostel account and hence there is compliance of the conditionstipulated under Section 11(4)(A) of the Act by maintaining separateaccounts. The Commissioner of Income Tax (Appeals) has also held thatin as much as the income derived by the assessee through itscommercial activities is being used towards its object which is acharitable purpose, its activity of indulging in such a business isnot a business activity independent of the objects of the Trust andthe same has to be considered as incidental activity to thecharitable activities. Therefore by holding so the Commissioner of Income Tax (Appeals) allowed the appeals filed by the assessee exceptfor the assessment years 1995-96 and 2000-01. In so far as theassessment years 1995-96 and 2000-01 are concerned, the Commissionerof Income Tax (Appeals) confirmed the order of the AssessingAuthority by holding that the construction for the college for womenand the construction of school building cannot be said to becharitable objects of the assessee as the same would amount toutilisation of the income. Therefore, the appeals filed by theassessee for the above said years were dismissed against theassessee. 6.Findings of the Tribunal: Income Tax (Appeals) allowed the appeals filed by the assessee exceptfor the assessment years 1995-96 and 2000-01. In so far as theassessment years 1995-96 and 2000-01 are concerned, the Commissionerof Income Tax (Appeals) confirmed the order of the AssessingAuthority by holding that the construction for the college for womenand the construction of school building cannot be said to becharitable objects of the assessee as the same would amount toutilisation of the income. Therefore, the appeals filed by theassessee for the above said years were dismissed against theassessee. 6.Findings of the Tribunal: 6.1.The Tribunal while reversing the orders of theCommissioner of Income Tax (Appeals) for the assessment years 1995-96and 2000-01 and confirming the orders for the assessment years 1996-97, 1997-98, 1998-99 and 2002-03 as well as 2005-06 has held that theobjects of the assessee Trust are charitable in nature, the propertyhas been held in Trust by the assessee, there is sufficientcompliance of the books of accounts and the business income derivedby the property held in Trust is surely incidental to the objectsmore so when the same is utilised for the above said purposes. Henceby holding so the Tribunal has allowed all the appeals filed by theassessee and dismissed the appeals filed by the Revenue. The Revenuehas filed the present appeals, challenging the said orders of theTribunal by raising the above referred substantial questions of law. 7.Heard Shri.Patty B.Jeganathan, learned counsel appearingfor the appellant/revenue and Shri.V.Ramachandran, learned seniorcounselforMrs.Dr.AnitaSumanthappearingfortherespondent/assessee and perused the written arguments filed by thecounsels. 8.Submissions of the Revenue: 8.1.Shri.Patty B.Jeganathan, learned counsel appearing forthe revenue submitted that when it is not in dispute that the incomeof the institutions derived by commercial activities such as runningmarriage halls, auditoriums and receiving rent is augmented bycommercial activities. The said business cannot be held to beincidental to the attainment of the objects of the trust. In otherwords it is submitted that a business whose income is utilised by thetrust for the purpose of achieving its objectives cannot be construedto mean that the same is incidental to the objects. Therefore, in asmuch as the business carried on by the assessee having no directrelationship to the objectives of the trust the mandate of Section 11(4)(A) of the Act has not been complied with. The learned counselsubmitted that the facts involved in the judgment of the HonourableApex Court in ASSISTANT COMMISSIONER OF INCOME-TAX v. THANTHI TRUST[2001 247 ITR 785] are totally different and therefore the ratio laiddown therein by the Honourable Apex Court does not have any application to the present case on hand. The learned counselstrenuously submitted that in the said case one of the objective ofthe Trust is to run the newspaper which is not the case on hand.Moreover the assessee has demolished the old building and constructedthe halls for business purposes and therefore it cannot be construedthat the properties are held in trust by the assessee. application to the present case on hand. The learned counselstrenuously submitted that in the said case one of the objective ofthe Trust is to run the newspaper which is not the case on hand.Moreover the assessee has demolished the old building and constructedthe halls for business purposes and therefore it cannot be construedthat the properties are held in trust by the assessee. 8.2.Shri.Patty B.Jeganathan, learned counsel appearing forthe revenue further submitted that a combined reading of Section 11(4) and Section 11(4)(A) of the Act would make it clear that even fora property held in trust, the Assessing Officer shall have the powerto determine the income in accordance with the provision of the Actand if such income so determined is in excess of the income as shownin the accounts of the assessee such excess shall be deemed to beapplied to purposes other than charitable or religious purposes.Therefore, Section 11(4)(A) of the Act should be made applicable onlyto those activities which are incidental to the attainment of theobjects of the Trust. Hence it is submitted by the learned counselthat the business carrying on by the assessee is not one of theobjectives mentioned in the Trust deed and hence exemption underSection 11(4)(A) of the Act is not applicable. 8.3.The learned counsel further submitted that the othercondition mentioned under Section 11(4)(A) of the Act has also notbeen complied with by the assessee by maintaining separate books ofaccounts in relation to the business. The learned counsel submittedthat in order to get the exemption under section 11(4)(A) of the Act,the said condition will have to be complied with by the assessee,which the Assessing Officer has rightly found as not complied with.The learned counsel without prejudice to his above submissions hasstated that in as much as the Assessing Officer has not gone into thebreakup figure of various heads of accounts given by the assessee,considering the scope of Section 11(4)(A) of the Act as well asSection 11(4) of the Act, the appeals will have to be allowed byremanding the cases to the Assessing Officer to decide theeligibility of the assessee to get the actual income exempted underSection 11(4) of the Act. The learned counsel has relied upon thejudgment of the Honourable Division Bench in DIRECTOR OF INCOME-TAX(EXEMPTIONS) v. AVM CHARITIES [[2010] 323 ITR 27] in support of theabove said contention. 9.Submissions of the assessee: 9.1.Shri.V.Ramachandran, learned senior counsel appearingfor the assessee submitted that the property has been held in Trustby the assessee after its purchase and an order to that effect hasbeen passed by this Honourable High Court in C.S.No.76 of 1973 in andby the order dated 08.03.1973. The assessee has been registered as aCharitable Trust under Section 12(A)(a) of the Act. There is nodispute regarding the object of the assessee Trust which pertains toeducational institutions, health etc. The income derived from the business of letting out the building has been utilised for thecharitable purposes. 9.2.The assessee has also been maintaining three separateaccounts. In view of the fact that a portion of building has been letout to M/s.Indian Bank within the auditorium premises, the same hasto be necessarily to be included in the books of the saidauditoriums. Both the Commissioner of Income Tax (Appeals) and theTribunal have held on facts that the assessee has been maintainingthree separate accounts and they are in compliance of Section 11(4)(A) of the Act. The assessee has complied with Section 11(1) and 11(2) of the Act by utilising the income for the purpose of charity.The assessee has also filed Form-10 towards the accumulation of theincome for the purpose of construction of educational institutions. 9.2.The assessee has also been maintaining three separateaccounts. In view of the fact that a portion of building has been letout to M/s.Indian Bank within the auditorium premises, the same hasto be necessarily to be included in the books of the saidauditoriums. Both the Commissioner of Income Tax (Appeals) and theTribunal have held on facts that the assessee has been maintainingthree separate accounts and they are in compliance of Section 11(4)(A) of the Act. The assessee has complied with Section 11(1) and 11(2) of the Act by utilising the income for the purpose of charity.The assessee has also filed Form-10 towards the accumulation of theincome for the purpose of construction of educational institutions. 9.3.Section 2(15) of the Act has been suitably amended byremoving the expression "not involving the carrying of any activityfor profit with effect from 01.04.1984 while defining charitablepurpose". Further Section 11(4)(A) of the Act has been amended witheffect from 01.04.1992 which is more beneficial to the Trust thanwhat was available prior to the said amendment. 9.4.The issue involved in the appeal that the activitycarrying on by the Trust being business in nature is incidental tothe objects of the Trust or not has been decided by the HonourableApex Court in ASSISTANT COMMISSIONER OF INCOME-TAX v. THANTHI TRUST[2001 247 ITR 785]. The said judgment of the Honourable Apex Courtwas also followed by the Division Bench of this Honourable Court inCOMMISSIONER OF INCOME-TAX v. SRI RAO BAGHADUR ADK DHARMARAJAEDUCATIONAL CHARITY TRUST [[2008] 300 ITR 365] and COMMISSIONER OFINCOME-TAX v. JANAKIAMMAL AYYANDAR TRUST [[2005] 277 ITR 274] etc.Therefore it is submitted that it is no longer open to the revenue tore-agitate the said issue which has become final. The learned seniorcounsel also submitted that this Honourable High Court has alreadyheld in COMMISSIONER OF INCOME-TAX v. HALAI NEMON ASSOCIATES [[2000]243 ITR 439] that income received from a marriage hall is a businessincome. It is also submitted by the learned senior counsel byapplying the doctrine of feeding the charity it has to be held thatthere is sufficient compliance of section 11(4)(A) of the Act. 9.5.In so far as the non compliance of the conditionsstipulated under section 11(4)(A) of the Act by maintaining books ofaccounts for the income derived from the business is concerned, thelearned senior counsel submitted that the Commissioner of Income Tax(Appeals) and the Tribunal have given clear factual findings that thesame has been complied with through three separate accountsmaintained by the assessee. Similarly, for the contention of therevenue that in as much as the authorities have mainly concentratedon the entitlement of the exemption under Section 11(4)(A) of the Act and consequently the quantum of the exemption has not been gone into,the learned senior counsel submitted that the assessee has producedall those particulars in the written arguments submitted and insupport of the same, he has also produced the relevant records beforethis Court. The learned senior counsel also submitted that thejudgment in DIRECTOR OF INCOME-TAX (EXEMPTIONS) v. AVM CHARITIES[[2010] 323 ITR 27] is distinguishable on facts, since there is nofinding regarding the compliance of the conditions mentioned undersection 11(4)(A) of the Act. The learned senior counsel thereforesubmitted that the appeals deserve to be dismissed. 10.Whether profit and gains of the business would be incidental tothe object of the assessee under Section 11(4)(A) of the Act:-10.1.It is not in dispute that the assessee Trust holds theproperty in Trust. It is also not in dispute that the commercialactivity is being carried on by the assessee by using the building asmarriage halls, auditoriums etc. The assessee has filed its returnsclaiming that the income derived therein is being used towards itsobjectives which are charitable in nature. 10.Whether profit and gains of the business would be incidental tothe object of the assessee under Section 11(4)(A) of the Act:-10.1.It is not in dispute that the assessee Trust holds theproperty in Trust. It is also not in dispute that the commercialactivity is being carried on by the assessee by using the building asmarriage halls, auditoriums etc. The assessee has filed its returnsclaiming that the income derived therein is being used towards itsobjectives which are charitable in nature. 10.2.In order to appreciate the rival contentions of thelearned counsel appearing for both sides, it is useful to extractSection 11(4)(A) of the Income Tax Act, 1961."11(4)(A) Sub-section (1) or sub-section (2)or sub-section (3) or sub-section (3A) shall notapply in relation to any income of a trust or aninstitution, being profits and gains of business,unless the business is incidental to theattainment of the objectives of the trust or, asthe case may be, institution, and separate booksof account are maintained by such trust orinstitution in respect of such business." 10.3.Shri.Patty B.Jeganathan, learned counsel appearing forthe revenue submitted that considering the scope of Section 11(4)vis-a-vis Section 11(4)(A) of the Act, it has to be held that untiland unless the business as such is connected either directly orindirectly to anyone of the objectives of the assessee Trust, thesame cannot be declared as incidental to such objectives. The learnedcounsel further submitted that in as much as the business activitiesare purely commercial in nature unlike in the case in ASSISTANTCOMMISSIONER OF INCOME-TAX v. THANTHI TRUST [2001 247 ITR 785], theassessee is not entitled for exemption under Section 11(4)(A) of theAct. It is his further argument that the old building has beendemolished and reconstructed by the assessee and therefore the samehas not been held in trust. 10.4.Even though the argument of the learned counsel forthe revenue is appealing and attractive, we are not able to accept https://hcservices.ecourts.gov.in/hcservices/ the said contention. The issue raised is no longer available forjudicial review and scrutiny by this Court, since the same hasalready been decided by the Honourable Apex Court in ASSISTANTCOMMISSIONER OF INCOME-TAX v. THANTHI TRUST [2001 247 ITR 785]. Thejudgment of the Honourable Apex Court referred above has also beenfollowed by the Division Bench of this Court in COMMISSIONER OFINCOME-TAX v. SRI RAO BAGHADUR ADK DHARMARAJA EDUCATIONAL CHARITYTRUST [[2008] 300 ITR 365] and COMMISSIONER OF INCOME-TAX v.JANAKIAMMAL AYYANDAR TRUST [[2005] 277 ITR 274] and also by a recentjudgment of this Court in COMMISSIONER OF INCOME-TAX v. SRI NARAYANAGURUVIAH CHETTY'S ESTATE and CHARITIES [[2010] 326 ITR 662]. TheHonourable Apex Court in ASSISTANT COMMISSIONER OF INCOME-TAX v.THANTHI TRUST [2001 247 ITR 785 ] has observed as follows: "The substituted sub-section (4A) states that theincome derived from a business held under trustwholly for charitable or religious purposes shallnot be included in the total income of theprevious year of the trust or institution if "thebusiness is incidental to the attainment of theobjective of the trust or, as the case may be,institution" and separate books of account aremaintained in respect of such business. Clearly,the scope of sub-section (4A) is more beneficialto a trust or institution than was the scope ofsub-section (4A) as originally enacted. In fact,it seems to us that the substituted sub-section(4A) gives a trust or institution a greaterbenefit than was given by section 13(1)(bb). Ifthe object of Parliament was to give trusts andinstitutions no more benefit than that given bysection 13(1)(bb), the language of section 13(1)(bb) would have been employed in the substitutedsub-section (4A). As it stands, all that itrequires for the business income of a trust orinstitution to be exempt is that the businessshould be incidental to the attainment ofobjectives of the trust or institution. Abusiness whose income is utilised by the trust orthe institution for the purposes of achieving theobjectives of the trust or the institution is,surely, a business which is incidental to theattainment of the objectives of the trust. In anyevent, if there be any ambiguity in the languageemployed, the provision must be construed in amanner that benefits the assessee. The trust,therefore, it entitled to be benefit of section11 for the assessment year 1992-93 andthereafter. It is, we should add, not in disputethat the income of its newspaper business has been employed to achieve its objectives ofeducation and relief to the poor and that it hasmaintained separate books of account in respectthereof." (Emphasis added) 10.5.The Honourable Apex Court in the above said judgmentwas pleased to hold that what is sufficient is that the incomederived from the business from a property held in trust by theassessee is utilised towards the attainment of the objectives.Therefore, it was held that it is irrelevant if the business is runon a commercial expediency with a profit motive. In view of the cleardictum of the Honourable Apex Court it is not open to this Court togo into the said question once again which is impermissible in law.More so, when the other Division Benches of this Court have alsodealt with identical cases as the one on hand and taken the view infavour of the assessee. While dealing with an issue in a multi-judgeCourt, the judges are bound by precedents and procedure. Judicialdecorum, discipline and legal propriety demand that the law laid downby the higher forum will have to be followed in letter and spirit.The doctrine of binding precedent brings about an element ofuniformity, decisiveness as well as the consistency in judicialdecisions. 10.6.The judgment of the Honourable Apex Court is bindingon the High Courts as the law laid down under Article 141 of theConstitution of the India. Such a judgment cannot be ignored orbypassed on the ground that relevant provisions have not been broughtout or certain issues have not been urged. In a system which has ahierarchy of judicial forums it is incumbent on the lower forums tofollow the dictum of the higher forum. In SUNDARJAS KANYALAL BHATHIJAv. COLLECTOR, THANE , the Honourable Supreme Courthas observed as follows: 10.6.The judgment of the Honourable Apex Court is bindingon the High Courts as the law laid down under Article 141 of theConstitution of the India. Such a judgment cannot be ignored orbypassed on the ground that relevant provisions have not been broughtout or certain issues have not been urged. In a system which has ahierarchy of judicial forums it is incumbent on the lower forums tofollow the dictum of the higher forum. In SUNDARJAS KANYALAL BHATHIJAv. COLLECTOR, THANE , the Honourable Supreme Courthas observed as follows: "17.It would be difficult for us toappreciate the judgment of the High Court. Onemust remember that pursuit of the law, howeverglamourous it is, has its own limitation on theBench. In a multi-judge court, the Judges arebound by precedents and procedure. They could usetheir discretion only when there is no declaredprinciple to be found, no rule and no authority.The judicial decorum and legal propriety demandthat where a learned single Judge or a Divisionbench does not agree with the decision of a Benchof co-ordinate jurisdiction, the matter shall bereferred to a larger Bench. It is a subversion ofjudicial process not to follow this procedure." 10.7.Similarly in SUGANTHI SURESH KUMAR v. JAGDEESHAN , the Honourable Apex Court has observed as follows:"9.It is impermissible for the High Court tooverrule the decision of the Apex Court on theground that the Supreme Court laid down the legalposition without considering any other point. Itis not only a matter of discipline for the HighCourts in India, it is the mandate of theConstitution as provided in Article 141 that thelaw declared by the Supreme Court shall bebinding on all courts within the territory ofIndia. It was pointed out by this Court in AnilKumar Neotia v. Union of India[6] that the HighCourt cannot question the correctness of thedecision of the Supreme Court even though thepoint sought before the High Court was notconsidered by the Supreme Court."10.8.On a consideration of the ratio laid down in the abovepronouncements, we are of the view that when a business income isused towards the achievement of the object of the trust it wouldamount to incidental to the achievement of the object of the trustnot withstanding the profit and gain involved therein. 11.Whether Section 11(4)(A) of the Income Tax Act restricts the powerunder Section 11(4):- 11.1.Section 11(4)(A) of the Tax is an exception to Section11(1), 11(2), 11(3) and 11(3)(A) of the Act in so far as the businessincome which is not utilized towards the object of the trust isconcerned. It is couched in a negative language. It provides for anexemption from the purview of the Act from the inclusion of theincome while computing the income assessable for tax when a businessis incidental to the object of the trust. Similarly Section 11(4) ofthe Act speaks about the property held in trust and it also providesfor the Assessing Officer to determine the income of an undertakingand if it is found to be in excess of the income shown in theaccounts of the undertaking, such an excess shall be deemed to beapplied to purposes other than charitable or religious purposesthereby assessable for tax. 11.2.Section 11(4)(A) of the Act does not exclude Section11(4). Exemption under section 11(4)(A) would be available only whenthe business is incidental to the attainment of object of the trust.Hence when it is not the case then such an income cannot be exempted.Therefore only such income which is used towards the object of thetrust is exempted. In other words, Section 11(4)(A) of the Actmandates that when an income from a business which can be by way ofutilization of a property held in trust is not used towards theobject of the trust then no exemption can be sought for such income. 11.2.Section 11(4)(A) of the Act does not exclude Section11(4). Exemption under section 11(4)(A) would be available only whenthe business is incidental to the attainment of object of the trust.Hence when it is not the case then such an income cannot be exempted.Therefore only such income which is used towards the object of thetrust is exempted. In other words, Section 11(4)(A) of the Actmandates that when an income from a business which can be by way ofutilization of a property held in trust is not used towards theobject of the trust then no exemption can be sought for such income. 11.3.It is a well established principle of law thatprovisions contained in enactment should be read together by makingan harmonious construction. Therefore, we are of the view thatsection 11(4) and 11(4)(A) of the Income Tax Act will have to be readtogether. Further by holding that section 11(4)(A) would over ridesection 11(4) would make the very provision contained under section11(4) otiose and redundant. While making a construction, the Courtwill have to see the intention behind the provision and should avoidan interpretation which would defeat the very provision itself. 11.4.JUSTICE G.P.SINGH IN PRINCIPLES OF STATUTORYINTERPRETATION, 12[th] EDITION AT P.298 SAYS THUS:"... a statute must be read as a whole aswords are to be understood in their context.Extension of this rule of context permitsreference to other statues in pari materia i.e.statutes dealing with the same subject-matter orforming part of the same system." 11.5.The said observations of the Justice G.P.Singh wasquoted with approval by a recent judgment of the Apex Court inS.NAGARAJ v. B.R.VASUDEVA MURTHY [(2010) 3 SCC353] while construing the principle of harmonious construction. 11.6.The Honourable Supreme Court in UNION OF INDIA v. ALOKKUMAR [(2010) 5 SCC 349] has held as follows:-"61.It will be useful to apply the rule ofcontextual interpretation to the provisions ofRule 9. It would not be permissible to import anymeaning or make additions to the plain and simplelanguage of Rule 9(2) in relation to "otherauthority". The rule of contextual interpretationrequires that the court should examine every wordof the statute in its context, while keeping inmind the Preamble of the statute, otherprovisions thereof, pari materia statutes, ifany, and the mischief intended to be remedied.Context often provides a key to the meaning ofthe word and the sense it carries. 62.It is also a well established andcardinal principle of construction that when therules and regulations have been framed dealingwith different aspects of the service of theemployees, the courts would attempt to make aharmonious construction and try to save theprovision, not strike it down rendering theprovision ineffective. The court would normallyadopt an interpretation which is in line with thepurpose of such regulations. The rule ofcontextual interpretation can be purposely applied to the language of Rule 9(2),particularly to examine the merit in thecontentions raised by the respondent before us.The legislative background and the object of boththe Rules and the Act is not indicative of anyimplied bar in appointment of former employees asenquiry officers. These principles are wellestablished and have been reiterated withapproval by the courts, reference can usefully bemade to the judgments of this Court in GudurKishan Rao v. Sutirtha Bhattachaarya, NirmalChandra Bhattacharjee v. Union of India, CentralBank of India v. State of Kerala, Housing Boardof Haryana v. Employees' Union." applied to the language of Rule 9(2),particularly to examine the merit in thecontentions raised by the respondent before us.The legislative background and the object of boththe Rules and the Act is not indicative of anyimplied bar in appointment of former employees asenquiry officers. These principles are wellestablished and have been reiterated withapproval by the courts, reference can usefully bemade to the judgments of this Court in GudurKishan Rao v. Sutirtha Bhattachaarya, NirmalChandra Bhattacharjee v. Union of India, CentralBank of India v. State of Kerala, Housing Boardof Haryana v. Employees' Union." 11.7.The Honourable Apex Court in AMERICAN HOTEL ANDLODGING ASSOCIATION EDUCATIONAL INSTITUTE v. CENTRAL BOARD OF DIRECTTAXES AND OTHERS [(2008) 301 ITR 86] while construing the provisos toSection 10(23C)(vi) has adopted the principle of harmoniousconstruction for coming to its conclusion.11.8.The Honourable Supreme Court in a recent judgmentrendered in VIJAYA BANK v. SHYAMAL KUMAR LODH [(2010) 7 SCC 635] hasobserved as follows: "19.But this does not end the controversy.The power to adjudicate money claim is to theLabour Court "as may be specified in this behalfby the appropriate Government". Every word usedby the legislature carries meaning and thereforeeffort has to be made to give meaning to each andevery word used by it. A construction brushingaside words in a statute is not a sound principleof construction. The court avoids a construction,if reasonably permissible on the language, whichrenders an expression or part of the statutedevoid of any meaning or application. 20.The legislature never wastes its words orsays anything in vain and a constructionrejecting the words of a statute is not resortedto, excepting for compelling reasons. There doesnot exist any reason, much less compelling reasonto adopt a construction, which renders the words"as may be specified in this behalf" used inSection 33-C(2) of the Act as redundant. Thesewords have to be given full meaning. These wordsin no uncertain terms indicate that there has tobe specification by the appropriate Governmentthat a particular court shall have jurisdictionto decide money claim under Section 33-C(2) of the Act and it is that court alone which shallhave the jurisdiction. The appropriate Governmentcan specify the court or courts by general orspecial order in its discretion." 11.9.Considering the above said position of law, we are ofthe opinion that in the absence of any specific bar under section 11(4)(A) of the Act prohibiting the application of section 11(4) itcannot be construed that the same is independent of section 11(4) ofthe Act. 11.10.Hence, we hold that section 11(4)(A) and section 11(4) of the Act are complementary to each other and section 11(4)(A)does not restrict the power under section 11(4) of the Act. We answerthe substantial question of law No.1 in favour of the revenue. 12.Compliance of maintenance of books of accounts:- 12.1.In so far as the compliance of the maintenance ofseparate books of accounts as required under Section 11(4)(A) of theAct is concerned, a reading of the above said provisions would makeit clear that it is mandatory and a condition precedent for theassessee to maintain the same while seeking exemption. However it isnot in dispute in the present case on hand that the assessee hasmaintained three sets of accounts, namely: "(i)One set of books for the income from auditoriumsincluding the interest receipt, 12.Compliance of maintenance of books of accounts:- 12.1.In so far as the compliance of the maintenance ofseparate books of accounts as required under Section 11(4)(A) of theAct is concerned, a reading of the above said provisions would makeit clear that it is mandatory and a condition precedent for theassessee to maintain the same while seeking exemption. However it isnot in dispute in the present case on hand that the assessee hasmaintained three sets of accounts, namely: "(i)One set of books for the income from auditoriumsincluding the interest receipt, (ii)One set of books for the income of the Trustwherein the assessee accounts donations receipt, dividend,lease rent, amenities account, and interest receipt. It isto be noted here that the assessee accounts its donationreceipt from the occupants of the auditoriums in this bookonly. This compulsive donation amount is pre-determined bythe assessee as per it's resolution. The assessee finallyconsolidates both the above accounts and prepares itsIncome & Expenditure account as well as its Balance Sheet,and (iii)One set of books for the income from the Ladieshostel account. It is to be noted here that the profitarising out of this activity is never spent but taken tobalance sheet u/h Excess of Income Over Expenditure in thisbook itself." 12.2.Considering the above said facts, both theCommissioner of Income Tax (Appeals) and the Tribunal have held thatthe assessee has complied with the condition of maintaining theaccounts. The said findings being the findings of fact, we are of theopinion that the contention of the revenue that there is no separatebooks of accounts maintained by the assessee in respect of his income assessable under the said business cannot be countenanced. Hence, thesame is also rejected. 13.Whether orders of Remand are required:- 13.1.However, substantial arguments have been made by thelearned counsel appearing for the revenue as well as the assesseeregarding the entitlement of the assessee's actual income towardsexemptions. The learned counsel for the revenue submitted that in asmuch as the Assessing Officer and the other authorities have not goneinto and made any break up of the separate heads of accountsmaintained and utilised towards the objectives of the Trust, thematter will have to be remanded to the Assessing Officer to decidethe same. Per contra, the learned senior counsel appearing for theassessee submitted that the records produced would show that theassessee has placed the entire material before the authorities whichwere found to be satisfactory and therefore no order of remand isrequired. 13.2.We find considerable force in the submissions made bythe learned counsel appearing for the revenue that the authoritieshave substantially dealt with the issue of exemption sought for bythe assessee under Section 11(4)(A) of the Act. The factual questionof the actual income that is to be exempted has not been gone into bytaking into consideration of the separate heads of accounts. Aperusal of Section 11(4)(A) of the Act would clearly show that thesaid provision is an exception to Section 11(1), 11(2), 11(3) and 11(3)(A) of the Act. Therefore, the assessee will have to satisfy theauthorities that such an exemption is to be granted by providingsubstantial materials to show that income derived from the businesshas been utilised towards the fulfillment of the objectives of thetrust. Equally a duty is cast upon the Assessing Officer concerned tolook into the records and give a factual finding, determining theactual income available for exemption. 13.3.Section 11(4) of the Act specifically speaks about thepower of the Assessing Officer to deal with a property held in trust.The condition stipulated under Section 11(4)(A) of the Act that theassessee should maintain separate books of accounts for the businessincome has been introduced with a specific purpose and object behindit. The reason for introducing such a condition is to make sure thatthe assessee shall not claim and get exemption for the businessincome which is not used for charitable purposes. Therefore, such acondition is mandatory. In other words, a failure to comply with thecondition would make the assessee concerned from claiming exemption.Such a compliance on behalf of the assessee while seeking exemptionalso consequently mandates, the Assessing Officer to verify theaccounts under different heads with its break-ups of figures byapplying his mind while doing a thorough verification. In the case onhand, we find that all the authorities have mainly dealt with eligibility of the assessee to seek exemption under Section 11 of theAct. 13.4.A perusal of the provisions contained in section 11(4)(A) of the Act would make it clear that it contains two separateelements. The 1[st] one being if the Assessing Officer is convinced onenquiry about the genuineness of the trust on a consideration of therelevant materials then he can decide and declare the eligibility ofexemption. The second one being the entitlement of the income aseligible for exemption. In order to satisfy himself the AssessingOfficer has to necessarily go through th