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Issues: (i) Whether the assessee-trust's business of running Hamdard Dawakhana was carried on to further the objects of the trust so that quami income qualified for exemption under section 11 of the Income-tax Act, 1961. (ii) Whether the income-tax refund of Rs. 7,21,206 could be treated as income for the purpose of application of income under section 11(2) of the Income-tax Act, 1961.
Issue (i): Whether the assessee-trust's business of running Hamdard Dawakhana was carried on to further the objects of the trust so that quami income qualified for exemption under section 11 of the Income-tax Act, 1961.
Analysis: The issue stood covered by the earlier decision in the assessee's own case for prior assessment years. The same view was followed, and the business activity was treated as being carried on in furtherance of the objects of the trust, entitling the income to exemption.
Conclusion: In favour of the assessee. The question was answered in the affirmative and against the Revenue.
Issue (ii): Whether the income-tax refund of Rs. 7,21,206 could be treated as income for the purpose of application of income under section 11(2) of the Income-tax Act, 1961.
Analysis: Section 11(2) applies only to income derived from property held under trust wholly for charitable or religious purposes. An income-tax refund is not income derived from trust property and therefore falls outside the scope of that provision.
Conclusion: In favour of the assessee. The refund could not be brought within section 11(2), and the Tribunal's view was upheld.
Final Conclusion: Both referred questions were decided for the assessee, and the references were disposed of accordingly.
Ratio Decidendi: Exemption under section 11 and the related application-of-income provision under section 11(2) apply only to income derived from property held under trust for charitable or religious purposes, and a tax refund does not constitute such income.
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