Assessee granted tax exemption under Income Tax Act; High Court upholds decision.

The Tribunal found the assessee eligible for exemption under section 11 of the Income Tax Act due to fulfilling conditions under section 11(4A), supported by government approval, separate accounts, and lack of surplus funds. The High Court upheld this decision based on factual findings and account maintenance. Regarding the adjustment of deficit to surplus, the Court dismissed the appeal, citing a previous decision where a similar issue was settled against the revenue.

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Issues:
1. Whether the assessee is entitled to exemption u/s.11 of the Income Tax Act, 1961Rs.
2. Whether the adjustment of deficit from earlier years to surplus of the current year can be considered as application of income for charitable purposeRs.

Issue 1:
The Tribunal found that the assessee, a council approved by the Government for promoting jewelry exports, fulfilled the conditions u/s.11(4A) of the Income Tax Act. The Tribunal considered the objects of the council, approval from the Government of India, maintenance of separate accounts, and lack of surplus funds. Citing precedents and the CIT(A)'s findings, the Tribunal concluded that the assessee's activities were incidental to its main object, making it eligible for exemption u/s.11. The High Court, in light of the Apex Court's judgment in Assistant Commissioner of Income Tax v. Thanthi Trust, upheld the Tribunal's decision based on factual findings and separate account maintenance.

Issue 2:
Both parties agreed that the second question was settled against the revenue by a previous decision of the High Court in Commissioner of Income Tax v. Institute of Banking. Consequently, the Court found no merit in the appeal and dismissed it without costs.

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