Section 11 exemption and remand limits: dividend clauses defeated charitable status, and appellate relief could not exceed remand scope.

Exemption under section 11 was denied where the assessee's governing instrument, as applicable to the relevant years, still permitted dividend distribution and private benefit, defeating charitable character; the alleged retrospective amendment was not accepted for those earlier years. The Tribunal also held that the Commissioner (Appeals) could not exceed the scope of the earlier remand by granting relief on additions that had already attained finality. The assessment was therefore restored only to the extent consistent with the Tribunal's directions, with the Revenue succeeding on both issues.

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Issues: (i) Whether the assessee was entitled to exemption under section 11 despite the original Articles of Association containing clauses providing for declaration and distribution of dividend and the subsequent amendment being claimed as retrospective; (ii) whether the Commissioner (Appeals) could grant relief beyond the Tribunal's earlier remand directions and disturb additions that had already attained finality.

Issue (i): Whether the assessee was entitled to exemption under section 11 despite the original Articles of Association containing clauses providing for declaration and distribution of dividend and the subsequent amendment being claimed as retrospective.

Analysis: The existence of clauses enabling dividend distribution showed that, during the relevant years, the assessee's governing document permitted application of income for the benefit of shareholders, attracting the statutory prohibition against private benefit and defeating the claim of charitable character. The alleged retrospective deletion of those clauses was not accepted as legally effective for the earlier assessment years. The Court also held that the amendment could not override the statutory requirement for exemption under section 11, and that the earlier authorities relied upon by the assessee did not assist it on these facts.

Conclusion: The assessee was not entitled to exemption under section 11 for the years in question; the finding was against the assessee and in favour of the Revenue.

Issue (ii): Whether the Commissioner (Appeals) could grant relief beyond the Tribunal's earlier remand directions and disturb additions that had already attained finality.

Analysis: The Tribunal's earlier directions confined the reassessment to the issue of exemption under section 11 and specifically barred fresh additions on matters already final. The Commissioner (Appeals) travelled beyond that remit by giving relief on additions that were not open in the set-aside proceedings. Such action exceeded the scope of the remand and could not be sustained.

Conclusion: The Commissioner (Appeals) lacked jurisdiction to grant that further relief; the finding was against the assessee and in favour of the Revenue.

Final Conclusion: The Department's appeals succeeded on both substantial issues, and the assessments were restored to the extent consistent with the Tribunal's directions.

Ratio Decidendi: A claim to exemption under section 11 cannot be sustained for earlier assessment years where the governing instrument, as applicable to those years, permitted dividend distribution or other private benefit, and an appellate authority cannot enlarge the scope of a remand beyond the Tribunal's specific directions.

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