Tax exemption for trust receipts disclosed as other income does not bar relief; appellate authorities must grant entitled relief.

Disclosure of trust receipts as "income from other sources" does not automatically defeat entitlement to tax exemption; authorities must apply a judicious, justice-oriented approach rather than deny relief for technical filing choices, and appellate authorities may entertain and grant claims not made in the return where legally due (outcome: exemption restored). Appellate bodies have a duty to assist taxpayers and correct Assessing Officer errors rather than rely on procedural technicalities; departmental officers should not take advantage of an assessee's mistake (outcome: appeal allowed and departmental costs awarded).

---

---

Issues: Whether exemption under sections 11 and 12 of the Income-tax Act, 1961 can be denied merely because interest from fixed deposits was disclosed under the head 'income from other sources' in the return of income.

Analysis: The assessee was registered under section 12A and 80G and satisfied conditions for exemption under sections 11 and 12; the interest in question was applied for charitable purposes and the assessee had utilised the amounts in meeting trust expenditures. The assessment initially processed under section 143(1) assessed income at nil and granted refund, but on scrutiny under section 143(3) the assessing authority treated the bank interest as taxable because it was shown under 'income from other sources'. The appellate authorities and the Tribunal did not rectify the position despite material demonstrating entitlement to exemption. Appellate authorities possess power to grant relief to which an assessee is entitled even if not claimed in the return, and departmental officers have a duty to assist taxpayers in securing legitimate reliefs rather than taking advantage of inadvertent errors.

Conclusion: The exemption cannot be denied solely on the ground that interest was disclosed under 'income from other sources'; the appeal is allowed and the assessment and subsequent orders are quashed. The result is in favour of the assessee.

---