2009 (7) TMI 654

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....s under: "3. Whether on the facts and circumstances of the case and in law, the hon'ble Income-tax Appellate Tribunal was correct in sending back the issue of taxability of interest income back to the file of the Assessing Officer without appreciating the fact that the assessee has failed to prove that the interest was earned from a property held under a trust or a legal obligation?" It is fairly stated that other questions relate to findings of fact and are, thus, not substantial questions of law. 3. The assessee is a public sector undertaking and received grants from the Central and State Governments for its various projects. On the grants of Governments received, it earned interest income. It claimed deduction on the said income....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....d expression in section 11(1)(a). None of the judgments relied upon is in the context of section 11. The qualification for attracting section 11(1) (a) is that income should be derived from property held in trust for charitable purpose. The Commissioner of Income-tax (Appeals) as well as the Tribunal held that interest income from grants was fully covered under section 11(1)(a). In Asst, CIT v. Thanthi Trust [2001] 247 ITR 785 (SC), it was held that income from incidental business was also covered under section 11(1)(a). 7.  Even if the test of income directly arising from property of trust is applied, interest directly accrues on funds of the trust. In CIT v. Pruthivi Trust [1980] 124 JTR 488 (Born), it was observed (page 494....