TaxTMI 
TaxTMI 
1973 (8) TMI 18
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....lify for exemption conferred by section 11(1)(a) ? " In our opinion, the question has not been properly framed and it should be recast thus: " Whether, on the facts and circumstances of the case, the sum of Rs. 25,000 contributed by the assessee on October 1, 1963, towards the establishment of a college of engineering shall be included in the total income of the previous year of the assessee ? " The assessee is a charitable trust assessed in the status of an " association of persons ". The assessment year in question is 1965-66 for which the corresponding accounting year is the year ended 30th September, 1964. The assessee was assessed on the total income of Rs. 34,473 comprising of property income of Rs. 10,993, business income of Rs. 2....
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....ring on the question and, therefore, we are left to decide this question on first principles. It is common ground that the assessee holds property under trust and that it derives income from such property held under trust wholly for charitable purposes. Section 11(1)(a) of the Act, which is the material provision, reads thus : " 11. Income from property held for charitable or religious purposes.- (1) Subject to the provisions of sections 60 to 63 the following income shall not be included in the total income of the previous year of the person in receipt of the income- (a) income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India ; and....
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....he result that even in a year, where there are no profits for the whole year, the assessee may be entitled to the benefits of section 11(1)(a) of the Act. Let us suppose, that in the first quarter of the previous year the trust earned profits to the extent of Rs. 25,000 and on the last day of the quarter the said sum was donated for charitable purposes. Let us also suppose that during the next three quarters of the year, the result was not profit but on the contrary one of loss of Rs. 50,000, the net result being a total loss of Rs. 25,000 in the year. In such a case if the argument of the learned counsel for the department is to be accepted as sound, the assessee will be entitled to the benefit of section 11(1)(a) since the donation was ma....