| The Tax Publishers2021 TaxPub(DT) 6250 (Karn-HC) : (2022) 441 ITR 0154 INCOME TAX ACT, 1961
Section 11
Where assessee-trust was running various institutions offering degree/training in various academic courses and revenue sought to deny exemption claimed under section 11 on allegation that two trustees, were paid remuneration/salary not in proportionate to the pay-scales of a professor and administrative officer, it was held that revenue cannot sit in the armchair of an assessee and decide the pattern of working, methodology to be adopted for whole administration of the educational trust, including the payment structure of salary/remuneration to be paid to the professors/administrative staffs.
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Charitable trust - Denial of exemption under section 11 - Assessee-trust running various institutions offering degree/training in various academic courses - Trustees allegedly getting remuneration/salary not in proportionate to the pay-scales of a professor and administrative officer
Assessee-trust was running various institutions offering degree/training in various academic courses and was granted registration under section 12A. In instant case, it was alleged that assessee violated the provisions of section 13(1)(c) and therefore, it was entitled to claim exemption under sections 11, 12 and 13. Case of revenue was that the two trustees, were paying remuneration/salary not in proportionate to the pay-scales of a professor and administrative officer.Held: It is well settled that the revenue cannot sit in the armchair of an assessee and decide the pattern of working, methodology to be adopted for whole administration of the educational trust including the payment structure of salary/remuneration to be paid to the professors/administrative staffs. Revenue cannot manage or control the managerial affairs of the educational trust. Findings of lower authorities were confirmed that the two trustees filed the returns of income reflecting their salary, etc., paid to them by the trusts and the same was in accordance with the pay-scale of a professor and administrative officer respectively. Further, as regards the cash deposits found in account of the two trustees, lower authorities rightly held that no explanation could be expected from the assessee - trust to explain the source of its deposits. Thus, merely to deny the exemption under section 11, reference made to section 13(1)(c) by revenue was held to be unjustifiable.
Relied:CIT v. CMR Jnanadhara Trust (2015) 55 Taxmann.com 516 (Karn) : 2015 TaxPub(DT) 1634 (Karn-HC), CIT v. FR Mullers Charitable Institutions (2014) 363 ITR 230 (Karn-HC) : 2014 TaxPub(DT) 1568 (Karn-HC), Director of Income Tax (Exemption) v. Sabarmati Ashram Gaushala Trust (2014) 223 Taxman 43 (Guj) : 2014 TaxPub(DT) 1964 (Guj-HC), CIT v. Madhushree Gupta 2013 TaxPub(DT) 1963 (Del-HC), Vanita Vishram Trust. v. Chief CIT & Anr. (2010) 192 Taxman 389 (Bom) : 2010 TaxPub(DT) 1914 (Bom-HC), Director of Income Tax (Exemption) v. Agrim Charan Foundation (2002) 253 ITR 593 (Del) : 2002 TaxPub(DT) 0570 (Del-HC), Director Of Income Tax (Exemptions) v. Sheth Mafatlal Gagalbhai Foundation Trust (2001) 249 ITR 533 (Bom) : 2001 TaxPub(DT) 681 (Bom-HC) and Krupanidhi Educational Trust v. Director of Income Tax (Exmp.) 2013 TaxPub(DT) 0062 (Bang-Trib).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. :
IN THE KARNATAKA HIGH COURT
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