Director of Incometax v. Bharat Diamond Bourse

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The Tax Publishers2003 TaxPub(DT) 0841 (SC) : (2003) 259 ITR 0280 : (2003) 179 CTR 0225 : (2003) 126 TAXMAN 0365 6Director of Income Tax v. Bharat Diamond Bourse In the Supreme Court of India Mrs. Ruma Pal & B.N. Srikrishna, JJ. Civil Appeal Nos. 8211 & 8212 of 2001 [From the judgment and order dated 21-3-2000, of the Bombay High Court in Income Tax Appeal No. 265 of 2000, reported as Director of Income Tax (Exemptions) v. Bharat Diamond Bourse (2000) 245 ITR 437 (Bom)] A.Y. 1989-90 & 1990-91 Decided on 16 December 2002 *Counsel :* R.P. Bhat with Prateek Jalan & B.V. Balram Das, for the Revenue Sohrab, E. Dastur with B.V. Jhaveri & R.B. Hathikhanwala, for the Assessee JUDGMENT *B.N. Srikrishna, J.* These appeals arise out of the judgments of the High Court of Bombay dismissing the appeals filed by the revenue under section 260A of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'). Civil Appeal No. 8211/2001 pertains to assessment year 1989-90 while Civil Appeal No. 8212/2001 pertains to the assessment year 1990-91. Since the issues, fact and law are common, both the appeals are disposed of by this common judgment. 2. The respondent-assessee is incorporated as a company limited by guarantee under the Companies Act, 1956, and is a non-profit service organization. For the assessment years 1989-90 and 1990-91 returns were filed by the assessee along with audited income and expenditure account and balance sheets for the relevant previous years. The assessee claimed the benefit of section 11 of the Act on the ground that it was an institution established wholly for charitable purposes' within the meaning of section 2(15) of the Act and had been registered as such under section 13 of the Act. The assessing officer denied the benefit of section 11 on two grounds. First, he held that the respondent-assessee was a diamond bourse and as such its objects were not 'charitable purpose' within the meaning of section 2(15) of the Act. Secondly, he took the view that, even if so, the assessee had breached the conditions under section 13 and as such was liable to be denied the benefit of section 11. The assessee carried the matter in appeals to the Commissioner (Appeals) who confirmed the orders of the assessing officer. Further appeals were carried to the Tribunal. The Tribunal came to the conclusion that the objects for which the respondent-assessee was established were 'charitable purpose' within the meaning of section 2(15) of the Act and that there was no breach of the provisions of section 13. In this view of the matter, the Tribunal allowed the appeals of the assessee for both assessment years and reversed the orders of the two authorities below. Being aggrieved thereby, the department carried appeals to the High Court under section 260A and these appeals have been dismissed. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2003 TaxPub(DT) 0841 (SC) : (2003) 259 ITR 0280 : (2003) 179 CTR 0225 : (2003) 126 TAXMAN 0365

6Director of Income Tax v. Bharat Diamond Bourse

In the Supreme Court of India Mrs. Ruma Pal & B.N. Srikrishna, JJ.

Civil Appeal Nos. 8211 & 8212 of 2001 [From the judgment and order dated 21-3-2000, of the Bombay High Court in Income Tax Appeal No. 265 of 2000, reported as Director of Income Tax (Exemptions) v. Bharat Diamond Bourse (2000) 245 ITR 437 (Bom)] A.Y. 1989-90 & 1990-91

Decided on 16 December 2002

Counsel : R.P. Bhat with Prateek Jalan & B.V. Balram Das, for the Revenue Sohrab, E. Dastur with B.V. Jhaveri & R.B. Hathikhanwala, for the Assessee

JUDGMENT

B.N. Srikrishna, J.

These appeals arise out of the judgments of the High Court of Bombay dismissing the appeals filed by the revenue under section 260A of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'). Civil Appeal No. 8211/2001 pertains to assessment year 1989-90 while Civil Appeal No. 8212/2001 pertains to the assessment year 1990-91. Since the issues, fact and law are common, both the appeals are disposed of by this common judgment.

2. The respondent-assessee is incorporated as a company limited by guarantee under the Companies Act, 1956, and is a non-profit service organization. For the assessment years 1989-90 and 1990-91 returns were filed by the assessee along with audited income and expenditure account and balance sheets for the relevant previous years. The assessee claimed the benefit of section 11 of the Act on the ground that it was an institution established wholly for charitable purposes' within the meaning of section 2(15) of the Act and had been registered as such under section 13 of the Act. The assessing officer denied the benefit of section 11 on two grounds. First, he held that the respondent-assessee was a diamond bourse and as such its objects were not 'charitable purpose' within the meaning of section 2(15) of the Act. Secondly, he took the view that, even if so, the assessee had breached the conditions under section 13 and as such was liable to be denied the benefit of section 11. The assessee carried the matter in appeals to the Commissioner (Appeals) who confirmed the orders of the assessing officer. Further appeals were carried to the Tribunal. The Tribunal came to the conclusion that the objects for which the respondent-assessee was established were 'charitable purpose' within the meaning of section 2(15) of the Act and that there was no breach of the provisions of section 13. In this view of the matter, the Tribunal allowed the appeals of the assessee for both assessment years and reversed the orders of the two authorities below. Being aggrieved thereby, the department carried appeals to the High Court under section 260A and these appeals have been dismissed.