Decided on April 02,1982



M. Fatima Beebi, Judicial Member - (1.) THESE appeals arise from the assessments in respect of the assessment years 1975-76 and 1976-77. The assessee is a public charitable trust registered under Section 12A of the Income-tax Act, 1961 ("the Act"). The assessee is in appeal for the assessment year 1975-76 whereas the appeal for the assessment year 1976-77 is preferred by the revenue. In both the appeals the ground relates to the forfeiture of exemption from tax under Section 13(1)(c)(ii) and Section 13(2)(3) read with Section 13(3) of the Act.
(2.) The assessee-trust was created under the deed of 15-3-1972 executed by Shri C.R. Kesavan Vaidyar, his two sons and wife. The declared objects of the trust are education, medical relief and relief of the poor. The trust is a partner of the firm Beena Enterprises, Coimbatore ("the firm") constituted under a deed of partnership dated 1-4-1972 with three partners. Out of the capital contribution of Rs. 30,000, the share of the assessee is Rs. 5,000. The trust is entitled to 30 per cent of the profits of the firm. The other partners, holding substantial interest in the firm, are the relatives of the authors of the trust.
(3.) THE main source of income of the trust is the share of profits received from the firm. THE previous year of the assessee is the year ending 31st March. THE income of the trust was exempted under Section 11 of the Act in the assessments up to the assessment year 1974-75. THE share of the profits of the trust in the firm for the assessment year 1975-76 as finally determined after audit was Rs. 1,49,782.70. This was intimated by the firm to the trust on 20-7-1975 and the amount was debited to the current account of the firm on 31-3-1975 and brought forward in the account of the subsequent year. THE trust received this amount in two instalments of Rs. 35,000 on 26-7-1975 and the balance of Rs. 1,14,782.70 on 29-8-1975. THE ITO completed the assessment in respect of the assessment year 1975-76 on 26-11-1977 giving the assessee the exemption under Section 11.;

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