- (1.) These appeals by special leave arise from the decision of the High Court of Assam and Nagaland in Tax References Nos. 2 to 4 of 1965 on its file wherein the High Court of Assam and Nagaland answered the two questions of law referred to it by the Assam Board of Revenue under S. 28 (2) of the Assam Agricultural Income-tax Act, 1939 (Assam Act IX of 1939) (to be hereinafter referred to as the Act) in the negative. The two questions referred for the advisory opinion of the High Court are: (1) Whether on the facts and in the circumstances of the case the Board was competent in course of appeals preferred by the assessee to question the finding of Assistant Commissioner of Taxes to the effect that the amount donated to Jalan Charity Trust were amounts actually spent for 'Charitable purposes' within the meaning of Assam Agricultural Income-Tax Act. (2) Whether on the facts and in the circumstances of the case the Board was justified in holding that only 60 per cent of the amounts actually spent by the assessee for 'Charitable purposes' from the Agricultural income was admissible as deduction under Rule 2 (2) of the Rules framed under the Assam Agricultural Income Tax Act." Aggrieved by the decision of the High Court Commissioner of Taxes, Assam has brought this appeal.
(2.) We shall now briefly set out the facts necessary for deciding the points in controversy in these appeals. Each of the three assessees with whom we are concerned in these appeals had given certain donations to the Jalan Charity Trust in the relevant assessment years, which in the case of two of the assessees is 1955-56 and in the case of the third is 1955-56 and 1957-58. The question for consideration is whether those donations can be considered as "amounts actually went for charitable purposes" under rule 2 (1) of the Rules framed under the Act.
(3.) The agricultural income of the assessee was computed at 60 per cent of the total net income ascertained by the Income-tax Officer under the Indian Income-tax Act, 1922. Before, the Income-tax Officer the assessees claimed exemption under Section 15-B of the Indian Income-tax Act in respect of the donations made by them to the Jalan Trust, but that Officer did not grant the exemption asked for but reserved that question for decision to a latter date as he wanted to examine the nature of those donations. He determined the income of the assessees for the years in question without taking into consideration those donations. Thereafter the Agricultural Income-tax Officer proceeded to assess the agricultural income of the assessees. Before that Officer the assessees again claimed exemption under rule 2 (1) of the Rules, of the donations given by them to the Jalan Charity Trust. That Officer refused to grant the exemption asked for. Thereafter the assessees took up the matter appeal to the Assistant Commissioner. The Assistant Commissioner granted to each of the assessees exemption to the extent of 60 per cent of the amounts donated. Then the assessees took up the matter in appeal to the Board of Revenue. The Department had no right to appeal against the order of the Assistant Commissioner. The Board of Revenue came to the conclusion that the assessees were not entitled to any exemption under the Act but all the same as the order of the Assistant Commissioner had become final in respect of exemption given, the assessees were entitled to retain the exemption granted by the Assistant Commissioner. Alternatively it also came to the conclusion that even if the assessees were entitled to any exemption under the Act and the Rules, the exemption granted to them by the Assistant Commissioner was more than what they were entitled to. Thereafter the assessees moved the Board to refer to the High Court for its opinion the two questions mentioned earlier.;