K.P. Singh, J. - (1.) THIS reference under Section 256(1) of the Income-tax Act, 1961, has been made by the Appellate Tribunal at the instance of the Commissioner of Income-tax, Kanpur, and the following questions have been referred for the opinion of this court : "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in holding : (1) that the Income-tax Officer had not properly interpreted and implemented the order of the Income-tax Appellate Tribunal in I. T. A. No. 427 of 1974-75 dated August 13, 1975, and (2) that, while giving effect to the above order of the Tribunal, which had become final, the Income-tax Officer could not have recomputed the total income of the assessee in the manner in which he did it, vide the impugned order."
(2.) THE assessee is a trust which derives income from property, interest and share income from a firm, Messrs. J.K., Calcutta. It had claimed exemption under Section 11(1)(a) of the Income-tax Act, 1961. THE Income-tax Officer did not allow the exemption claimed by the assessee. THErefore, the assessee went in appeal and the Appellate Assistant Commissioner held through his order dated September 8, 1972, that the assessee was a charitable trust. THErefore, the provisions of Section 11(1)(a) of the Income-tax Act, 1961, were attracted subject to the conditions mentioned therein. In pursuance of the order of the Appellate Assistant Commissioner, the Income-tax Officer, through his order dated July 27, 1973, determined the income of the assessee-trust at Rs. 2,17,621. He gave exemption to the tune of Rs. 10,000 only under Section 11(1)(a) and included the rest of the income as taxable income on the ground that the same had not been applied to charitable purposes. The income so computed included the share income of Rs. 2,05,150 derived from the firm, Messrs. J.K., Calcutta. Aggrieved by the order of the Income-tax Officer, the assessee went in appeal and contended that the original order of the Appellate Assistant Commissioner had not been properly implemented by the Income-tax Officer. It was further contended that the income of the trust had been attached by the Tax Recovery Officer, vide his order dated September 30, 1967. Therefore, the assessee had not physically received any income so as to satisfy the provisions of Section 11(1)(a) of the Income-tax Act, 1961. The Appellate Assistant Commissioner dismissed the appeal holding that the Income-tax Officer had properly implemented the order of remand and the arguments raised on behalf of the assessee raised fresh grounds which could not be entertained. Against the order of the Appellate Assistant Commissioner, the assessee went to the Income-tax Appellate Tribunal which reversed the order of the Appellate Assistant Commissioner through its order dated August 13, 1975, and held that the assessee's contention did not raise any fresh grounds in appeal and that the Appellate Assistant Commissioner was wrong in not entertaining the grounds raised by the assessee. However, the Income-tax Appellate Tribunal, through its order dated August 13, 1975, set aside the order passed by the authorities below and asked the Income-tax Officer to pass an order under Section 251/154 of the Income tax Act, 1961, in the light of the observations made in the judgment. (See annexure 'D' of the paper book).
(3.) THEREAFTER, the Income-tax Officer, through his order dated February 7, 1976, redetermined the taxable income of the assessee and added the share income from Messrs. J.K., Calcutta, on the ground that though the income was subject to attachment it was never paid to the Department. Therefore, the claim of the assessee in this regard did not find favour with the Income-tax Officer. Against the order of the Income-tax Officer dated February 7, 1976, the assessee went in appeal and the Appellate Assistant Commissioner, Special Range, Kanpur, through his order dated August 5, 1976, accepted the claim of the assessee for the assessment year 1968-69, which is under our consideration in this reference and observed as below : ".... However, he is directed to exclude the share income derived from the firm for the assessment year 1968-69 as the share income did not become available to the appellant for being spent on its objects due to the issue of notice under Section 226(3) on September 30, 1967." ;