- (1.) AS three reference applications relating to asst. yrs. 1969 -70, 1970 -71 and 1971 -72 have been referred for disposal by this court in which identical questions of law arises. The office is directed to register the reference application for asst. yr. 1969 -70, as 8/76, for the asst. yr. 1970 -71 as 8(a) of 1976 and for asst. yr. 1971 -72 as 8(b) of 1976. All the three reference applications are disposed of by one single order.
(2.) THE following questions of law have been referred by the Income -tax Appellate Tribunal, Jaipur Bench, Jaipur. 1. 'Whether, on the facts and in the circumstances of the case, the assessee Trust was entitled to exemption from tax under s. 11 read with s. 2(15) of the IT Act, 1961 as being a Trust wholly for charitable purposes. 2. If the answer to question No. 1 be in affirmative, then whether, the income of the Trust from hedging transactions was or was not exempt from tax as being de -hors the trust deed. 3. If the answer to question No. 1 and/or question No. 2 be in the negative then whether the trust is entitled to deduction under s. 80G of the IT Act, 1961 in respect of donation made to Charitable Institutions in the application of the objects of the Trust.' These questions of law relates to the asst. yrs. 1969 -70, 1970 -71 and 1971 -72. The Income -tax reference No. 8 of 1976 will relate to asst. yrs. 1960 -70 and 8(a) and 8(b) of 1976 shall relate to asst. yrs. 1970 -71 and 1971 -72 respectively. As above mentioned identical questions of law arises in respect of all assessment years the same are disposed of by one single order.
(3.) BRIEF facts of the case as mentioned in the statement of the case are that M/s. Rajasthan Charity Trust, Jaipur (hereinafter referred to as the assessee) is a trust created under the Indenture dt. 23 -4 -1956. Initially the property settled upon the trust consisted of Rs. 20,000 shares of Gwalior Webbing Co. Ltd. of Rs. 10 each fully paid up. The objectives of the trust have been enumerated in cl. 3 of the said indenture and which are also mentioned in detail in statement of the case and we do not consider it necessary to repeat the same. In course of time the shares originally settled upon the trust were sold and the cash realised therefrom was invested with some other concerns. Fresh donations were also received from several parties. Thus, the trust fund grew larger and the income therefrom was applied for the object of the trust. The CIT, Delhi and Rajasthan by his order dt. 22 -4 -1963 held that donations made to the assessee will be exempt under s. 80G of the Act in the hands of the donors subject to limits and conditions prescribed in the said section. This order of the Commissioner helped the trust to collect more donations with order to augment its funds. After examining the various terms of the trust deed and other documentary evidence, the ITO held that the trust fulfilled all the conditions laid down under the Act to qualify itself for exemption from Income -tax. In March, 1968, the assessee received as donations from Shri Mahadeoji Loyalka, 11,500 shares of Indian Iron and Steel Co., Ltd. which were taken in the books of the trust at their market value of Rs. 1,88,140 at Rs. 16.36 per share. A further donation of 3,500 shares of Indian Iron and Steel Co. Ltd. was received in May, 1968 from Smt. Amrita Loyalka and these shares were taken in the books of the trust at their market value of Rs. 60,200 at Rs. 17.20 per share. Soon after getting the first lot of the shares of Indian Iron and Steel Co. Ltd., the trustees were apprehensive that the price of these shares might go down because of manipulative transactions carried out by some powerful groups. The trustees, therefore, started making forward sales of the shares of Indian Iron and Steel Co. Ltd. held by them right from the beginning of the accounting year relevant to the asst. yr. 1969 -70. The trustees however, did not part with these shares but purchased them again on the delivery date by paying the difference. Thus, during the course of the period covered by 3 accounting years relevant to the assessment years, the trustees carried out hedging transactions with respect to the shares in question. As apprehended by the trustees, the prices of these shares went down during the relevant period and this resulted in profits of Rs. 33,090, Rs. 35,100 and Rs. 52,500 in share hedging transactions for assessment years in question.;