M.Y.EQBAL,J. - (1.) BY this application under Section 256(1) of the Income -tax Act, 1961, the following questions of law have been referred to this Court for opinion: 1. Whether in the facts and circumstances of the case, the was justified in holding that the trust was charitable -cum -religious trust and it was not hit by Section 13(1)(bb) of the Act? 2. Whether in the facts and circumstances of the case, the Tribunal was justified in holding that even if there is some miscarriage on account of breach of trust by the trustees, the benefit of Section 11 cannot be denied if such miscarriage docs not effect the vires of the validity of the trust? 3. Whether in the facts and circumstances of the case, the Tribunal was justified in holding that the assessee fulfilled all the conditions laid down in Section 11 of the Act to claim the benefit of Section 11 of the Act?
(2.) THE facts of the case, which are relevant for answer the questions of law, are as under. The assessee is M/s. Karimia Trust, Jamshedpur. The assessee -trust was created by late Hussainy Tafazul Karim of Jamshedpur under a registered deed dated 6.5.1945 which was replaced by another deed dated 30.5.1958. The assessee -trust was a charitable -cum -religious trust with primary purposes and objects of spreading and imparting education according to Muslim tenets to Mohammadan boys and girls of the town of Jamshedpur and to carry out certain religious activities. By that deed of trust, the settler settled tow cinema talkies viz., Jamshedpur Talkies and Karim Talkies with its goodwill including buildings, machinery, fixture and fittings etc. The right to carry on business was also entrusted to the assessee -trust. The case of the assessee is that it had been using the income from those two cinema halls to accommodate the religious as well as charitable purposes as incorporated in the trust deed.
(3.) ALTHOUGH the assessee was allowed exemption under Section 11 of the Act till 1976 -77 but for the first time exemption from income tax was disallowed in view of provisions of Section 13(1)(bb) of the Act by the Assessing Officer. However, the appellate authority allowed the claim of the assessee for entitlement of exemption under Section 11 of the Act. Thereafter, for the assessment years in question i.e. 1981 -82, the Assessing Officer again disallowed the assessee -trust exemption under Section 11 of the Act on the ground that there was violation of provisions of Section 13(1)(bb) of the Act inasmuch as the assessee -trust was carrying on business which is not for primary purposes of the trust. The Assessing Officer also held that the assessee has violated the provisions of Section 13(1)(c) of the Act because it has rented out the two cinema halls to one M/s. Kapur Chand Private Limited which, in their turn, gave the management and exhibition of films to one M/s. Ruhee Enterprises of jamshedpur. The Assessing Officer further held that the assessee is not managing the trust properly.;