JUDGMENT R.K. Agrawal, J.
1. The Income Tax Appellate Tribunal, Allahabad has referred the following questions of law under Section 256(2) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") for opinion to this Court:
Whether on the facts and in the circumstances of the case, the Tribunal was justified in confirming the directions given by the Appellate Assistant Commissioner to exclude a sum of Rs. 59,500/- which was admittedly not spent or utilised for charitable purpose covered by the objects of the Trust?
2. The reference relates to the Assessment Year 1972-73.
3. Briefly stated, the facts giving rise to the present reference are as follow:
4. The assessee is a trust and in earlier years it claimed before the Income Tax Officer to be a charitable trust entitled to exemption under Section 11 of the Act. This claim of the assessee was, however, not accepted and assessments of the earlier years resulted in a considerable demand which remained unpaid. The Tax Recovery Officer, therefore, appointed a receiver for collecting the income of the trust and depositing the same towards payment of outstanding demand. During the previous year, relevant to the assessment year 1972-73, the receiver had collected Rs. 59,500/- and deposited the same for credit to the Income Tax Department towards payment of taxes. For this year also, the assessee repeated its claim of being a charitable trust entitled to exemption under Section 11 of the Act, which claim was not accepted by the Income Tax Officer who made the assessment in the status of an association of persons.
5. The assessee was not satisfied with the assessment and, therefore, went in appeal before the Appellate Assistant Commissioner who accepted the assessee's claim that it was a charitable trust entitled to exemption under Section 11 of the Act provided other conditions laid down therein were also satisfied. The Appellate Assistant Commissioner also held that the amount of Rs. 59,500/- which was collected by the receiver and deposited with the Income Tax Department towards taxes, could not be treated as income for the purpose of working out the application of income for charitable purposes, The Appellate Assistant Commissioner, however, gave a finding that this amount may be treated as income for this purpose in the year in which it became available to the assessee.
6. The Revenue being aggrieved went up in appeal. The Tribunal following its order for the assessment year 1968-69 (I.T.A. No. 247/Alld. of 1975-76) held that unless the trustees actually and physically receive the income of the trust, they cannot be expected to apply it on the objects of the trust and, therefore, the amount of Rs. 59,500/- which was collected by the receiver appointed by the Tax Recovery Officer and credited towards the income tax dues, was rightly not included for the purposes of working out the application of income for charitable purposes.
7. We have heard Sri Shambhoo Chopra, learned Standing Counsel for the Revenue.
8. We find that almost in similar circumstances, the Calcutta High Court in the case of Commissioner of Income Tax, Central I, Calcutta v. Jayashree Charitable Trust , has held that immunity from tax that has been granted to an income from the charitable trust, cannot be denied on the ground that deemed income from the trust has not been spent for the purposes of charity. In that case tax on source was deducted from the dividend income of the trust and the amount that was deducted from the lax at source, had not been spent for charitable purpose. The Calcutta High Court has held that such amount cannot be included in the income of the trust for the purpose of application of income towards the object of the trust.
9. We are in respectful agreement with the view taken by the Calcutta High Court as in the present case Rs. 59,500/- was realised by the receiver appointed by the Tax Recovery officer and directly paid to the Income Tax Department for clearing outstanding dues. The said amount was not available with the assessee for being spent on the charitable purposes. Thus, the Tribunal was justified in confirming the direction given by the Appellate Assistant Commissioner to exclude the aforesaid amount.
10. We, therefore, answer the question referred to us in the affirmative, i.e., in favour of the assessee and against the Revenue. There shall be no order as to costs.