JUDGMENT M. C. AGARWAL, J. :
The Tribunal, Allahabad, has referred the following question, stated to be of law and to arise out of its order dt. 26th Aug., 1978, passed in ITA Nos. 2625 and 2626 (Alld) of 1977-78 for the asst. yrs. 1975-76 and 1976-77, for the opinion of this Cour : "Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in holding that the provisions of s. 13 are not applicable in this case and that the assessee trust is entitled to exemption under ss. 11 and 12 of the IT Act?"
2. We have heard Sri Rajesh Kumar Agarwal, learned Standing Counsel for the Revenue. No one appeared on behalf of the assessee-respondent.
3. The question was whether any part of the income or property of the assessee trust was during the concerned previous years used or applied directly or indirectly for the benefit of any person referred to in sub-s. (3). One Sri Padampat Singhania was the trustee of the assessee-trust. He held over 20% profit sharing rights in M/s J. K. Bankers with whom the assessee-trust had deposited money in a current account carrying interest at 9-1/2%.
The ITO took the view that the interest charged was lower and the loan was not adequately secured. He, therefore, took the view that the trust had violated the provisions of s. 13(1)(c)(ii) and was not entitled to exemption. The Tribunal has discussed the matter in all necessary details and held that there was no evidence to show that the loan was not adequately secured and the interest charged was also adequate in the facts and circumstances of the case. The Tribunal, therefore, concluded that there was no violation of the aforesaid provision of law and the trust was entitled to exemption under s. 11 of the Act.
3. As is evident, the findings of the Tribunal about the adequacy of the security and the interest are findings of fact. It is not the Revenues case that these findings are not based on any material. These findings are, therefore, binding on us in proceedings under s. 256(1) of the Act. On the aforesaid findings, we answer to the question as referred by the Tribunal saying that the Tribunal was right in holding that the provisions of s. 13 of the Act are not applicable in this case and that the assessee-trust is entitled to exemption under ss. 11 and 12 of the IT Act. We answer the aforesaid question accordingly in the affirmative, in favour of the assessee and against the Revenue.