Trust Established Before Commencement of Act Can Make Provisions for Payment of Honorarium to Trustees: HC
- Blog|News|Income Tax|
- 2 Min Read
- By Taxmann
- |
- Last Updated on 16 October, 2024
Latest from Taxmann
Case Details: Commissioner of Income-tax vs. Indian Institute of Engineering Technology - [2024] 167 taxmann.com 257 (Madras)[10-09-2024]
Judiciary and Counsel Details
- R. Suresh Kumar & C. Saravanan, JJ.
-
Mrs V. Pushpa, Sr. Standing Counsel for the Appellant.
-
R. Veniatanarayanan, Adv. for the Respondent.
Facts of the Case
The assessee-trust was established in 1961, before the commencement of the Income Tax Act of 1961. As per the Memorandum of Association of the Trust, provisions were available to pay an honorarium to trust members or their family members. During the relevant assessment year, the assessee claimed total exemption under section 11.
The Assessing Officer (AO) rejected the assessee’s claim for exemption under section 11, contending that the trust had spent a certain amount on the wife of the trust’s founder. By virtue of said amount having been spent on the individual, it was considered a violation of section 13(1)(c).
On appeal, the CIT(A) confirmed the AO’s order. On further appeal, the Tribunal reversed the order and allowed the assessee’s claim of exemption under section 11. The matter then reached the Madras High Court.
High Court Held
The High Court confirmed the decision of the Tribunal wherein it was held that the payment made to the said individual could not be construed as a violation of section 13(1)(c) because the trust was established well before the Act came into force, that is, on 1-2-1961 and the Memorandum of Association of the trust had paved the way for making this amount of honorarium to the trustees. When that being so, it is strictly in consonance with the Memorandum of Association, and therefore, it cannot be construed as a violation of section 13(1)(c).
This aspect was also considered within the meaning of sections 13(1)(c), 13(2) and 13(3) and concluded that the assessee was entitled to claim exemption under section 11. Therefore, the assessment order passed by ITAT was to be upheld.
List of Cases Reviewed
- ITA No.318/Mds/2014 dated 27.05.2014 (para 12) followed.
Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.
Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.
The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:
- The statutory material is obtained only from the authorized and reliable sources
- All the latest developments in the judicial and legislative fields are covered
- Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
- Every content published by Taxmann is complete, accurate and lucid
- All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
- The golden rules of grammar, style and consistency are thoroughly followed
- Font and size that’s easy to read and remain consistent across all imprint and digital publications are applied
Sign Up
To subscribe to our weekly newsletter please log in/register on Taxmann.com
Latest Books
Everything on Tax and Corporate Laws of India
To subscribe to our weekly newsletter please log in/register on Taxmann.com
