1. This is a reference under Section 256(1) of the I.T. Act, 1961, made by the Income-tax Appellate Tribunal, Indore, seeking this court's opinion on the following question :
'Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the assessee is entitled to the benefit of the exemption under Section 11 of the Income-tax Act for its entire income ?'
2. Facts as stated by the Tribunal are as follows : The assessee is a Panchayat registered under Section 12 of the I.T. Act, 1961, by the Commissioner of Income-tax, Bhopal. For the assessment years 1974-75, 1975-76 and 1976-77, the assessee claimed that it was a trust only for charitable and religious purposes and, therefore, its income was not taxable in view of Section 11 of the I.T. Act.
3. The ITO held that, according to the bye-laws, the Panchayat had been created and established for the benefit of the members of the Maheshwari Agrawal Marwari Samaj and, therefore, it could not claim exemption in view of Section 13(1)(b) of the Act. On appeal before the AAC, the contention of the assesses was that its main purpose was the maintenance of the old temple and the uplift of the Maheshwari Samaj was only a subsidiary purpose. It was further contended that though the institution was registered in the year 1967, the temple and its buildings were in existence for the last several decades. Learned AAC partly accepted the assessee's contention and held that the purpose of the trust was two-fold, i.e., to look after the property of the temple and to act for the uplift of the Maheshwari Samaj. First was purely a religious purpose but so far as the second purpose was concerned, the learned AAC held that the trust which had been created after the commencement of the Act and one of its objects was to provide benefit to a particular religious community, Section 13(1)(b) of the Act was partly applicable. Accordingly, he directed the ITO to treat the trust as one created for charitable and religious purposes and to give exemption under Section 11 of the Act for the income which had been utilised for religious purposes.
4. The department did not challenge this order. The assessee, however, appealed before the Appellate Tribunal. The question which was raised before the Tribunal was whether the assessee-trust had been created or established before the commencement of the Act of 1961 or after and, if so, whether Section 13(1)(b) was applicable to deprive the assessee-trust of the benefit available to it under Section 11 of the Act.
5. The Appellate Tribunal examined two public documents, one, a certificate issued by the High Court-of Bhopal under Order 21, Rule 89 of the CPC in favour of the managers of the Maheshwari Agrawal Marwari Panchayat, Bhopal, and the other, a copy of the minutes of the resolution of the Panchayat approving the accounts for the year 1958 and redrafting the bye-laws passed on 17th March, 1958. On the basis of these two documents, the Appellate Tribunal recorded a finding of fact that the trust existed before the coming into force of the 1961 Act and managed the affairs of the property of the temple.
6. In the light of this finding of fact about the existence of the trust before the coming into force of the 1961 Act, we have to examine whether the Tribunal was1 right in holding that the assessee was entitled to the benefit of exemption under Section 11 of the I.T. Act for its entire income. The department sought to deny the exemption claimed by the assessee on the short ground that in view of Section 13(1)(b) of the Act, the trust had been established for the benefit of a particular religious community. Section 13(1)(b) of the I.T. Act is as follows:
'13. (1) Nothing contained in Section 11 or Section 12 shall operate so as to exclude from the total income of the previous year of the person in receipt thereof--... (b) in the case of a trust for charitable purposes or a charitable institution created or established after the commencement of this Act, any income thereof if the trust or institution is created or established for the benefit of any particular religious community or caste .'
7. This provision applies only to such charitable trusts which are created or established after the commencement of the Act of 1961. The bar under this provision is not applicable to a charitable trust which was created or established before the commencement of the Act. Since the Tribunal held as a fact that the assessee-trust had been created before the commencement of this Act, it was right in holding that the assessee was entitled to the benefit of exemption under Section 11 of the I.T. Act for its entire income as the bar under Section 13(1)(b) was not applicable to it.
8. We, therefore, answer the question in the affirmative and hold that the Tribunal was correct in law in holding that the assessee is entitled to the benefit of exemption under Section 11 of the I.T. Act for its entire income. There shall be no order as to costs.