Director Of Income Tax vs Bharat Diamond Bourse
The respondent-assessee is incorporated as a Company limited by guarantee under the Companies Act, 1956 and is a non-profit service organization. For the assessment years 1989-90 and 1990-91 returns were filed by the assessee along with audited Income and Expenditure Accounts and Balance Sheets for the relevant previous years. The assessee claimed the benefit of Section 11 of the Act on the ground that it was an institution established wholly for ‘charitable purposes’ within the meaning of Section 2(15) of the Act and had been registered as such under Section13 of the Act. The Assessing Officer(hereinafter referred to as the ‘AO’) denied the benefit of Section11 on two grounds. First, he held that the respondent-assessee was a Diamond bourse and as such its objects were not’charitable purpose’ within the meaning of Section 2(15) of the Act. Secondly, he took the view that, even if so, the assessee had breached the conditions under Section13 and as such was liable to be denied the benefit of Section 11. The assessee carried the matter in appeals to the Commissioner of Income Tax(appeals) who confined the orders of the A.O. Further appeals were carried to the Income Tax Appellate Tribunal.