THE HON’BLE SRI JUSTICE V.V.S. RAO AND THE HON’BLE SRI JUSTICE B.N.RAO NALLA REFERRED CASE No.149 of 1996 28.11.2011 Between: The Commissioner of Income-tax, Andhra Pradesh-II, Hyderabad … Petitioner AND A.P. State Essential Commodities Corporation Limited, Hyderabad ... Respondent THE HON’BLE SRI JUSTICE V.V.S. RAO AND THE HON’BLE SRI JUSTICE B.N.RAO NALLA REFERRED CASE No.149 of 1996 ORDER: (per Hon’ble Sri Justice V.V.S.Rao) The reference under Section 256(1) of the Income Tax Act, 1961 (the Act) is at the instance of the Revenue. The following questions are referred for the decision of this Court. 1. Whether, on the facts and in the circumstances of the case, the ITAT was correct in law in holding that the assessee-Corporation was a charitable institution incorporated for charitable purposes viz., advancement of the object of a general public utility within the meaning of Section 2(15) of the Income-tax Act and is entitled to claim exemption of its income u/s.11 of the Income-tax Act? 2. Whether, on the facts and in the circumstances of the case, the ITAT was correct in law in holding that the assessee Corporation satisfied the requirements of clause (b) of sub-section (4A) of Section 11 of the Income-tax Act for claiming exemption of its income u/s.11(1) of the Income-tax Act? 3. Whether, on the facts and in the circumstances of the case, the ITAT was correct in law in holding that the assessee was entitled to exemption u/s.11(1) of the Income-tax Act? The respondent/assessee is State Government Undertaking (hereafter, the Corporation) incorporated under the provisions of the Companies Act, 1956. For the assessment year 1986-87, the Corporation filed the return of income claiming exemption under Section 11 of the Act. They contended that they spend the income for charitable purposes. The assessing officer, however, rejected the claim and completed the assessment showing taxable income. The Appellate Commissioner confirmed the assessing officer. The Income Tax Appellate Tribunal, following earlier returns for the years 1983-84 to 1988-89, held that the Corporation is entitled to claim the benefit of the Act as it substantially satisfied the requirement of Section 11(4A) of the Act, aggrieved by which, the Revenue sought reference of the above questions. This Court heard the Junior Standing Counsel for Income Tax and the Standing Counsel for the Andhra Pradesh Essential Commodities Corporation, Hyderabad. In the Commissioner of Income Tax v A.P. State Civil Supplied Corporation (Order dated 04.3.2003 in R.C.No.59 of 1992), this Court considered inter alia the question, “Whether on the facts and in the circumstances of the case, the Andhra Pradesh State Civil Supplies Corporation Limited is a charitable institution within the meaning of Section 2(15) of the Income Tax Act, 1961 particularly having regard to the provisions of Section 11(4A) (b) of the Act?”. After referring to the decision of the Supreme Court in CIT v APSRTC and a decision of this Court in Girijan Cooperative Corporation Limited v Commissioner of Income Tax, it held that the activities carried on by the assessee therein are charitable in nature within the meaning of Section 2(15) of the Act. Another Division Bench of this Court in CIT v A.P. State Essential Commodities Corporation Limited (R.C.No.76 of 1994, dated 09.3.2006) followed R.C.No.59 of 1992 and held that the assessee herein is a charitable institution. Following the same, this reference is answered in the affirmative in favour of the assessee and against the Revenue. The Referred Case stands disposed of, accordingly, without any order as to costs. _______________ (V.V.S.RAO,J) _____________________ (B.N.RAO NALLA, J) November 28, 2011 YS