( 1 ) IT appears that the assessee is a trust. The assessment year in this reference is 1960-61. There was a trust. It applied for refund under Section 48 of the Indian I. T. Act, 1922, for the assessment year 1960-61, the relevant accounting period ending on March 31, 1960. The income derived by the trust was from dividends. The asses-see had paid on March 9, 1960, a sum of Rs. 18,950 to another trust called Lakshmi Nath Seva Trust. While the ITO scrutinised the statement filed, he came across this item. According to him, this Lakshmi Nath Seva Trust was a private trust. He observed that the assessee could not prove that the donation was for any public charitable or religious purpose. He, therefore, taxed the sum of Rs. 10,850 at the maximum rate.

( 2 ) BEFORE the AAC, on appeal, the assessee contended that the donation to the trust was made under the belief that it was a charitable trust and that if a donation was made in good faith, it could not be said that the money had been applied for non-charitable purposes. In the alternative, it was pointed out that in the case of Shri Lakshmi Nath Seva Trust the AAC had held, in his order for the assessment year