( 1 ) THESE four reference applications under Section 256 (1) of the Income-tax Act, 1961 (in short act ) relate to assessment years 1972-73 and 1973-74. While two of the reference applications have been tiled hut the Revenue, two others have been filed by the assessee. Following question "has been referred, at the instance of Revenue, for opinion of this Court by the Income-tax Appellate Tribunal Delhi Bench-C Delhi (in short Tribunal ):-

"whether on the facts and in the circumstances of the case, the Tribunal is correct in holding that the dividend income from the bonus shares of mmlsr (P) Ltd. held by the assessee was exempted under Section 11 for the assessment years 1972-73 and 1973-74?"so far as the assessee s reference are concerned, following questions have been referred:

" (I) Whether the Tribunal was correct in holding that the eight persons who subscribed their names to the memorandum of association of the assessee society could be regarded as "founders" of an "institution" viz. , the assessee society, for the purposes the Section 13 (3) (a) of the Income-tax Act, 1961, for the assessment years 1972-73 and 1973-74? (2) Whether on the facts and in the circumstances of the case, the Tribunal was correct in holding that the various persons who had made contributions to the assessee society could be regarded as persons who had made "sub- stantial contributions" to the society within the meaning of Section 13 (3) (b) of the Income-tax Act, 1961. , for the assessment years 1972-73 and 1973-74 ? (3) Whether on the facts and in the circumstances of the case, the Tribunal was justified in rejecting the assessee s contention that only contributions received by the assessee society during the previous years relevant to the assessment years 1972-73 and 1973-74 could be taken into account in deter- mining whether any one of the aforesaid persons had made substantial contributions to the society for the assessment years 1972-73 and 1973-74 ?"

( 2 ) A brief reference to the factual position as highlighted in the statement of case would suffice. Assessee is a society, registered under the Societies Registration Act, 1960 (in short the "societies Act" ). It was formed when eight persons come together for the purpose of forming a society. It was registered as such on 12/12/1957 by the Registrar of Societies, Delhi. Originally the name of the society was "charat Ram and Sons Charitable Trust Society". Subsequently the name was changed to "charat Ram Foundation" w. e. f. 2/12/1960. It had acquired a number of shares in a company viz. Madan Mohan Lal Siri Ram (P) Ltd. (hereinafter referred to as the "company" ). During the assessment years 1957 and 1960,1000 shares each were purchased. In 1966, 1404 shares were allotted as bonus shares. During the assessment years in question, assessee received several donations. Names of the donors and the amounts donated are as follows : name of Party amount (a) M/s. Industrial and Allied Sales Private Ltd. Rs. 15,000. 00 (b) MMLSR (P) Ltd. Rs. 50,000. 00 (c) M/s. Shriram Service Ltd. Rs. 7,500. 00 Total Rs. 72,500. 00 assessee was registered under Section 12-A of the Act on 2/08/1975. For the assessment years 1972-73 Income tax Officer (in short "i. T. O. ") determined taxable income as Rs. 57,368. 00. The dividend income of Rs. 45,954. 00 was held to be taxable as according to the I. T. O. shares held by the trustees in the company exceeded the prescribed limit. Assessee had also claimed expenses of Rs. 2,09,946. 00. The expenditure for charitable purpose was held to be only Rs. 56,000. 00 ; as the I. T. O. was of the. view that provisions of Section 13 of the Act had been violated. Assessee carried the matter in appeal before the Appellate Assistant Commissioner ( in short "a. A. C," ). Before the said authority, assessee s stands was that subscribers to the Memorandum of Association were not to be treated as "founders" within the meaning of Section 13 of the Act and further the I. T. O