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TMI Blog1988 (11) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... ------------------------------------------------- Sl. No. Accounting year Corpus funds Investment/Loans/Advances out of corpus funds ------------------------------------------------------------------------------------------------------------------------------------------------- 1.31-12-1972Rs. 7,81,728 M/s Jay Engg. Works Ltd.Rs. 7,30,000 2.31-12-1973Rs. 11,27,801 M/s Jay Engg. Works Ltd.Rs. 10,55,000. -------------------------------------------------------------------------------------------------------------------------------------------------- The assessing officer found that, by the accounting year ending31-12-1980, the deposits with M/s Jay Engg. Works Ltd. had gone up to Rs. 22,10,000. 4. In the accounting year ending on 31-12-1981 relevant to the assessment year 1982-83, the assessee-trust withdrew an amount of Rs. 13,75,000 out of the aforesaid deposits of Rs. 22,10,000 with M/s Jay Engg. Works Ltd. As a result of the above withdrawal, the corpus deposits with M/s Jay Engg. Works Ltd. as on31-12-1981, stood reduced to Rs. 8,35,000. This entire amount with M/s Jay Engg. Works Ltd. during the year ending31-12-1982was withdrawn and out of it a sum of Rs. 8 lakhs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be seen that emphasis there is also on mode of investment. If a depositee was covered by a particular mode of investment under the relevant provisions of law earlier, the change to a different depositee will not rob the trust of its exemption provided the mode remained the same. He emphasised that the assessee is covered by the proviso to section 13(1)(d) and but for this proviso the assessee will be denied the exemption. The funds which were lying with M/s DCM Ltd., during the accounting period relevant to the assessment year under appeal, formed part of the corpus on1st June, 1973. The change has not made any difference because the conversion envisaged in the provisions of law is prior to1-6-1973and in this case there is no such conversion. According to the ld. counsel two stages of conversion are prohibited and thus, there is only one stage of conversion and that is, prior to1-6-1973. In section 13(1)(d), the words "such asset" refer to investment already made. These are to be interpreted in the light of the mode of investment. Since, in the case of the assessee, the asset is a 'book debt', the change from one company to another was not material. The ld. counsel emphasised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be called a single asset. Since, withdrawal was from one company and it was redeposited in a different company, i.e., M/s DCM Ltd., the funds with M/s DCM Ltd. is a new asset. The deposit was shifted to M/s DCM Ltd. in the accounting year ending31-12-1982. Hence, this is outside the modes prescribed by section 11(5) of the Act. Hence, the deposits with M/s DCM Ltd. are not covered by the proviso to section 13(1)(d). She emphasised that deposits with M/s DCM Ltd. did not form part of the corpus as on1-6-1973. Since section 13(1)(d) proviso was applicable to asst. year 1984-85 onwards, the question of its earlier application did not arise. It was clarified by the ld. DR that though there were amendments to the Act, in this regard, earlier, yet they were not given effect to till the year of assessment under appeal. It was contended that there is no case made out for an interference in the impugned order of the ld. CIT(A). The appeal may, therefore, be dismissed. 13. We have given careful consideration to the rival submissions. We have very carefully perused the orders of the authorities below to appreciate the decisions arrived at by them. Since, the issue is really res integra, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er alia, provides the forms and modes of investing or depositing the money referred to in clause (b) of sub-section of section 11. 15. We have noted supra that whereas the Legislature provided for exclusions from the total income of certain types of income by insertion of sections 11 and 12 the Legislature in its wisdom provides for exceptions to sections 11 and 12 in section 13 of the Act. In other words, section 13 incorporates exceptions to the general rule of exclusions enunciated in sections 11 and 12. Thus, in section 13(1)(a) income applied for private religious purposes and in section 13(1)(b) Trust or Institution for particular religious entity or caste are covered. It is in this context that section 13(1)(d) appears on the statute book with a proviso that nothing in this clause shall apply in relation to--- (i) any assets held by the Trust or Institution where such assets form part of the corpus of the Trust or Institution on the first day of June, 1973 and such assets were not purchased by the Trust or Institution or acquired by it by conversion of, on in exchange for, any other assets. In other words, the exceptions provided under section 13(1)(d)(ii) have an exce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnment or by a State Government; (vii) investment or deposit in any Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956); (b) in a case where such funds represent---- (i) the corpus of the trust or institution immediately before the 1st day of June, 1973 ; or (ii) the original corpus (being assets other than cash) of any trust or institution created or established on or after the 1st day of June, 1973; or (iii) any contribution (otherwise than in cash) made to any trust or institution on or after the 1st day of June, 1973, with a specific direction that they shall form part of the corpus of the trust or institution, any form or mode, other than investment in shares (not being shares entitled to a fixed rate of dividend whether with or without a further right to participate in profits) in a company (not being a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956), or a corporation established by or under a Central, State or Provincial Act) (c) in any other case, the forms or modes referred to in sub-clause (i), sub-clause (ia), sub-clause (ii), sub-clause (iii) and sub clause (iv) of clause (a); " 17. The om ..... X X X X Extracts X X X X X X X X Extracts X X X X
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