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TMI Blog1984 (11) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income-tax as required under section 12A of the Income-tax Act, 1961 (' the 1961 Act '). He rejected the assessee's contention that it is a charitable institution and, hence, its wealth should be exempted from tax. 3. The assessee appealed to the AAC. The AAC held that the assessee-trust would be entitled to exemption under section 5(1)(i) of the Wealth-tax Act, 1957 (' the Act ') up to 1972-73 but thereafter the assessee will not be entitled to exemption in view of the introduction of section 21A in the Act, wherein exemption under section 5(1)(i) is available subject to the provisions of section 21A only. He held that as the funds of the trust were invested in a firm in which the trustees were partners with substantial interest, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , cannot be considered as adequate interest. Thus, the assessee is clearly hit by the provisions of section 13(2)(a). He also urged that the assessee is hit by section 13(2)(h) as the funds of the trust continued to remain invested in the concern in which the trustees have substantial interest. He also urged that the assessee is not entitled for the exemption under section 5(1)(xxiii). 6. Under section 5(1)(i), the property held under the trust or other legal obligation for any public purpose of a charitable or religious nature in India is exempt from wealth-tax. But this exemption is not available under section 21A with effect from the assessment year 1973-74, where the trust violates the conditions laid down in section 13 by making use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) applies, it is not necessary for us to consider the applicability of section 13(2)(h). Sub-section (4) of section 13 does not apply to the assessee as the interest of the trustees in Dorabji Bros. exceeds 5 per cent of the capital of that concern. In CIT v. Eternal Science of Man's Society [1981] 128 ITR 456, the Delhi High Court has held that if the funds of the trust are invested in debentures or loans then clause (a) of sub-section (2) of section 13 applies. Thus, in the instant case, the assessee is hit by section 13(2)(a) and section 13(3) of the 1961 Act and as such under section 21A of the 1957 Act, the assessee is liable to wealth-tax and it is not entitled to exemption under section 5(1)(i). 8. We find force in the alternativ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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