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TMI Blog1990 (2) TMI 137X X X X Extracts X X X X X X X X Extracts X X X X ..... Tube Company Ltd. that they had obtained consent of Controller of Capital Issues to issue one bonus share in the ratio of one equity share and according to the said formula the assessee is entitled to 500 equity shares. M/s. The Indian Textile Paper Tube Company Ltd. is a company in which the trustees of the assessee-trust had substantial interest. Investment of trust funds in M/s. The Indian Textile Paper Tube Company Ltd. would not amount to keeping the trust funds in approved securities under section 11(5). After scrutiny of the assessments for these three assessment years the learned Commissioner found that since the assessee had to convert its funds into approved securities under section 11(5) after 1-4-1983 and since the assessee failed to do so as is evident by continuing to keep its funds invested in M/s. The Indian Textile Tube Company Ltd., which is a private limited company and in which the trustees of the assessee-trust are interested in, invoked his powers of revision under section 263 and passed a common impugned order dated 15-9-1987 covering all the three assessment years, whereby he held after rejecting the assessee's explanation that granting exemption to the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or a charitable or religious institution, any income thereof, if for any period during the previous year--(i) any funds of the trust or institution are invested or deposited after the 28th day of February, 1983 otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11 ; or (ii) any funds of the trust or institution invested or deposited before the 1st day of March, 1983 otherwise than in any one of the forms or modes specified in sub-section (5) of section 11 continue to remain so invested or deposited after the 30th day of November, 1983." The above provisions would clearly show that it is obligatory on the part of a public charitable institution to invest or deposit its present or fresh income derived from 28-2-1983 in the approved securities and such of the funds which it may have possessed prior to 1-3-1983 should also be converted into approved securities under section 11 (5) on or before 30-11-1983. If any public or charitable institution fails either to deposit its income which it had earned prior to 28-2-1983 in the approved securities or failed to convert the funds which it might have possessed prior to 1-3-1983 into approved secu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the arguments of the learned counsel for the assessee remained that the ' funds of the trust ' occurring in section 13(1)(d) should mean only liquid cash which can itself be capable of invested into approved securities under section 11(5). Bonus shares which the assessee trust was holding for the assessment year 1985-86 did not come out of any investment made out of the funds of the trust. They were only bonus shares granted ex gratia by the company. The receipt of bunus shares was an event which cannot be foreseen and hence they cannot be treated as the funds of the trust. In support of this proposition the assessee relied on the Gujarat High Court decision in CIT v. Insaniyat Trust [1988] 173 ITR 248/40 Taxman 159 and particularly the assessee's counsel wanted to rely upon the following ratio found at page 260 : " In our opinion, in the context of the setting in which the expression ' trust funds ' is employed, the meaning which should be attributed to that expression is actual or available money or cash resources such as money in hand, money in cash, money in bank. No other meaning of the expression ' funds ' is relevant for construing that expression employed in section 13(2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y preferred to ascribe contextual interpretation for the words ' funds of the trust or institution ' occurring in section 13(2)(h). In that connection they held as follows : " Therefore, while construing the expression ' trust funds ' employed in clause (h), what is provided in clauses (a) to (g) has to be kept in mind. Wherever the Legislature wanted the transaction to relate to income or property or land or building or shares or securities, it has specifically done so. Therefore, when the same provision, namely, sub-section (2), while mentioning the trust funds in clause (h), income or properties are not mentioned, it would mean that income or property would not be included in the expression ' trust funds '. The expression ' trust funds ' employed in clause (h) is employed in contradistinction to what is provided in clauses (a) to (g) ..... In our opinion, in the context of the setting in which the expression ' trust funds ' is employed, the meaning which should be attributed to that expression is actual or available money or cash resources such as money in hand, money in cash, money in bank." 5. Now, the question before me is whether the words ' any funds of the trust or insti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said trust would lose exemption from income-tax. We fail to see how section 13(2)(h) could be construed in the light of the provision which has been subsequently introduced. Again, clause (d) in sub-section (1) and sub-section (5) of section 13 deal with altogether a different matter and they cannot have any relevance in construing section 13(2)(h). It may be that as contended by Mr. Soparkar, the term ' funds ' could be attributed a wider meaning under the said provision ; but that cannot lead to the inference or conclusion that the term ' funds ' which is employed in section 13(2)(h) has the same wider meaning." In view of the above portion of the judgment of the Gujarat High Court the contextual interpretation of the words ' funds of the trust ' occurring is section 13(2)(h) cannot, be applied to the same words used in section 13(1)(d) and in fact the words ' funds of the trust ' occurring in section 13(1)(d) bears a more wider meaning and in my opinion the shares of a company, whether they are equity shares or bonus shares, are comprehended by the words ' funds of the trust '. It is significant in this connection that the assessee in its reply dated 6-7-1987 for the notice ..... X X X X Extracts X X X X X X X X Extracts X X X X
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