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TMI Blog1990 (2) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... are 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 s. 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 s. 11(5) after 1st April, 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, invoked his powers of revision under s. 263 and passed a common impugned order dt. 15th Sept., 1987 covering all the three assessment years, whereby the held, after rejecting the assessee s explanation, that granting exemption to the assessee-trust under s. 11 of the IT, Act even though it continued to invest its funds in M/s. The Indian Textile Paper Tube Company Limited, is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r modes specified in sub-s. (5) of s. 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-s. (5) of s. 11 continue to remain so invested or deposited after the 30th day of November, 1983." The above provision 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 28th Feb., 1983 in the approved securities and such of the funds which it may have possessed prior to 1st March, 1983 should also be converted into approved securities under s. 11(5) on or before 30th Nov., 1983. If any public or charitable institution fails either to deposit its income which it had earned prior to 28th Feb., 1983 in the approved securities or failed to convert the funds which it might have processed prior to 1st March, 1983 into approved securities in between 1st March, 1983 and 30th Nov., 1983 then such an assessee even though ordinarily entitled to be exempt under ss. 11 and 12, would not get such exemption. Now the main question in this case is whether the assessee had committed any such co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only liquid cash which can itself be capable of invested into approved securities under s. 11(5). Bonus shares which the assessee trust was holding for the assessment years 1985-86 did not come out of any investment made out of the funds of the trust. They were only bonus shares granted exgratia by the company. The receipt of bonus 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 vs. INSANIYAT TRUST (1988) 71 CTR (Guj) 145 : (1988) 173 ITR 248 (Guj) 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 s. 13(2)(h). What cl. (h) contemplates is fund of the trust which are capable of investment. If the funds of the trust are not capable of being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mployed in cl.(h), what is provided in cls. (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-s. (2), while mentioning the trust funds in cl. (h), income or properties are mentioned, it would mean that income or property would not be included in the expression trust funds . The expression trust funds employed in cl.(h) is employed in contradistinction to what is provided in cls. (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 institution occuring in s. 13(2)(h) should bear the same meaning under s. 13(1)(d) also. That means whether the contextual interpretation given by the Gujarat High Court for the words occuring in s. 13(2)(h) should be adopted when the same words occur in s. 13(1)(d) also. Whet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... buted a wider meaning under the said provisions; but that cannot lead to interence or conclusion that the term funds which is employed in s. 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 occuring in s. 13(2)(h) cannot be applied to the same words used in s. 13(1)(d) and in fact the words funds of the trust occuring in s. 13(1)(d) bear a more wider meaning and in my opinion the shares of a company, whether they are equity shares or bonus shares, are comprehended by words funds of the trust . It is significant in this connection that the assessee in its reply dt., 6th July, 1987 for the notice issued under s.263 stated that it had liquidated its shares in the accounting year ended with 30th Sept., 1981 and offered profit on sales of shares. Therefore, it would show that the assessee itself is aware that the shares it held are part of its funds. Simply be cause the shares with which I am concerned here are equity shares does it make any difference; in my opinion it does not. Therefore, I hold that since the assessee did not convert the 500 bonus shares i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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