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TMI Blog1989 (10) TMI 107X X X X Extracts X X X X X X X X Extracts X X X X ..... as shares and other securities issued by the Companies registered in India. The trustees are entitled to establish necessary guidelines and procedures and administering the objects which include financial assistance by way of grant of repayable loans. They can prescribe the period of repayment of loan, the interest rate of the loan etc. The total of the contributions together with accretions during the assessment years 1977-1978 to 1982-83 came to Rs. 30,50,000. In 1983-84 under the provisions of Finance Act, 1984, Sections 40A(9), (10) and (11) are inserted. These provisions are retrospective in operation and the Legislature made them retrospective from 1-4-1980. By virtue of the authority vested in it, the Tube Investment of India Ltd. (the Company which made the contributions) asked the assessee-trust to refund the unutilised amount from out of the contributions made by it right from the inception of the trust together with the accretions thereon. Such demand was made by the letter dated 25-6-1984. A copy of the said letter was furnished to me. In the said letter, it is stated that the aggregate of the contributions made by the Company to the assessee-trust during 1978-79 to 198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be deemed always to be the income of the Tube Investment of India Ltd. (hereinafter called as 'the Company'). It was also argued that since the whole of the trust fund were allowed to be recalled and they were actually been recalled by the Company, the trust itself should be deemed to have come to an end from 1-4-1988. For that reason also, the assessed income of Rs. 80,340 for the assessment year 1982-83 should only be assessed in the hands of the Company and not in the hands of the assessee-trust. This argument was accepted by the Appellate Asstt. Commissioner who held that the income declared by the assessee-trust for the assessment year 1982-83 should be assessed in the hands of the Company. The Appellate Assistant Commissioner cancelled the assessment against the assessee-trust and directed the Income-tax Officer to intimate the Income-tax Officer, Central Circle XIV, Madras who was the assessing Officer of the Company to take necessary further steps. As against the impugned order passed by the AAC dated 4-2-1987, the present second appeal is brought in by the Revenue and thus the matter stood for my consideration. 5. I have heard Shri S.C. Goel, the learned Departme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (11) have three peculiar features that they are retrospective in character, that there is a deeming fiction that the expenditure laid out are expended wholly and exclusively for the welfare of the employees of the Company out of the contributions made by it to the trust, the amount of such expenditure in case it had not been allowed in the hands of the Company while computing its, business income of previous years in which such expenditure is laid out or expended, should be allowed while computing the business income under Sec. 28 of the Income-tax Act as if such expenditure has been laid out or expended by the assessee-company, the invalidity of the trust deed contemplated under Sec. 40A(11) is absolute in its terms and the trusts will no longer be considered to be in existence. The amount of Rs. 30.50 lakhs which was claimed back by the Company from the Trust includes the amount of income assessed in the hands of the assessee-trust for the assessment year 1982-83 as per the assessment order dated 19-3-1985. According to my understanding of section 40A(11)(i), it enables the Company to claim back the whole of the unutilised amount. So also under sub-clause (ii) of the said sub-se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke in the word "income". The learned Departmental Representative argued that the true scope of ejusdem generis rule is that the words of a general nature following the specific and particular words should be construed as limited to things which are of the same nature as those specified. Now, in the above sub-section, the word "asset" is of a general nature and it is followed by the specific words (land building, machinery, plant or furniture). If so, the asset should be of the same category as that of land, building, machinery, land or furniture. Money as such representing interest income does not go along with or come under the category of either land and building machinery, plant or furniture and, therefore, though the general meaning of the word "asset" comprehends money as such in the particular context in which the words occur in Section 40A(11)(ii) either the interest income or the dividend income can be taken to be assets and, therefore, the interest income and the dividend income earned by the assessee-trust for the assessment year 1982-83 cannot be deemed to be part of the income earned by the Company and those incomes cannot be included in the Company's hands for the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as got every right to recover from the assessee-trust. I am of the opinion that the amount invested in fixed deposits in bank from out of contributions made and the accrued interest thereon cannot partake the character of expenditure in the hands of the assessee-trust. What constitutes the 'trust fund' is clearly defined under clause (2) of the trust deed which is extracted hereunder : " 2. The Trustees shall henceforth hold and stand possessed of the said sum and any other contributions, donations and all accumulations thereof referred to in clause 8 of this indenture (hereinafter referred to as "the Trust Fund" which expression shall unless repugnant to the subject or context also include any other property and investments of any kind whatsoever into which the same or any part thereof may be converted, invested or varied from time to time and those which may be acquired by the Trustees or come to their hands by virtue of these presents, or by operation of law, or testamentary disposition, or contributions from the Settlor, or any other organisation and/or individual, or otherwise whatsoever in relation to these presents including all contributions, donations, gifts, bequests an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in fact the learned counsel for the assessee very much relied on it. It is in the following terms : " All income arising to any person by virtue of a revocable transfer of assets shall be chargeable to income-tax is the income of the transferor and shall be included in his total income ". To the extent of recovering the unutilised amount the trust deed in my opinion should be considered as revocable transfer. Therefore, all incomes which accrue or arise by virtue of revocation of the trust shall be chargeable to Income-tax as the income of the transferor. In this case, the transferor is the Company. Admittedly, the interest and dividend incomes were accrued on the unutilised amounts, that too during a period when unutilised amount should have been transferred to the Company and in those circumstances, I hold that Section 61 clearly applies to the facts of this case and the interest and dividend incomes should be chargeable to Income-tax as incomes of the Company but not as income of the assessee-trust. 7. In Sampat Iyengar's Law of Income-tax, 7th Edn., page 2352, the law is stated to be as under : " It may, however, be mentioned here that for this Section to be applica ..... X X X X Extracts X X X X X X X X Extracts X X X X
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