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TMI Blog2014 (7) TMI 909X X X X Extracts X X X X X X X X Extracts X X X X ..... e word used is 'Capital' of the concern, the word 'Capital' has not been defined under the Act. Relying upon Commissioner of Wealth Tax Vs. Lallubhai Gordhandas Charitable Trust [1999 (9) TMI 85 - GUJARAT High Court] - especially while granting the benefit to the charitable institution, when the legislature consciously provided for the funds of the Trust by way of investment and they have fixed a limit of 5%, by placing an interpretation which is contrary to the expressed words, benefits cannot be denied to the assessee - computation is to be made for investment by charitable trust - The word "capital" of the concern should be understood as the total capital of the concern - Both the Tribunal and the Appellate Authority w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of Income Tax (Appeals). Before the Appellate Authority it was contended that the trust was running Dental Institutions and the campus was set up at Derelakatte, 13 kms. away from the city. The construction of the hospital at the campus was in progress. In the meantime, the trust proposed to set up a medical college. As per MCI guidelines, the college was required to have a hospital attached to it. No other hospital was willing to provide the needed access to the hospital facility. Therefore, the trust invested ₹ 20,00,000/- in the shares of Yenepoya Institute of Medical Science Research Private Limited, a company owning and running a hospital within the Mangalore city. The trust utilized three floors of the hospital building owned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;Capital' includes not only the share capital but even the borrowed capital. Admittedly, the investment made by the trust in the company is less than 5% of the capital of Yenepoya Institute of Medical Science Research Private Limited and has extended the benefit of exemption. Accordingly, the appeal came to be dismissed. Aggrieved by the said order, the revenue is in appeal. 3. This appeal came to be admitted on 19.12.2008 to consider the following substantial question of law:- a. Whether the Appellate Authorities were correct in holding that the investment of ₹ 20 Lakhs made in Yenepoya Institute of Medical Science Research Private Limited, would be less than 5% of the capital of the assessee if the borrowed amount is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concern, the exemption under Sections 11 and 12 of the Act shall not be denied. The word used is 'Capital' of the concern, the word 'Capital' has not been defined under the Act. The word 'Capital' is also not defined in the Companies Act. However, reliance was placed on the judgment of the Commissioner of Wealth Tax Vs. Lallubhai Gordhandas Charitable Trust reported in (1999) 239 ITR page 448 (Guj), where it has held as under: Exemption under S. 5(1)(i) - Property held under trust - Applicability of s. 21A - Trust made investments in share capital of two companies exceeding five per cent of their share capital in which persons specified in s. 13(3) of IT Act did have substantial interest - Assessee - trust w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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