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TMI Blog2014 (11) TMI 395X X X X Extracts X X X X X X X X Extracts X X X X ..... question of allowing statutory deductions will not arise - The 'income' contemplated by the provisions of section 11 is the real income and not the income as assessed or assessable in view of the above judgments - Assessment of Trusts is a separate code in itself once an institution has been granted registration u/s 12A - the 'income' occurring in the Act for the purpose of a Trust should be considered what is available in the hands of the assessee i.e. TRUST subject to an adjustment of any expenses extraneous to the trust - Section 11(1A) in itself is a separate specific section which governs the overall taxability of capital gains in a trust and being a specific section it shall prevail over section 50C which is a general section and does not start with a non-obstante clause - In the case of a Trust and for the purpose of Sec. 54F where question of utilization of the funds in case of sale of an asset arises it would be the available funds with the assessee and not the deemed income - This is on the ground that what is, not available with the assessee can never be invested - assessee has rightly computed income of the year and Sec. 50C of the Act has no application to the facts o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsfer of capital asset in the case of a charitable society was examined by the Tribunal in the case of ACIT vs. Shri. Dwarikadhish Temple Trust, Kanpur in I.T.A. No. 256 257/LKW/2011, in which the Tribunal has held that where the entire sale consideration was invested in other capital asset, provisions of section 50C of the Act should not be invoked. The relevant observations of the Tribunal are extracted hereunder:- 6.1 From the order of CIT(A), we find that the assessee is a charitable and religious trust registered u/s 12A of the Act. It is also noted by the Assessing Officer that the assessee has sold immovable property for total sale consideration of ₹ 2.25 lac and the entire sale consideration was invested in other capital asset i.e. fixed asset with bank. The Assessing Officer invoked the provisions of section 50C of the Act and computed the capital income at ₹ 66.38 lac based on the value adopted by stamp duty authorities for stamp duty purposes. We find that the CIT(A) has decided this issue in favour of the assessee by following the Tribunal decision in the case of Gyanchand Batra vs. Income Tax Officer 115 DTR 45 (JP-Trib). 6.2 We also find that it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant during the course of the assessment proceedings that the provisions of section 50C of the Income Tax Act, 1961 are not attracted in it's case, as a separate code i.e. section 11(1 A) of the Act exists for taxation of capital gains in case of charitable trusts. Section 11(1 A) of the Act reads as follows: (a) where a capital asset, being property held under trust wholly for charitable or religious purposes, is transferred and the whole or any part of the net consideration is utilised for acquiring another capital asset to be so held, then, the capital gain arising from the transfer shall be deemed to have been applied to charitable or religious purposes to the extent specified hereunder, namely: (i) where the whole of the net consideration is utilised in acquiring the new capital asset, the whole of such capital gain ; (ii) where only a part of the net consideration is utilised for acquiring the new capital asset, so much of such capital gain as is equal to the amount, if any, by which the amount so utilised exceeds the cost of the transferred asset; (b) where a capital asset, being property held under trust in part only for such purposes, is transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... If a case appears to be governed by either of two provisions, it is clearly the right of the assessee to claim that he should be assessed under the one, which leaves him with a lighter burden. The literal meaning of the expression 'Generalia Spedalibus Non Derogant is that general words or things do not derogate from the special. The Courts have held the expression to mean that when there is a conflict between a general and special provision, the latter shall prevail as held in the cases of CIT vs. Shahzada Nand and Sons 60 ITR 392 (SC) and UOI vs. Indian Fisheries (P.) Ltd. AIR 1966 SC 35, or the general provisions must yield to the special provision. Thus by virtue of the above the specific provision whether it applies to taxing of Capital gains is concerned or it applies to the definition of Net Consideration is concerned section 11(1A) being a section enacted specifically for the trusts shall prevail over section 50C. While justifying the provisions of taxability of trusts and that its assessment has to be done in a totally different manner within the four corners of section 11 to section 13 the Appellant also made the following submissions: Heads of income under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id provision. Thus, the same cannot be applied for the purpose of calculating the gain u/s. 11(1A). In view of this, what is relevant for the purpose of section 11(1A) is the reinvestment of the net amount actually realized and not any notional amount as may be adopted by virtue of sec. 50C. 5. The sale proceeds of the capital asset have duly been utilized for the purposes of Investment in FDR's within the prescribed time which has, altogether, not been seen, challenged or commented upon by the AO. Who has not given the credit for the same. We rely on the following judgments: Deposit in public sector company is an eligible investment - The contention of the revenue that the investment by way of deposit in the public sector company cannot be treated as a new asset acquired with the net consideration, in terms of section 11(1A), is not tenable - CIT v. East India Charitable Trust [1994] 206 ITR 152/73 Taxman 380 (Cal.). Investment of sale proceeds of shares in fixed deposits is permissible - Investment in fixed deposit made in previous year relevant to the assessment year 1981-82 out of sale proceeds of shares of companies, amounted to acquiring of another capital assets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income under section 14 have no relevance and question of allowing statutory deductions will not arise - The 'income' contemplated by the provisions of section 11 is the real income and not the income as assessed or assessable in view of the above judgments. Assessment of Trusts is a separate code in itself once an institution has been granted registration u/s 12A. 2. It is abundantly clear that the 'income' occurring in the Act for the purpose of a Trust should be considered what is available in the hands of the assessee i.e. TRUST subject to an adjustment of any expenses extraneous to the trust. 3. Section 11(1A) in itself is a separate specific section which governs the overall taxability of capital gains in a trust and being a specific section it shall prevail over section 50C which is a general section and does not start with a non-obstante clause. 4. In the case of a Trust and for the purpose of Sec. 54F where question of utilization of the funds in case of sale of an asset arises it would be the available funds with the assessee and not the deemed income. This is on the ground that what is, not available with the assessee can never be invested. 5. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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