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TMI Blog2002 (4) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... sposed of by this common judgment. However, the facts of the matter are being noticed from C.W.P. No. 129 of 1982. The petitioner is a public charitable trust constituted and founded in terms of indenture dated April 8, 1971, made by Shri Dharam Chand Anand. The founder constituted a Hindu undivided family under the name and style of "Dharam Chand Anand and Sons" wherein his wife, Smt. Chandan Kanta Anand, and his sons--S/Shri Deep Chand Anand, Jagdish Chand Anand, Kuldip, Chand Anand and Shri Satish Chand Anand, were members. They held 4,500 shares in Gabriel India Limited. A smaller Hindu undivided family constituting of himself and his wife, Smt. Chandan Kanta, had also been created and the said smaller Hindu undivided family owned 2,000 shares in Asia Automotive Pvt. Ltd. The said Hindu undivided family donated to the petitioner 1,000 shares of value Rs.100 each of Gabriel India Limited on February 4, 1972, and 500 equity shares of face value of Rs.100 each of Asia Automotive Pvt. Ltd. on April 10, 1975. This trust is registered under se ction 12A(a) of the Income-tax Act, 1961. Its objects are charitable in nature within the meaning of section 2(15) thereof. The donat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate so as to exclude from the total income of the previous year of the person in receipt thereof--... (c) in the case of a trust for charitable or religious purposes or a cha ritable or religious institution, any income thereof- (i) if such trust or institution has been created or established after the commencement of this Act and under the terms of the trust or the rules governing the institution, any part of such income enures, or (ii) if any part of such income or any property of the trust or institution (whenever created or established) is during the previous year used or applied, directly or indirectly for the benefit of any person referred to in sub-section (3): Provided that in the case of a trust or institution created or established before the commencement of this Act, the provisions of sub-clause (ii) shall not apply to any use or application, whether directly or indirectly, of any part of such income or any property of the trust or institution for the benefit of any person referred to in sub-section (3), if such use or application is by way of compliance with a mandatory term of the trust or a mandatory rule governing the institution: Provided further that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asset is acquired or the 31st day of March 1993, whichever is later; (iii) any funds representing the profits and gains of business, being profits and gains of any previous year relevant to the assessment year commencing on the 1st day of April, 1984, or any subsequent assessment year: Explanation.--Where the trust or institution has any other income in addition to profits and gains of business, the provisions of clause (iii) of this proviso shall not apply unless the trust or institution maintains separate books of account in respect of such business. Explanation.--For the purposes of sub-clause (ii) of clause (c), in determining whether any part of the income or any property of any trust or institution is during the previous year used or applied, directly or indirectly, for the benefit of any person referred to in sub-section (3), in so far as such use or application relates to any period before the 1st day of July, 1972, no regard shall be had to the amendments made to this section by section 7 [other than sub-clause (ii) of clause (a) thereof] of the Finance Act, 1972. (2) Without prejudice to the generality of the provisions of clause (c) and clause (d) of sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersons specified in sub-section (3) has substantial interest and if such investment of the trust funds is made after December 31, 1970, it would result in forfeiture of exemption from tax. But, however, if the trust funds have already been invested before January 1, 1971, the exemption would be forfeited if the funds continue to be so invested even after December 31, 1970. It was observed: "In order to attract the provisions of section 13(2)(h), what is essential is that the funds of the trust are invested in a concern covered by section 13(2)(c) and if such investment is made prior to January 1, 1971, funds are continued to be not invested after December 31, 1970. It is only if the funds of the trust itself are under section 11, the funds have to be such as are capable of investment. Therefore, in order to attract section 13(2)(h), it has to be established that the funds of the trust which are capable of being invested have been utilised for making investment as provided therein. When the funds of the trust are so invested and such investment is continued after December 31, 1970, the trust whose funds are so invested will not be entitled to claim exemption under section 11. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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