9911796707
TMI Blog1993 (9) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... . 51/ Ahd. of 1979. The reference has been made in the background of the following facts : The assessee, Lalbhai Dalpatbhai Charity Trust, Ahmedabad, is a trust admittedly recognised by the income-tax authority as a charitable trust exempt under section 11 of the Act. The assessee submitted a return of income for the assessment year 1974-75. Some of the shares held by the assessee-trust belonged to the companies in which persons referred to in section 13(2) of the Act had substantial interest. The net dividend referable to such shares was worked out at Rs. 57,007. The Income-tax Officer, while computing the gross income, took into consideration the dividend income of Rs. 57,007 as well as Rs. 17,028, which was tax deducted at source by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) The Tribunal has recorded a finding of fact that the dividends on shares in the present case constituted the initial corpus of the trust. This is a finding of fact which is not challenged in the present reference. As the amount of dividends was received on the shares which initially constituted the corpus of the trust, it cannot be said that the income was derived by way of investment of funds of the trust. The question whether the dividend received on the shares is entitled to exemption when the trust continues to hold the shares in the relevant previous year has been considered by this court in the case of CIT v. Insaniyat Trust [1988] 173 ITR 248. In the facts of that case, it was found that the assessee, which was a public charitable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved on the shares which constituted the initial corpus of the trust and, therefore, could not have been brought under the provisions of section 13 of the Act. The Tribunal was right in holding that the provisions of section 13(2)(h) of the Act were not applicable to the facts of the present case in view of the holding of the assessee-company. In our view, therefore, on the facts and in the circumstances of the case, the provisions of section 13(2) of the Act were not applicable so as to bring to tax the net dividend of Rs. 57,007 and the tax deducted at source of Rs. 17,028. (3) The question referred to us is answered in the negative, i.e., in favour of the assessee and against the Revenue. The reference stands accordingly disposed of w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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