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TMI Blog1993 (2) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... facts in respect of the other references are similar. Some of these references are at the instance of the assessee while some are at the instance of the Revenue. Facts in Income-tax Reference No. 298 of 1978 : The assessee is public charitable trust. The trust was created on January 18, 1963, by an indenture of trust executed by late Shri Mangaldas N. Verma, as a settlor, settling Rs. 1,00,000 on trust for public charitable purposes. On March 6, 1964, the trust has received and Accepted 3,000 fully paid equity shares of Rs. 100 each of Caprihans (India) Pvt. Ltd. as a donation to the corpus of the trust. Again on March 30, 1965, the trust received and accepted another 800 fully paid up equity shares of Rs. 100 each of Caprihans (India) Pv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this question, we must look to the relevant provisions of the Income-tax Act, 1961. Under section 11 of the Income tax Act, 1961, income derived from property held under trust wholly for charitable or religious purposes is not to be included in the total income of the previous year of the person in receipt of the income to the extent and subject to the conditions which are set out in section 11. These are not relevant for our purpose. Under section 12 (introduced with effect from April 1, 1973) any voluntary contributions received by a trust created wholly for charitable or religious purpose shall, for the purposes of section 11, be deemed to be income derived from property held under trust wholly for charitable or religious purposes. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich is available under sections 11 and 12, is not available, inter alia, if any income of such a trust is used or applied directly or indirectly for the benefit of any person referred to in sub-section (3). Section 13, sub-section (2), is a deeming provision dealing with cases where the income or property of such a trust is deemed to have been used or applied for the benefit of such a person. One such case arises if any funds of the trust are invested or continue to remain invested in any concern in which such a person has a substantial interest. The assessees before us contend that the provisions of clause (h) of section 13(2) will be attracted only in a case where the funds of the trust are invested or continue to remain invested in an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifferent meanings as follows : "moneys and much more, such as notes, bills, cheques, drafts, stocks and bonds and in broader meaning may include property of every kind.... Money in hand, assets, cash, money available for the payment of a debt, legacy, etc. Corporate stocks or Government securities; in this sense usually spoken of as the 'funds' ; Assets, securities, bonds or revenue of a State or Government appropriated for the discharge of its debts. Generally, working capital ; sometimes used to refer to cash or to cash and marketable securities." The term "funds", therefore, has a wide import. We, however, have to see the meaning of this word in the context in which it is used. What section 13(2)(h) refers to is funds of the trust which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e trust received shares of such a company by way of a donation. The assessee did not deal with or commit or lay out any part of its existing assets to acquire the said shares. Apart from the acceptance by the assessee of the said shares, there was no decision or action on the part of the assessee. The Calcutta High Court said that there was no investment of funds of the assessee within the meaning of section 13(2)(h). A similar view has been taken by the Gujarat High Court in the case of CIT v. Insaniyat Trust [1988] 173 ITR 248. The Gujarat High Court, after considering the provisions of section 13(2)(h), has said that the object of the above provisions is to discourage investment of trust funds in concerns in which specified persons hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hra Pradesh High Court, however, the assessee had settled a sum of Rs. 20,000 on a trust for charitable purposes. The said sum was invested in a firm in which he had a substantial interest. It was held that in view of the provisions contained in section 13(2)(h), the assessee's claim for an exemption under section 11 was not maintainable. This judgment will have no application to the facts and the situation which is before us. Mr. Jetly also sought to rely upon the Statement of Objects and Reasons accompanying the Finance Bill of 1970 introducing these provisions in the Income-tax Act and the Memorandum explaining the various clauses in that Bill. We have gone through these. Neither the Memorandum which explains the provisions in the Fina ..... X X X X Extracts X X X X X X X X Extracts X X X X
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