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TMI Blog1988 (11) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... )(ii) and section 13(2)(h) of the Act ?" At the instance of the assessee : " (2) Whether, on the facts and in the circumstances of the case, the application of the property of the trust for the benefit of specified persons can be said to be by way of compliance with the mandatory terms contained in clause 18 of the trust deed ? (3) Whether, on the facts and in the circumstances of the case, the provisions of sub-clause (ii) of clause (c) of section 13(1) would apply in view of the first proviso thereto ?" We propose to first deal with the question of law referred to us at the instance of the Revenue. The assessee-trust was created by a deed of trust dated November 25, 1946. The trust has all along been treated as a public charitable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, it was stated, the second proviso to section 13(1)(c) would not cover the assessee's case as the investments in the said four companies, though made before June 1, 1970, remained invested in those very companies even after January 1, 1971, and the assessee's case would not, therefore, be covered by the second proviso. The Tribunal found on facts that the assessee had gifted shares of Walchand and Company Pvt. Ltd. on December 28, 1970, and, therefore, the dividend received from that company would certainly qualify, for exemption. As regards the dividend from the remaining three companies amounting to Rs. 41,726 also, the Tribunal did not accept the Department's case that the provisions of section 13(2)(h) created a further fiction so th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Income-tax Act, 1961. The provisions at the material time read thus : " 13. (1 ) Nothing contained in section II or section 12 shall operate 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 charitable 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) it during the previous year used or applied, directly o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds of the trust or institution are, or continue to remain, invested for any period during the previous year (not being period before the 1st day of January, 1971) in any concern in which any person referred to in sub-section (3) has a substantial interest." There appears to be no dispute that, factually, the provisions of the second proviso to clause (c) of sub-section (1) of section 13 cover the assessee's case and that ordinarily the assessee would continue to qualify for exemption. The Department's case is that the case of the assessee also falls within section 13(2)(h) and that fact makes all the difference in the situation. It may be mentioned as a statement of fact that a view contrary to what was taken by the Andhra Pradesh High ..... X X X X Extracts X X X X X X X X Extracts X X X X
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