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TMI Blog2021 (8) TMI 1363X X X X Extracts X X X X X X X X Extracts X X X X ..... ich has been confirmed by the Tribunal that there has been no discussion on such aspects, nor the Assessee raised such issue. Nevertheless the issue, being ultimately a legal issue, involves question of fact and law for the Tribunal is required to take a fresh decision considering all issues and also the effect of sub-section (2) of Section 13. In the result, the matter is remanded to the Tribunal to decide the issue regarding whether there was a violation committed by the Assessee Trust under Section 13(1)(c) read with 13(2) and Section 13(3) of the Act in respect of building contract awarded to a firm in which managing trustee was a partner and the firm having earned profit, whether the Assessee is entitled for exemption under Section 11. - T.C.A. No. 326 of 2015 - - - Dated:- 24-8-2021 - Hon'ble Mr. Justice T.S. Sivagnanam And The Hon'ble Mr. Justice Sathi Kumar Sukumara Kurup For the Appellant : Mr. J. Narayanasamy, Senior Standing Counsel. For the Respondent : Mrs. T.C.A. Sangeetha. JUDGMENT Delivered by T.S. SIVAGNANAM, J. : This Tax Case Appeal filed under Section 260-A of the Income Tax Act, 1961 ('the Act' for bre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove decision. 5. In so far as the third substantial question of law is concerned, in the Assessee's own case in T.C.A. No.890 of 2019 dated 24.09.2020, the Division Bench of this Court had set aside the order passed by the Tribunal and remanded the matter to the Tribunal to consider the issue afresh and in accordance with law. The operative portion of the Judgment reads as follows: 3. We have elaborately heard Ms.T.C.A.Sangeetha, learned counsel for the appellant/assessee and Mr.J.Narayanaswamy, learned Senior Standing Counsel appearing for the respondent/Revenue. 4. The assessee is a registered Public Charitable Trust, which has established and administering an educational institution. It has been granted registration under Section 12A of the Act. For the assessment year under consideration (AY 2010-11), the assessee filed their return of income declaring its total income as 'Nil' and claiming exemption under Section 11 of the Act. The case was taken up for scrutiny and notice under Section 143(2) of the Act was issued on the assessee on 14.09.2011. In the scrutiny assessment, certain disallowances/additions were made and the taxable income of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not application of funds, but an investment in gold bullion and this investment is in violation of Section 11(5) of the Act. There is nothing on record to indicate that this opinion was formed by the Tribunal and recorded in its order after the assessee had an opportunity to put forth their contention. 7. The assessee's case is that if such was the view of the Tribunal, then the assessee's case should have been considered as per the proviso (iia) to Section 13(1)(d) of the Act. The assessee would contend before us that the asset, not been specified investment, can be held for a period of one year from the end of previous year in which such an asset was acquired, which is the case of the assessee. Since this issue was not dealt with by the Tribunal, rather the assessee appears to have not been put on notice, the above opinion formed by the Tribunal holding that the purchase of gold by the assessee was not application of funds, but an investment in gold bullion, we find that the assessee has been put to prejudice. Therefore, they are required to be granted a fresh opportunity to put forth their contention. 8. In the light of the above, the appeal is allowed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on referred to in sub-section (3). 9. Admittedly, the Managing Trustee of the Trust was a partner who would fall within the definition of a person as defined in sub-clause (cc) of sub-section (3). 10. The argument of Mrs. T.C.A. Sangeetha, Learned Counsel appearing for the Respondent is that Section 13(2)(c) would come to the aid and assistance of the Assessee which states that if any amount is paid by way of salary, allowance or otherwise during the previous year to any person referred in sub-section (3) of Section 13 out of resources of the Trust or institution for services rendered by such person to such Trust or institution and the amount so paid, is in excess of what may be reasonably paid for such services, the benefit granted by the CIT(A) requires to be confirmed. 11. The moot question would be as to how sub-section (2) of Section 13 should be interpreted and whether there is a deemed provision? In this regard, Mr.J. Narayanaswamy, Learned Senior Standing Counsel appearing for the Appellant referred to the decision of Hon'ble Division Bench of the Kerala High Court in the case of Chandrika Educational Trust V. Commissioner of Income Tax reported i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for the benefit of a person who could be the one specified in section 13(3). Provision of section 13(2)(h) is one such illustrative situation. The said provision, if reproduced, is as follows: If any funds of the trust or institution are, or continue to remain, invested for any period during the previous year (not being a period before the 1 st day of January, 1971) in any concern in which any person referred to in sub-section (3) has a substantial interest. It would be seen that the benefit of section 11 would not be available to a situation which is deemed to have been statutorily stated to be used or applied for the benefit of such person, if the income continues to remain invested for any period during the previous year in question in any concern in which any person referred to in section 13(3) has a substantial interest. Therefore, the provisions of section 13(2)(h) are also required to be understood as an additional situation deemed to have been considered statutorily as taking out the situation for the purpose of benefit under section 11. 12. Thus, the issue to be considered is as to how to interpret sub-section (2) of Section 13, which is a de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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