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TMI Blog2024 (11) TMI 1393X X X X Extracts X X X X X X X X Extracts X X X X ..... e is, therefore, not entitled for exemption u/s 11 of the Act. From perusal of Sections 11 and 13 of the Act, it is evident that the Legislature did not contemplate the benefit of denial of Section 11 of the Act, to the entire income and only the income from an investment made in violation of Section 13 (1) (d) of the Act is liable to tax. The aforesaid view has been taken in DIT (Exemption) v. Sheth Mafatlal Gagalbahai Foundation Trust [ 2000 (10) TMI 26 - BOMBAY HIGH COURT] and in IT (Exemption) v. Agrim Charan Foundation [ 2001 (8) TMI 78 - DELHI HIGH COURT] respectively We may examine whether the entire income from such an investment made in violation of Section 13 (1) (d) of the Act, which has accrued to the assessee has to be taxed. From perusal of Sections 11 and 13 of the Act, it is evident that the Legislature did not contemplate the benefit of denial of Section 11 of the Act, to the entire income and only the income from an investment made in violation of Section 13 (1) (d) of the Act is liable to tax. The substantial question of law framed in these Appeals is answered by stating that the investment made by the assessee in its joint venture companies is an investment made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. In addition, the assessee was also required to procure edible rice bran oil and supply the same at reasonable cost to the poorer sections of the society. 5. According to the assessee, on the advice of the Central and State Government, the assessee during the year 1981-82 started a modern dal mill unit and edible grade rice bran oil unit has joint ventures with 50% participation in equity to ensure adequate supply of dal and edible grade rice bran oil The assessee since 1983-84 has been held to be a charitable institution within the meaning of Section 2(15) of the Income Tax Act, 1961 (hereinafter referred to as the Act ). 6. The assessee filed the return of income for the assessment year 1996-97 on 29.11.1996 declaring an income of Rs. 46, 87, 847/- and an exemption under Section 11 of the Act was claimed. The assessing officer, however, held that surplus income of the assessee has not been accumulated in accordance with Section 11(1) of the Act and therefore, the exemption under Section 11 of the Act is not available to the assessee. Accordingly, the claim of exemption under Section 11 of the Act was rejected and total income of the computed at Rs.9,81,28,695/-. Being aggrieved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act with effect from 01.04.1983, whereby the amended provision sought to include in the total income only that part of the income which has been earned from its investments and deposits made in violation of the statute. 10. In support of aforesaid submission, reliance has been placed on the decision of Commissioner of Income Tax vs. FR.Mullers Charitable Institutions [2014] 363 ITR 230 (Kar) , Commissioner of Income Tax vs. Working Women s Forum [2015] 53 taxmann.com 85 (Madras) , Commissioner of Income Tax vs. Orpat Charitable Trust [2015] 55 taxmann.com 211 (Gujarat) , and Commissioner of Income Tax (Exemptions), Pune vs. Audyogik Shikshan Mandal [2019] 101 taxmann.com 247 (Bombay) . It is pointed out that SLP filed by the Revenue against the order passed by the Division Bench of Karnataka High Court has been dismissed by the Supreme Court in M/s. J. Sikile Foundation, Chennai v. DCIT, Exemption-Iii, Chennai [2014] 51 Taxmann.com 378 (SC). Our attention has been invited to circular No.387, dated 06.07.1984 and it has been contended that only that part of income which has earned from the investment or deposit made in violation of Section 13(1)(d) is liable to tax. It is con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the total income to the extent to which such income is applied to charitable or religious purpose in India. However, Section 11 is subject to provisions of Section 13 of the Act. Section 13 (1) (d) and Section 13 (1) (d) (iii) provides that if any funds of the trust or charitable institution is invested or deposited before first of March, 1983, otherwise than in any one or more of the forms or modes specified in Section 11 (5), continue to remain so invested or deposited after 30.11.1983, the assessee shall not be entitled to the benefit of exemption. 13. In the instant case, the assessee is a charitable institution and invested the funds in the shares of the joint venture companies, namely, (1) Sudha Modern Dhall Mill Limited (2) Delta Oils Fats Limited (3) Sri Guruvaurappan Swamy Oil Foods Fats Limited, and (4) Godavari Edible Bran Oil Limited, in the year 1982-83. The said joint venture companies are neither the Government Companies nor the Corporations established under Central or Provincial Acts. The investment was made by the assessee as a promoter in the joint venture companies. The essential nature of the investment made by the assessee was an investment in the shares of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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