9911796707
TMI Blog1990 (10) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... trust. The assessee trust was registered in the office of Charity Commissioner, Ahmedabad under the provisions of Bombay Public Trust Act, 1950 by Dy. Charity Commissioner, Ahmedabad. An application for registration under section 12A(a) has been filed on behalf of the assessee trust on 7-7-1982 to the Commissioner of Income-tax, Ahmedabad. 3. The assessee trust received towards corpus 794 ordinary shares of Rewa Investments Pvt. Ltd. valued at Rs. 79,400 and also received towards corpus Rs. 75,895 being cash balance lying to the credit of the donor with Seth Karamchand Premchand. Thus, total subsequent donations towards corpus came to Rs. 1,55,295. 4. The assessee received income of Rs. 2573 by way of interest at 4.5% from deposit of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tled to be exempted under section 11(1) of the Act, the entire donations received by the assessee trust, though towards corpus would be regarded as income of the assessee trust. He accordingly, added Rs. 1,55,395 (including initial donation of Rs. 100) in the income of the trust and brought the entire amount to tax. He further held that the assessee trust could have earned interest at 12% from M/s. Karamchand Premchand and not at mere 4.5% as declared by the assessee. On this view, he made addition of Rs. 4257 being difference between interest at 12% and interest at 4,5% on deposit of Rs. 75,895. 7. As far as the other appeals are concerned, facts are identical. The assessees in those appeals are public charitable trusts and additions ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were received as donation and as such the fact that the trustees of the assessee trust or their relatives were directors or had any substantial interest in said company would be immaterial. The decision of Gujarat High Court referred to above would apply to donation of shares. It has been laid down in said decision that where shares in a company in which person specified in section 13(3) has substantial interest were donated to charitable trust, and the trust continued to hold those shares in the relevant previous year, and where no investment of trust funds had been made in said company, provisions of sec. 13(2)(h) were not applicable and as such dividend from shares was entitled to exemption under section 11 of the Act. However, as far a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 13(2)(h) would be violated. The main reason given by the Gujarat High Court in the aforesaid decision was that the shares do not constitute ' fund ' and as such when shares were received by way of donation it could not be said that the funds of the trust had been invested in those shares. The matter will be entirely different when the donation is in respect of the cash balance lying in deposit in a concern. In the latter case, the said amount would represent the fund of the assessee trust as soon as donation is made and if the assessee trust thereafter allows the said fund to continue to remain in the concern in which the trustee had substantial interest, there would be violation of the provisions of section 13(1)(c) read with section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntly, nothing turns on the provisions in clause 5(b) of the trust deed. The Income-tax Officer has also mentioned that the said clause in the trust deed was in violation of section 35 of the Bombay Public Trust Act, 1950. The said section lays down that where the trust property consisted of money and the said money could not be applied immediately or at an early date to the purposes of the public trust, the trustees would be bound to deposit the money in the scheduled bank or in the postal saving bank or in the co-operative bank, etc., notwithstanding any direction contained in the instrument of the trust. The said section thus lays down that whatever directions might have been contained in the instrument of the trust, the trustees were bou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion that they would form part of the corpus of the trust. The submission on behalf of the Department was that the exemption made in the definition regarding contributions made with a specific direction that they shall form part of the corpus of the trust would not apply to those public charitable trusts which had violated the provisions of section 13(1)(c) read with section 13(2)(h) of the Act. We are unable to accept the said submission. We find that the said definition in section 2(24) would apply even in respect of those trusts who had in a particular year violated the provisions of section 13(1)(c) read with section 13(2)(h) of the Act. As already stated the trust which violates the provisions of section 13(1)(c) read with section 13(2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
