9911796707
TMI Blog1986 (3) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... this appeal before us are that the assessee is a trust whose income has been held to be exempt under section 11 in the earlier years. In course of the assessment proceedings for the assessment year 1981-82 which is under consideration the ITO found that the assessee-trust had received 23,910 equity shares as donation and it purchased further 1,000 equity shares of Kamal Trading Co. (P.) Ltd. Two other persons, viz., (1) Jayshree Charity Trust, and (2) Swarasangam were the substantial contributors to the assessee-trust as envisaged under section 13(3)(b) of the Act. These two persons also had purchased shares in Kamal Trading Co. (P.) Ltd. On the above facts, the ITO held that the aforesaid two persons had substantial interest in Kamal Trad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his donation, the two persons together became the substantial investors in the aforesaid company after 24-3-1981 by virtue of Explanation 3(i) to section 13(4). However, after 24-3-1981 no part of the funds of the assessee-trust remained invested in that company. Prior to 24-3-1981 some of the funds of the assessee-trust was indeed invested in the aforesaid company. But during that period the aforesaid two concerns taken together did not have a substantial interest in the aforesaid company as their combined shareholdings in the said company was less than 20 per cent of the voting power of the said company and so the condition in the aforesaid Explanation 3(i) was not satisfied during that earlier period. The shares held by Jayshree Charity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the exemption under section 11 and so as a consequence to that fact no exemption under section 11(1A) could be allowed. Thus, he also assessed to tax the aforesaid capital gains. 5. The assessee appealed to the Commissioner (Appeals) and reiterated its contentions. The Commissioner (Appeals) agreed with the assessee on both the counts and directed the ITO to treat the income as well as the capital gains of the assessee as exempt from tax as the assessee was not hit by the provisions of section 13. 6. Shri P.C. Banerjee, the learned representative for the department, took us through the orders of the ITO as well as the Commissioner (Appeals) and urged that the Commissioner (Appeals) erred in his decision. According to him, the Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In other words, three separate conditions must be simultaneously fulfilled in order to destroy the exemption given under section 11. These three conditions are stated in section 13. These three conditions are as enumerated above. In the case before us, during the previous year under consideration, there are two periods. One period is from 1-4-1980 to 23-3-1981 and the other period is from 24-3-1981 to 31-3-1981. In the first period the first two conditions are satisfied but not the third because during that period no person or persons taken together had a substantial interest in Kamal Trading Co. (P.) Ltd. In the second period, though the second and third conditions were satisfied, the first condition was not satisfied because no part of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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