9911796707
TMI Blog1992 (8) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... then he is in Switzerland and did not visit India. It is said that he had founded an institution known as Divine Life Zentrum on 11-10-1966, at Wintterthur, Switzerland, with the object of carrying on cultural study, philosophical research and services to individuals and the community, primarily in the spiritual field. It is also said that the said institution is working on worldwide synthesis on science, religion, yoga, philosophy, meta-physics, self-realization, the truth on physical plane between the highest ancient values and fascinating new style between East and West, the North and the South. He has been staying at 41, Anton-Graff-Strasse, Omkaranand Ashram, 8400, Wintterthur, Switzerland. Certain foreign remittances were credited in the Non-Resident (External) Account (for short NRE) opened in his name with the State Bank of India, Rishikesh (U.P.). Undisputedly, the entire deposits were through proper Banking channels. There was accrual of interest on those deposits. Certain deposits were converted into term deposit receipts. But, nonetheless, their character remained as NRE. Interest on those term deposit receipt was also earned. 2.3 The assessee had an intention of found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment year 1986-87 and Rs. 29,85,044 in the assessment year 1987-88. Thus, the assessee went in appeal before the CIT (Appeals), Dehradun. The CIT (Appeals) in his reasoned order considered all the aspects of the issues in the light of the arguments advanced on behalf of the assessee and so also the arguments on behalf of the Department by the two Assistant Commissioners viz., Shri D.L. Khanna and Shri G. K. Maheshwari. He held that the assessee is a " person resident outside India " within the meaning of section 2(q) of the Foreign Exchange Regulations Act, 1973, and the interest income earned on NRE account was totally exempt from tax under section 10(4A) of the Act. He found no merit in the insistence of the Assistant Commissioners that section 10(4B) was applicable to the case of the assessee. He accepted the stand of the department that the assessee was not entitled to benefit under section 11 of the Act. Nonetheless, he reached the finding that the foreign remittances were not the income of the assessee within ambit of section 5(2) of the Act. He, therefore, deleted all the additions. 4. We have heard the learned Representatives of the parties. Learned Departmental Repre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable to any income from interest on saving certificates. There was no income to the assessee on saving certificate. It is therefore, futile to make any exercise on section 10(4B). 7. Clause (q) of section 2 of the Foreign Exchange Regulations Act, 1973, defines " person resident outside India " means a person who is not resident in India. Clause (p) of section 2 of the said Act defines " person resident in India ". The expression means a citizen of India, who has, at any time after 25-3-1947, been staying in India. It specifically, excludes a citizen of India, who had gone out of or stays outside India, (a) for or on taking up employment outside India, or (b) for carrying outside India a business or vocation outside India or (c) for any other purpose in such circumstances as would indicate his intention to stay outside India for an uncertain period. The assessee has gone out of India and is staying outside out of India since October 1966 for any purpose whatsoever described in (a), (b) and (c) above. He, therefore, cannot be treated as " person resident in India ". An argument has been raised as to what would happen if the assessee returns to India. Reply thereto finds plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CWT held that it was exempt under clause (ii) of section 6 of the Wealth-tax Act, 1957 (for brevity the Act). Net income of interest during the assessment years 1985-86 and 1986-87 out of the NRE deposits was also treated as wealth of the assessee by the A. O. On appeal, the CWT(Appeals) held that no amount of the net receipt of interest remained with the assessee on the valuation dates and, therefore, the additions were un-called for. The properties and assets held by the assessee in India were claimed by him as exempt from the Wealth-tax Act by virtue of section 5(1)(i) of the Act. This claim of the assessee was disallowed concurrently by the A.O. and the CWT(Appeals). The assessee is in appeal on this point. The Department is in appeal on the points that the CWT(Appeals) erred in holding that the balances in the NRE accounts were not includible in the wealth of the assessee and so also the net interest income earned by the assessee in these two assessment years was also not includible in the wealth of the assessee. 10. The answer to the Departmental appeals is very simple and we propose to dispose them of first. The CWT has elaborately dealt with both the objections of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me was certainly not the business of the assessee. In the case of CIT v. St. George Forana Church [1988] 170 ITR 62 (Ker.). There was an expenditure on account of additions to the buildings with the intention of letting them out. It has been held that the amount spent for augmentation of income of the Trust for Charitable purposes, was nonetheless an expenditure for charitable purposes. It is not the case of the Department that the investment in the Jamuna Hotel Complex was out of the loan taken from NRE account. It is also not the case of the Department that the Income earned from Jamuna Hotel Complex was applied by the assessee for any purpose other than charitable. Even in the dissenting judgment of Hon'ble Mr. Justice A.P. Sen in the case of Addl. CIT v. Surat Art Silk Cloth Mfrs.' Association [1980] 121 ITR 12 (SC), it was observed (at page 49) : " In case of a Trust falling under any of the three heads of charity, viz., 'relief of the poor', 'education' and 'medical relief', it may engage in any activity for profit, and the profits would not be taxable if they were utilized for the Primary object of the Trust. " 14. In the instant case, as observed above, the rental income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted out of joint family properties, which had been set apart for the use of pilgrims visiting the town, where the building was situated and was not used for any private purpose of the family. It was held that it was trust property, though no deed of trust was executed. These observations at 405 are pertinent :---- " It is well established that no express words of gift either directly or indirectly in the shape of a trust are required to create a dedication. All that is necessary is that the religious purpose or object of the donor shall be clearly specified and that the property intended for the endowment should be set apart and dedicated to those purposes. There are a large number of decided cases where it has been held that to constitute a valid dedication of property by a Hindu for religious and charitable purposes, no document in writing or registered is necessary ...... It is also well established that the existence of a trust can be established even by the conduct of parties. Though normally a Hindu while dedicating property to a deity or any other religious or charitable object ordinarily goes through the ceremonies of Sankalpa and samarpan, it cannot be said that those c ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
