TMI Blog2009 (6) TMI 610X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, does not mean that the assessee manifestly became owner of the shares. The shares and bonds belonged to the deceased intimates which normally would have gone to their legal heirs who were not traceable. This was the reason for non-entering the shares etc. in the books. The bonds and shares were also not saleable immediately. In these circumstances, the assessee could not be taken to be the de jure owner of the shares. Although, the word used is “held”, we are of the view that these words implies ownership of the assessee to the exclusion of all others, which is not the case here. In these circumstances, we are of the view that total denial of exemption u/s 11(1)(a) on the ground that the shares were held by the assessee will be agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that he assessee filed the return of income on 29-10-2005, declaring total income of Rs. 49,96,090. This income was claimed to be exempt u/s 11(1)(a). In the course of assessment proceedings, it was noticed by the Assessing Officer from the notes on accounts that the assessee was holding shares and bonds of 25 species, some of which were in the demat-form. These holdings were not in conformity with the provisions containing under section 11(5) of the Act. Therefore, the Assessing Officer held that the assessee infringed the provisions contained in section 13(1)(d)(iii), as substituted by Finance Act, 2007, retrospectively w.e.f. 1-4-1999. Accordingly, the assessee was not allowed exemption u/s 11(1)(a) in respect of application of the incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds in the aforesaid securities, those came in its possession on account of small donations. The assessee was also not in a position to dispose of these shares and bonds. In these circumstances, if the contention of the Assessomg Officer is accepted, then, holding the aforesaid securities of the small value of Rs. 2.05 lakh, will bring the entire charitable activities of the assessee to the extent of about Rs. 30.00 crore to a naught. Thus, it was held that on the facts and in the circumstances of the case, there was no infringement of the provision contained in section 13(l)(d)(iii) of the Act. Accordingly, exemption was allowed under sections 11 and 12. The assessee was also allowed the exemption inrespect of utilization of Rs. 27,58,384 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of the Ld.DR was that in view of the clarity of the statutory provision, there is no need of taking any aid of statutory interpretation for finding out whether the assessee is entitled to exemption u/s 11(1)(a). 4. In reply, the Ld.Counsel for the assessee pointed out that the shares and bonds were not purchased out of the funds of the assessee, but those were received in kind. The assessee had not taken these securities as donations received and it was for this reason that they were not entered in the balance sheet of the assessee. The shares and securities were in small lots and, therefore, they were not tradable. The assessee has been doing charity on a very large scale and it is a well-recognized charitable organization. If the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approved financial corporations and deposits with or investment in bonds issued by approved public companies engaged in providing long-term finance for construction or purchase of houses in India for residential purposes. His argument on the basis of this note was that this provision dealt with modes of investing or depositing monies accumulated or set apart by a trust. Therefore, it is only the funds of the assessee which become subject-mater of investment u/s 11(5) and consequently in contravention of this provision, the exemption may not be granted u/s 11 and 12 only when the funds of the trust are invested in unapproved securities. Reliance was also placed on a number of cases to the effect that technicalities should not come in the wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot saleable immediately. In these circumstances, the assessee could not be taken to be the de jure owner of the shares. Although, the word used is held , we are of the view that these words implies ownership of the assessee to the exclusion of all others, which is not the case here. In these circumstances, we are of the view that total denial of exemption u/s 11(1)(a) on the ground that the shares were held by the assessee will be against even the language of the provision. The Ld. CIT(A) has reached more or less on the same conclusion by mentioning that infringement, if any, was technical, which should be ignored by applying the rule of purposive construction. We tend to agree with him on the facts of the case. In such circumstances, what ..... X X X X Extracts X X X X X X X X Extracts X X X X
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