TMI Blog1997 (10) TMI 403X X X X Extracts X X X X X X X X Extracts X X X X ..... his assessment year. In the month of March, 1991, the assessee s C.A. appeared in pursuance of notice under section 143 issued to the assessee-trust. It was asked to file vouchers and bills for expenses. However, they were not produced in spite of the fact that notices on several dates were issued under section 143(2)/142(1). Finally, notice under section 143(2)/142(1) was issued on 17-2-1992 fixing the hearing on 27-2-1992. However, nobody appeared on behalf of the assessee-trust and no details called for were either available on record or furnished to the Assessing Officer on behalf of the assessee-trust. The Assessing Officer in his assessment order says that from the details submitted along with the return it is seen that the assessee-trust received major source of income by way of dividend and interest on debentures. It is not clarified by the assessee-trust as to the dates on which these investments were acquired by the assessee-trust. Then, the Assessing Officer comes to the conclusion saying that apparently these are prohibited investments as per the provisions of section 11(5), read with section 13(1)(d), of the Act. He further continued in his inference that these investm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le and so much of dividend income only should be taxed at maximum marginal rate. 5. The learned counsel for the assessee who appeared before me in the second appeal stated the particulars of the debentures held in the abovesaid three companies as follows : (a) Union Carbide Ltd. 60 debentures Total value ₹ 6,000 (b) Nirlon Synthetics Ltd. 100 debentures Total value ₹ 10,000 (c) Tata Oil Mills Ltd. 30 debentures Total value ₹ 3,000 The total debenture interest received on the above debentures from the three companies in the accounting period relevant to assessment year 1988-89 was stated to be ₹ 6,287. The learned counsel, continuing his alternative contention, submitted before me that only income of ₹ 6,287 may, at the most, be considered as taxable income by holding that the investment in the above debentures does not entitle the assessee-trust for the exemption under section 11(5)(vi) which is as follows : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel for the assessee as not in accordance with law as found to have been explained by the Madras High Court in Auditor Dasaradha Rami Reddy Charities v. CIT (1989) 76 CTR (Mad.) 124/44 Taxman 453. 6. In the appeal, I have heard Shri D.M. Dadia, learned counsel for the assessee, and Shri V.G. Gore, learned Departmental Representative. Paper book containing 37 pages was filed before me. And it is stated on the index of the paper book that all the papers compiled in the said paper book were filed before the Dy. CIT(Appeals). The learned Departmental Representative, who appeared before me, did not question the correctness of the said certification on the paper book. Pages 1 to 25 of the paper book is the copy of the registered Trust Deed dated 15-4-1965. According to the terms of the Trust Deed, Smt. Dayambai Adamji, widow of Abdulhusein Mohamadally Rangwala of Bombay, was the settlor. Abbasbhai Carrimjee, Taher Abbasbhai Carrimjee and Amina Akber Vahanvaty were the trustees. The word Trustees was taken to mean in the Trust Deed including the continuing or surviving Trustees or Trustee of the time being acting under and by virtue of this Trust Deed and shall include any Trustee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hose debentures were noted. Item No. 11 is the amount lying in Savings Bank Account. Out of the remaining 10 items, the interest derived from the Indian Telephone Industries was shown as items 1 and 6. It is stated that the assessee- trust was holding 75 shares in Indian Telephone Industries and a sum of ₹ 5,250 as against item No. 1 as well as item No. 6 was said to have been received and it was claimed to be not hit by the provisions of section 11(5)(vi). In the same list, items 2, 3, 4, 5, 7, 8, 9 and 10 represent the number of debentures held by the assessee-trust issued by Nirlon Synthetics, Union Carbide and Tata Oil Mills. The total of the interest derived from the debentures obtained from the above three companies was shown to be at ₹ 6,487. This amount, according to the assessee-trust, is at the most to be considered as income of the assessee-trust and is liable to be taxed at the maximum marginal rate and this is the alternative contention put forward by the assessee trust which is canvassed unsuccessfully before the first appellate authority. Apart from addressing oral arguments, the learned counsel for the assessee also filed copy of the written submissions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on will continue to hold good even after the stipulated date which was prescribed under section 11(5). My attention is also drawn to the Calcutta High Court decision in CIT v. Birla Charity Trust (1988) 170 ITR 150/(1987) 34 Taxman 507and the Gujarat High Court decision in CIT v. Insaniyat Trust (1988) 173 ITR 248/40 Taxman 159which have taken the view that the term funds means money or cash and the term investment connotes a positive act on the part of the trust whereby the funds of the trust are laid out or invested in any particular property or business or transaction with the object of earning profit or financial advantage or return. It is submitted that though the decisions were rendered in the context of section 13(2)(h), the ratio of those decisions applies equally well to understand the correct position under section 13(1)(d). According to learned counsel for the assessee-trust, if the funds are not invested in the first place, they cannot be said to have continued to remain invested. This position, argued by the learned counsel is quite acceptable, in view of the fact that the same position in law argued before the Madras High Court was accepted by their Lordships in A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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