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TMI Blog2002 (4) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... y constituting of himself and his wife, Smt. Chandan Kanta, had also been created and the said smaller Hindu undivided family owned 2,000 shares in Asia Automotive Pvt. Ltd. The said Hindu undivided family donated to the petitioner 1,000 shares of value Rs.100 each of Gabriel India Limited on February 4, 1972, and 500 equity shares of face value of Rs.100 each of Asia Automotive Pvt. Ltd. on April 10, 1975. This trust is registered under se ction 12A(a) of the Income-tax Act, 1961. Its objects are charitable in nature within the meaning of section 2(15) thereof. The donations accepted by it are also entitled to exemption from income-tax in terms of section 80G of the Income-tax Act. In its wealth-tax return, the petitioner claimed exemption under section 5(1)(i) of the Wealth-tax Act, 1957, for the year 1976-77. However, the said claim was not entertained. An appeal preferred thereagainst was dismissed. The matter, however, was not carried to the Income-tax Appellate Tribunal. However, in some other matter, a Full Bench of the Income-tax Appellate Tribunal, Bombay, granted the relief as prayed for by the petitioner whereafter, a revision application was filed before the Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he benefit of any person referred to in sub-section (3): Provided that in the case of a trust or institution created or established before the commencement of this Act, the provisions of sub-clause (ii) shall not apply to any use or application, whether directly or indirectly, of any part of such income or any property of the trust or institution for the benefit of any person referred to in sub-section (3), if such use or application is by way of compliance with a mandatory term of the trust or a mandatory rule governing the institution: Provided further that in the case of a trust for religious purposes or a religious institution (whenever created or established) or a trust for charitable purposes or a charitable institution created or established before the commencement of this Act, the provisions of sub-clause (ii) shall not apply to any use or application, whether directly or indirectly, of any part of such income or any property of the trust or institution for the benefit of any person referred to in sub-section (3), in so far as such use or application relates to any period before the 1st day of June, 1970; (d) in the case of a trust for charitable or religious purposes or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng whether any part of the income or any property of any trust or institution is during the previous year used or applied, directly or indirectly, for the benefit of any person referred to in sub-section (3), in so far as such use or application relates to any period before the 1st day of July, 1972, no regard shall be had to the amendments made to this section by section 7 [other than sub-clause (ii) of clause (a) thereof] of the Finance Act, 1972. (2) Without prejudice to the generality of the provisions of clause (c) and clause (d) of sub-section (1), the income or the property of the trust or institution or any part of such income or property shall, for the purposes of that clause, be deemed to have been used or applied for the benefit of a person referred to in sub-section (3),--... (h) if any funds of the trust or institution are, or continue to remain, invested for any period during the previous year (not being a period before the lst day of January, 1971) in any concern in which any person referred to in sub-section (3) has a substantial interest. (3) The persons referred to in clause (c) of sub-section (1) and sub-section (2) are the following, namely:-- (a) the author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... December 31, 1970. It is only if the funds of the trust itself are under section 11, the funds have to be such as are capable of investment. Therefore, in order to attract section 13(2)(h), it has to be established that the funds of the trust which are capable of being invested have been utilised for making investment as provided therein. When the funds of the trust are so invested and such investment is continued after December 31, 1970, the trust whose funds are so invested will not be entitled to claim exemption under section 11. The above position has been elaborately dealt with by the Gujarat High Court in CIT v. Insaniyat Trust [1988] 173 ITR 248. The word 'investment' means to lay out money in business with a view to obtain income or profit. In order to constitute an investment the amount laid down should be capable of resulting in an income or return or profit to the investor and in every case of investment, the intention and positive act on the part of the investor should be to earn such income, return or profit to the investor. In order to constitute an investment, the money shall be laid out in such manner, as to acquire some species of property which brings in an inco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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