TMI Blog2001 (2) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... he shares and property donated by Sir Sobha Singh? Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in holding that the provisions of section 13(2)(h) of the Income-tax Act, are not applicable to the present case and there by exempting the assessee from tax under section 11 of the Income-tax Act?" The factual position in a nutshell is as follows: The assessee-trust was created on March 25, 1961, with an amount of Rs. 5,000 donated by Sir Sobha Singh. On March 28, 1961, he donated to the trust 1,500 shares of Sobha Singh and Co. (P.) Ltd. and 2,000 shares of NVRP Co. Ltd. He also donated to the trust two properties: one at A-1, Jan path known as "Baikunth" and another in Mashobra, near Simla, known as "Sunderban". These two properties were occupied by Sir Sobha Singh chairman of the trust, who was paying rent to the trust for the use of these properties. For the assessment years in question, the Income-tax Officer (in short, "the ITO") held that in view of the provisions contained in sections 13(2)(b) and 13(2)(h) of the Act, the trust was not eligible for exemption. Section 13(2)(b) deals with occupation of any property of the trust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave heard learned counsel for the Revenue and for the assessee. The stand of learned counsel for the Revenue is that there is scope for misuse and evasion of tax if the interpretation given by the Tribunal is accepted. The language of the provisions, according to him, shows that the amount must have remained invested for a specific period and merely because, for the sake of argument, it can be said that originally the amount was not invested by the assessee yet when it remained invested subsequently, the provisions of section 13(2)(h) are applicable. The stress, according to him, is on the concern and not on the funds invested, except that it should remain invested in the concern. Learned counsel for the assessee, on the other hand, submitted that the language used is "funds" which must have been invested. If it was originally not invested the question of funds remaining invested in the manner suggested by learned counsel for the Revenue is not borne out from the statute. In order to appreciate the rival submissions, the relevant provisions need to be noted. Sections 11, 12 and 13(2)(h) at the relevant time reads as follows: "11. (1) Subject to the provisions of sections 60 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to be understood in the context of the provision and not only with reference to dictionaries or to commercial parlance or to the principles of accountancy. It is to be noted that the expression used is "funds" and not "fund". "Funds" means money in hand or cash according to some dictionaries. This, according to us, would be the proper meaning to be attributed to the expression "funds" as appearing in the provision. The fundamental requirement of section 13(2)(h) is that there must be investment of funds of a trust. If any expanded meaning is given to include assets other than money in hand or cash or credit balance in a bank account, it is evident that they are not capable of being invested as such. Other assets of the trust apart from money in hand or cash or balance in bank will have to be converted into money or cash before the same can -be invested, as was observed by the Calcutta High Court in CIT v. Birla Charity Trust [1988] 170 ITR 150. The expression "invest" connotes a positive act on the part of the trust whereby the funds of the trust are laid out or committed in any particular property or business or transaction with the object of earning a profit or financial advan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd. 1. an available quantity of material or intangible resources supply; 2. a sum of money or other resources the principal or interest of which is set apart for a specific objective." The expression "invest" in the said section 13(2)(h) is used as a verb and the meaning of the said expression in the standard dictionaries is as follows: "Chambers' Twentieth Century Dictionary, new edition ...to lay out for profit as by buying property, shares, etc." "The Concise Oxford Dictionary, fifth edition: ... lay out money, on as (invest) in a car." "Webster's Seventh New Collegiate Dictionary vb. vt. 1: to commit (money) in order to earn a financial return; 2. to make use of for future benefits or advantage--vt. to make an investment. "Corpus Juris Secundum, Volume XXXVII In general.--The word has a variety of meanings, but the sense in which it is employed must be gathered from the context. It is not a legal term with a settled meaning, but it is a term in common use, suggesting money, in common speech, although technically it may be employed to cover other articles of value, for the term 'fund' or 'funds' is generic and all embracing as compared with the term 'money', et ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich specified persons have substantial interest and if an investment is already made in such concerns, to discourage continuance thereof after December 31, 1970. In order to attract the provisions of section 13(2)(h), what is essential is that the funds of the trust are invested in a concern covered by section 13(2)(c) and if such investment is made prior to January 1, 1971, funds are continued to be not invested after December 31, 1970. It is on 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 cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used". The position has been reiterated time and again by the apex court. (see Sutlej Cotton-Mills Ltd. v. CIT[1991] 187 ITR 182 (SC); Saraswati Sugar Mills v. Haryana State Board, AIR 1992 SC 224 ; Oswal Agra Mills Ltd. v. Collector of Central Excise, 1993 SC 2288 and Calcutta Jute Mfg. Co v. Commercial Tax Officer [1997] STC 433; AIR 1997 SC 2920). As indicated above, several High Courts have taken the view expressed by the Calcutta High Court in Birla Charity Trust's case [1988] 170 ITR 150. (see J. K. Trust v. CIT [1994] 205 ITR 524 (Cal); CIT v. Bhoruka Public Welfare Trust [1999] 240 ITR 513 (Cal); CIT v. Sahitya Trust [1993] 203 ITR 349 (Guj); CIT v. Lalbhai Dalpatbhai Charity Trust [1994] 209 ITR 865 (Guj); Sarabhai Foundation v. CIT [1994] 209 ITR 590 (Guj); CIT v. J.K. Charitable Trust [1992] 196 ITR 31 (All), Trustees of Mangaldas N. Verma Charitable Trust v. CIT [1994] 207 ITR 332(Bom) and CIT v. Pittie Charitable Trust [1994] 207 ITR 1053 (Bom)) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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