TMI Blog1996 (7) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... firm in the name and style of Muthoottu Mini Chitty Fund. The business is of conducting chitty and money-lending on a large scale. There are different partnership firms also other than the above chitty fund. The present assessee-trust though came up under the indenture in 1976, became active after the formation of the chitty fund in June, 1977. The nature of the business activity so far as is relevant to the present references postulates a spread over of the activities of the fund carried out by the above firm. The firm had several series of chitty funds on the basis of agreements entered into between the fund, on the one hand, and the subscribers who are participants in the series of chitty funds on the other. We had an occasion to co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as correct in law in holding that it could not be said that the investment had been made by the assessee-trust in a firm, Muthootu Mini Chitty Fund, or continued to remain invested there, as understood in the business parlance with a view to obtaining any profit ? (ii) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that application of section 13(1)(c) read with section 13(2)(h) was ruled out ? " The undisputed facts are that the present assessee-trust was deriving its entire income from the chitty fund. At the time of the original assessment, the income-tax authorities treated the entire income of the trust as exempt under section 11 of the Income-tax Act, 1961. This was found to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of sections 13(1)(c), 13(2)(a), 13(2)(b) and 13(3)(b) of the Act also do not save the situation. The controversy centres around the two assessment years in regard to which amounts of Rs. 1,10,187 and Rs. 19,510, having been shown by the assessee-trust as the income, crediting them shown as amounts due to the trust from the chitty business. In addition thereto, the undisputed position also floats on the surface of the record, to the effect that these amounts were actually given to the trust on April 25, 1984. In regard to these amounts for these assessment years what is to be seen is as to whether the trust would be liable to be taxed or whether the trust will get the benefit of section 11 of the Act and in regard thereto whether there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot justified in setting aside the completed assessment orders. In fact on the basis of undisputed factual matrix we are required to consider the character of the two amounts. We have examined the agreements in question with regard to the series of chitty funds and on the basis thereof we have already decided that this 25 per cent. out of the amount forgone by the successful bidder would be the property of the trust in the nature of this amount. These amounts are the income of the trust with reference to the assessment years in question. The books of account of the trust bear a clear testimony in regard thereto as an undisputed position. It is also further crystal clear that these amounts continued to be with the chitty fund firm, not only d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (c)(ii) make it abundantly clear that if such income is not used for the benefit or applied in regard thereto, it would not be possible even to contemplate coverage of the provisions of section 11 in regard thereto. On the contrary, the facts are crystal clear that the benefit with regard to the amounts in question is literally and wholly for the benefit of the chitty fund firm which has no connection whatsoever with the concept of charity or religion. Added to it the factual matrix it is further clear that the three persons who are the founders of the trust are brothers inter se who through the activities of the chitty fund firm along with their children and close relatives are engaged in the business of conducting chitty and money-lending ..... X X X X Extracts X X X X X X X X Extracts X X X X
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