TMI Blog1996 (8) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... ee, the provisions of section 13(2)(b) became applicable, and are not the findings vitiated by non-consideration of the evidence ?" The assessee is a public charitable trust on the basis of the declaration of the trust by the deed dated July 25, 1979. The assessment year is 1980-81 and in regard thereto, the assessee-trust has been held not to be entitled to the protection of section 11 of the Income-tax Act, 1961. This is because, if the provisions of section 13(2)(b) and section 13(3) of the Income-tax Act, 1961, are applied, it is enacted, that section 11 of the Act would not apply in cases considered thereunder. It is elementary that the statutory provisions of section 11 of the Act enact non-inclusion of the total income of the previous year of the property held in trust, for charitable or religious purposes. Section 13 takes into consideration the statutory situations which take out the benefit of section 11 in regard to the total income. Section 13 also creates situations of exception as regards benefits of section 12 of the Act. Section 12 of the Act exempts contributions received by the trust created wholly for charitable or religious purposes or even by an instituti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the donors who are Swedish citizens. However, the trust had not adduced any proof to prove the visit of the donors. Moreover, the donors staying in the house of the trustee is only a very remote possibility. It is also stated that the office of the trust was for some time functioning in the house of the trustee. This is also not true. Even if this is true, refrigerator is not an essential item required in an office. From the facts of the case it is clear that the fridge was purchased for the use of the managing trustee and he was using it. The provisions of section 13(2)(b) are attracted." Similarly, even the first appellate authority--the Commissioner of Income-tax (Appeals), Calicut, has observed that the refrigerator was kept by the managing trustee only as a custodian and was shifted to the premises of the orphanage for the benefits of the inmates and ultimately found its destination. The first appellate authority found that these facts would not show that the conduct of the trustee is such that it would attract the provisions of section 13(2)(b) of the Act. This short reasoning in paragraph 14 is reproduced hereinbelow : "The first incident was the custody of the refri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 12 are denied. If in the matter of a charitable trust or institution, any income is found to have been used for the benefit of any particular religious community or caste, the benefits of section 11 are withdrawn. Again, if it is found that unless the business is carried on in the course of the actual carrying out of the primary purpose of the trust or institution, the benefit gets withdrawn in a similar way. If the spirit of section 13(1) of the Act also is taken into consideration as an aid in the process, it would be abundantly clear that the legislative intent of offering benefits of section 11 of the Act requires passing of a rigorous litmus test available in the statutory provisions of section 13 of the Act. Apart from the direct instances provided for in section 13(1) of the Act, section 13(2) of the Act additionally deals with situations which are in common parlance understood as "deeming situations". Section 13(2) of the Act statutorily provides that the income or the property of the trust or institution or any part of such income or property shall be deemed to have been used or applied for the benefit of a person referred to in sub-section (3). If we consider t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh it would be found from the orders of the three authorities with regard to its conspicuousness by absence, learned counsel sought to raise a contention with regard to the interpretation of section 13(2)(b) of the Act. Learned counsel contended that the words "any land, building or other property of the trust or institution" would have to be required to be understood in the generic sense. In other words, learned counsel submitted that the reading of clause (b) would show that the clause would cover immovable property and not all property in the context of the canon of interpretation in regard thereto. Learned counsel submitted that it applies to land, building or other property of the trust, meaning thereby that the term "other property" would carry the continuous meaning of the term land, building to understand the legislative intent that the term "other property" would have to be understood as immovable property of the trust. We have already stated that this contention is not available even by a whisper. Learned counsel contended that the term "land, building or other property of the trust" would have to be understood that the provision is relatable to availability for the use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be found with reference to the deeming situations of user and application for the benefit of a person covered by section 13(3) of the Act. Section 13(2) emphasises care and caution as regards the persons understood in section 13(3) of the Act and also as regards various deeming situations spelt out in the various clauses. In fact, if section 13(2) is taken into consideration, it is the income from the property of the trust either as a whole or as a part thereof that is sought to be protected and taken out from the availability of the benefit of section 11 or section 12 of the Act. We have already considered section 13(2)(a) dealing with the income or property of the trust. Section 13(2)(c) relates to the payments by way of salary, allowance or otherwise paid out of the resources of the trust or the institution for services rendered, if found in excess of reasonableness. Section 13(2)(c) relates to the services without adequate remuneration or compensation. Section 13(2)(e) relates to the situation of purchase of property by or on behalf of the trust for consideration which is more than adequate. Section 13(2)(f) relates to the sale by or on behalf of the trust of any shares, secur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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