TMI Blog1986 (11) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... unal was justified in holding that the assessee satisfied the requirements of section 13(2)(a) and that the provisions of section 13 (2) (h) were not applicable ? " The concerned assessment years are 1972-73, 1973-74 and 1974-75. The assessee is a public charitable institution the objects of which are the establishment of educational institutions for the advancement of knowledge and education and running and maintenance of educational institutions of any kind. The Income-tax Officer found that the objects were within the provisions of section 2(15) of the Act but, however, held that the income of the institution is taxable as the entire funds of the institution were lent to Messrs. Polisetty. Somasundaram in which the founder of the insti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the previous year used or applied, directly or indirectly for the benefit of any person referred to in sub-section (3)"; "Section 13(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), (a) if any part of the income or property of the trust or institution is, or continues to be, lent to any person referred to in sub-section (3) for any period during the previous year without either adequate security or adequate interest or both . . . (h) if any funds of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on (3) without adequate security or interest or both. Clause (h) provides that the benefit should be deemed to have been conferred if the funds of the institution are invested in any concern in which the person referred to in sub-section (3) has a substantial interest. It must be said that the provisions in section 13 have been jumbled up lacking systematic layout and arrangement of sub-sections. Section 13 cuts at the exemption visualised under section 11 and the exemption contemplated under section 11 is hedged in by the conditions catalogued in section 13 apart from the built in conditions in section 11. Section 13 up to sub-section (3) comprises three facets. The initial aspect is concerned with channelling the income to the destination ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e expression "invest". Investment involves laying out the amount in partnership firms, shares in joint stock companies, real estate business and such other concerns or businesses. In the process of investment, an element of risk is involved and the expectation of return or profit is not assured and the depletion of capital itself is not an abnormal feature. In the case of lending, the return by way of interest is generally assured and the element of risk is minimal. In Nawn Estates (P.) Ltd. v. CIT [1977] 106 ITR 45 (SC), in the context of considering the connotation of the expression "investment" in section 23A and whether "investments" in section 23A can be stretched to house property or capital gains apart from the holding of shares, deb ..... X X X X Extracts X X X X X X X X Extracts X X X X
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