TMI Blog1980 (1) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Wealth-tax Act, 1957. The assessee in all the cases is M/s. Rattan Trust, Amritsar. The brief facts giving rise to the abovementioned references are that the assessee trust was created in 1942. The dispute relates to the interest income received in each assessment year by the assessee from M/s. Gokal Chand Rattan Chand Woollen Mills Private Ltd. Exemption in respect of this income was claimed by the assessee under s. 11 of the Act. The ITO did not agree with the contention of the assessee that the interest income is to be exempted under s. 11 of the Act and consequently the claim of the assessee was rejected by the ITO. The ITO found that the trust has violated the provisions of s. 13 of the Act inasmuch as the trust funds have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viso to sub-section (1) of section 13 of the Income-tax Act, 1961 ? " The following question of law has been referred to this court for opinion in references Nos. 13 and 14 of 1978 : " Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in holding that the assessee-trust is exempt, from wealth-tax under section 21 A of the Wealth-tax Act, 1957 ? " Clause 41 of the rules pertaining to the trust deed rules is as follows : " 41. Except as to the names and aims and objects of the trust the trustees shall have the power by the majority of 75% of their total number to change, modify or amend any of the rules, regulations, any provision hereinbefore contained with regard to the conduct and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of trusts, etc. Section 13 provides for exigencies when the provisions of s. 11 will not be applicable. Proviso to s. 13(1)(b) of the Act, before it was amended by s. 6 of the Finance Act, 1970, was as follows : " 13. Nothing contained in section 11 shall operate so as to exclude from the total income of the previous year of the person in receipt thereof--..... (b) in the case of a trust for charitable purposes or a charitable institution created or established after the commencement of this Act, any income thereof,..... Provided that in a case where this section applies by reason only that under the terms of the trust or the rules governing the institution any part of such income enures directly or indirectly or that any part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the first proviso to s. 13(1)(c) of the Act, as amended. We have to see if the provisions of the trust deed fall within the ambit of the proviso, if so, no fault can be found with the conclusions arrived at by the Tribunal. It is not disputed that the assessee-trust was created before the commencement of the 1961 Act. It is no doubt true that cl. 39 of the trust deed, as it stood then, did not mike mandatory provisions regarding the investments of the funds of the trust and it was by amending the said clause on 13th March, 1971, that a mandatory provision was made that the funds of the trust, which are not required for immediate needs of the trust, shall be kept with M/s. Gokal Chand Rattan Chand Woollen Mills Private Ltd., but the ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he rules of the trust deed as pertained before the enforcement of the 1961 Act. Even if two interpretations are possible, the one in favour of the assessee has to be taken. The Tribunal has taken that view and we have no reason to take a different view from the one taken by the Tribunal in this regard. It has been conceded by the learned counsel for the parties that the interpretation given to the proviso to s. 13(1)(c) of the Act, will equally apply to the provisions of s. 21 A of the W.T. Act, 1957. For the reasons recorded above, all the questions referred to us in the references which are being disposed of by this common judgment, are answered in the affirmative, i.e., in favour of the assessee and against the revenue. We order ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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