High Court Of Calcutta
CIT vs. Rai Bahadur Biseswarlal Motilal Kalwasiya Trust
Sections 13(1)(c), 13(2)(a), 13(3)(cc)
Y.R. Meena & Malay Kumar Basu, JJ.
IT Ref. No. 47 of 1994
12th June, 2001
J.P. Khaitan, Sanjay Bhoumik & C.S. Das, for the Assessee : S.N. Dutta, for the Revenue
BY THE COURT :
On an application under s. 256(2) of the IT Act, 1961 this Court has directed to refer the following question for our opinion : “Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that there was no violation of any of the provisions of s. 13 of the IT Act, 1961, by the assessee trust in advancing money amounting to Rs. 98,000 to the two employees to warrant denial of the benefit of s. 11 ?” In compliance of direction of this Court the aforesaid question has been referred for our opinion.
2. The assessee is a charitable trust. During the course of assessment and on examination of the accounts the ITO found that a sum of Rs. 98,000 has been shown as refundable aids in the assets side of the balance sheet. On further scrutiny of details filed during the course of the hearing the AO further found that the said sum of Rs. 98,000 was paid to one Sri N.K. Kothari and K.D. Soni. Rs. 63,000 was paid to N.K. Kothari and Rs. 38,000 was paid to K.D. Soni as loan. The AO has took the view that as Sri Kothari was manager in the trust therefore, the advance of loan of Rs. 60,000 to him is indirect accommodation to a person referred to in s. 13(3) of the Act. Therefore, it hits by the mischief of the provisions of s. 13(1)(c) and 13(2)(a) of the IT Act. In appeal before the CIT(A), the CIT(A) found that the appellant trust cannot be said to have used any part of its income directly or indirectly for the benefit of any person referred to in s. 13(3). Therefore, the provisions of s. 13(1)(c) is not applicable. In appeal of the Revenue before the Tribunal, the Tribunal has also confirmed the view taken by CIT(A) that the assessee is a trust and not an institution. Therefore, the loan advanced to Mr. Kothari cannot be treated as benefit to the persons falling within the provision of s. 13(3) of the Act.
3. Learned counsel for the Revenue submits that when there is no dispute that money has been advanced to a manager of the trust, the manager falls within the provisions of s. 13(3) of the Act. Mr. Khaitan, learned counsel for the Revenue brought to our notice that the apex Court in the case of Asstt. CIT vs. Thanthi Trust (2001) 165 CTR (SC) 681 : (2001) 247 ITR 785 (SC) has considered one of the question that whether the word and phrase âtrustâ and the âinstitutionâ referred to entities differently constituted.
4. Sub-s. (3) of s. 13, clause âccâ provides that any trustee of the trust or manager (by whatever name called) of the institution that comes within the persons referred in cl. (cc) of sub-s. (1) and sub-s. (2) for the purpose of exemption provided under s. 11 of the Act but the pertinent question is whether a manager of the trust can be treated as manager of the institution referred to in cl. (cc) of sub-s. (3) of s. 13. Their Lordships in the case of Thanthi Trust (supra) at p. 795 observed as under : “Trusts and institutions are separately dealt with in the Act (s. 11 itself and ss. 12, 12A and 13, for example). The expressions refer to entities differently constituted. It is thus clear that the newspaper business that is carried on by the trust does not fall within sub-s. (4A). The trust is not only for public religious purposes so it does not fall within cl. (a). It is a trust not an institution, so it does not fall within cl. (b). It must, therefore, be held that for the assessment years in question the trust was not entitled to the exemption contained in s. 11 in respect of the income of its newspaper.”
5. When the trust and institution referred in s. 13 is not one and the same thing and they are different entities cl. (cc) of sub-s. (3) of s. 13 refers the manager of the institution and not the manager of the trust and in the case in hand the advance has been given to the manager of the trust and not the manager of the institution. In view of these admitted facts, no interference is called for in the order of the Tribunal.
In the result, we answer the question in affirmative i.e. in favour of the assessee and against the Revenue. The reference so made stands disposed of.
[Citation : 252 ITR 84]