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2000 DIGILAW 450 (DEL)

DIRECTOR OF INCOME TAX (EXEMPTION) v. ALARIPPU

2000-05-25

ARIJIT PASAYAT, D.K.JAIN

body2000
ARIJIT PASAYAT, CJ. ( 1 ) PRAYER for reference under Section 256 (1) of the Income-tax Act, 1961 (inshort,the Act) made by the Revenue was turned down by the Income-tax Appellate Tribunal,delhi Bench- c (in short, the Tribunal) and hence this application under Section256 (2) of the Act. ( 2 ) FACTUAL position so far as not in dispute is as follows: ( 3 ) ASSESSEE is a Society registered under Section 12a (a) of the Act. The disputerelates to the assessment year 1988-89. Prior to the said assessment period, allthrough assessments were completed under Section 143 (1 ) at "nit" income. Assesseeis a voluntary group which in association with other voluntary organizations stagesplays to educate people on various social problems. During the assessment year inquestion, the assessee Society had given Rs. 50,000. 00 to Mahila Haat to which thedispute relates. Application of income was held to be to the extent of Rs. 5,69,186. 00as against Rs. 7,94,200/ claimed by the assessee, assessing officer held that therewas infringement in terms of Section 13 (1) (d) read with Section 11 (5) of the Act, andas such benefit under Section 11 was denied. Commissioner of Income-tax (Appeals)XVI (in short CIT (A) confirmed the denial of benefit under Section 11 of the Act. Thematter was carried in Appeal to the Tribunal. Referring to the factual aspects broughton record, the Tribunal held that the expression "investment" and "deposit" has noapplication to the facts of the case and the sum of Rs. 50,000. 00 was not an investmentor deposit to constitute infringement, as alleged by the Revenue. As noted at theoutset, anapplication under section 256 (1) of the Act was filed, which was rejectedon the ground that no question of law arises as the issue was decided on appreciationoffacts. ( 4 ) LEARNED counsel for the Revenue submitted that the Tribunal s conclusion thoughessentially factual, do not reflect the actual position in law and it ought to have heldthat the amount constituted a deposit even if for the sake of argument it is concededthat it did not amount to an investment. ( 5 ) AT this juncture, it is to be noted that the Tribunal itself referred to the factualposition in detail. It was observed that the assessee had given an amount of Rs. 50,000. 00 to Mahila Haat (Rural) through Mahila Vikas Sang, Patna as directed by thedonor agency, namely, Oxfam America. ( 5 ) AT this juncture, it is to be noted that the Tribunal itself referred to the factualposition in detail. It was observed that the assessee had given an amount of Rs. 50,000. 00 to Mahila Haat (Rural) through Mahila Vikas Sang, Patna as directed by thedonor agency, namely, Oxfam America. The latter by a letter dated 9. 4. 1987 informedthe assessee that a sum of Rs. 2,15. 400. 00 had been sent to the society along with Rs. 2,24,000. 00 sent to Mahila Haat. Assessee was requested to give a temporary loanupto Rs. 50,000. 00 to Mahila Haat, in case there was delay in receipt of the money. Complying with the request assessee sent the amount to Mahila Haat as certified bymahila Vikas Sangh. The amount was utilised for organizing a seminar for the Mahilahaat. Mahila Vikas Sangh has been granted exemption u/s. 80g by the Commissionerof Income-tax Patna. Bye laws of Mahila Vikas Sangh are similar to those containedin the memorandum of association of the assessee society. Since the amount wasutilised for similar objects as available in the case of the assessee, its stand was thesame constituted application of income. Tribunal recorded a positive finding that theexpressions "investment" and "deposit" do not cover a transaction of the natureinvolved at hand. ( 6 ) IN order to appreciate the submissions made by the learned counsel for therevenue, it is necessary to quote Sections 11 (5) and 13 (1) (d) of the Act. They readas follows: "11 (5 ). The forms and modes of investing or depositing the money referredto in clause (b) of sub-section (2) shall be the following namely:- (i) investment in savings certificates as defined in clause (c) ofsection 2 of the Government Savings certificates Act, 1959 (46 of1959), and any other securities or certificates issued by the Centralgovernment under the Small Savings Schemes of that Government , (ii) deposit in any account with the Post Office Savings Bank: (iii) deposit in any account with a scheduled bank or a co-operativesociety engaged in carrying on the business of a banking (including aco-operative land mortgage bank or a co-operative land developmentbank.) (iv) investment in units of the Unit Trust of India, established underthe Unit Trust of India Act, 1963 (52 of 1963 ). (v) Investment in any security for money created and issued bythe Central Government or a State Government. (v) Investment in any security for money created and issued bythe Central Government or a State Government. (vi) Investment in debentures issued by or on behalf of, anycompany or corporation both the principal whereof and the interestwhereof are fully and unconditionally guaranteed by the Centralgovernment or by a State Government. (vii) Investment or deposit in any public sector company (viii) Deposits with or investment in any bonds issued by a financialcorporation which is engaged in providing long term finance forindustrial development in India and which is approved by the Centralgovernment for the -purposes of clause (viii) of sub-section (1) ofsection 36; (ix) Deposits with or investment in any bonds issued by a publiccompany formed and registered in India with the main object ofcarrying on the business of providing long-term finance forconstruction or purchase of houses in India for residential purposesand which is approved by the Central Government for the purposesof clause (viii) of sub section (1 ) of Section 36; (x) Investment in immovable property. (xi) Deposits with the Industrial Development Bank of India establishedunder the Industrial Development Bank of India Act, 1964 (18 of1964 ). (xii) Any other form or mode of investment or deposit as may beprescribed. " "13. (xi) Deposits with the Industrial Development Bank of India establishedunder the Industrial Development Bank of India Act, 1964 (18 of1964 ). (xii) Any other form or mode of investment or deposit as may beprescribed. " "13. (1) (D) Nothing contained in section 11 [or Section 12] shall operate so asto exclude from the total income of the previous year of the person in receiptthereof- (a) xxx xxx xxx (b) xxx xxx xxx (c) xxx xxx xxx (d) in the case of a trust for charitable or religious purposes or a charitableor religious institution, any income thereof, if for any period during theprevious year- (i) any funds of the trust or institution invested or deposited beforethe 1st day of March, 1983 otherwise than in any one or more of theforms or modes specified in sub-section (5) of section 11 continue toremain so invested or deposited after the 30th day of November,1983; or (ii) any funds of the trust or institution invested or deposited beforethe 1st day of March, 1983 otherwise than in any one or more of theforms or modes specified in sub-section (5) of Section 11 continue toremain so invested or deposited after the 30th day of November,1983; or (iii) any shares in a company not being a Government company asdefined in Section 617 of the Companies Act, 1956 (1 of 1956), or acorporation established by or under a Central State or Provincial Act]are held by the trust or institution after the Both day of November,1983:provided that nothing in this clause shall apply in relation to- (i) any assets held by the trust or institution where such assets formpart of the corpus of the trust or institution as on the 1st day of June,1973. (ia) any accretion to the shares, forming part of the corpus mentionedin clause (i) by way of bonus shares allotted to the trust or institution. " ( 7 ) THE expressions used in both the provisions, quoted above, are investment and deposit . Former expression means to lay out money in business with a view toobtain income or profit. Deposit, on the other hand, means that which is placedanywhere, as in any one s hands for safe keeping, something entrusted to the care ofanother. These two expressions have been used in cognate sense and have tounderstood as such. Former expression means to lay out money in business with a view toobtain income or profit. Deposit, on the other hand, means that which is placedanywhere, as in any one s hands for safe keeping, something entrusted to the care ofanother. These two expressions have been used in cognate sense and have tounderstood as such. In order to constitute an investment the amount laid down shouldbe capable of and result in any income, return or profit to the investor and in every,,case of investment the intention and positive act on the part of the investor should beto earn such income, returns, profit. In order to constitute an investment the moniesshall be laid out in such a manner as to acquire some species property which wouldbring in an income to the investor. Loan on other hand is granting temporary use ofmoney, or temporary accommodation. The words "investment" "deposit" and "loan"are certainly different. Section 11 (5)-refers to pattern of investment by the assessee. Section 11 (5) was introduced by Finance Act, 1983 w. e. f, 1/04/1983 i. e. for andfrom assessment year 1983-84. It prescribes the forms and modes of investing anddepositing money refereed to in Section 11 (2) (6 ). Subsequently, new forms andmodes have been added. Section-13 (1 ) (d ). Subsequently, new firms ?nd modeshave been added. Section 13 (1 ) (d) as amended by finance Act, 1983 provider thatthe income of any charitable or religious trust or institution will not be entitled toexemption under Section 11 and 12, if certain conditions stipulated therein are notcomplied with. The word deposit does not cover transaction of loan which can bemore appropriately described as direct bailment. The essence of deposit is thatthere must be a liability to return it to the party by whom or on whose behalf has beenmade on fulfillment of certain conditions. In the commercial sense the term is used toindicate the aforesaid transaction as deposit of money for employment, in business,deposits for value to initiate security for, deposit of tittle deeds, similar documents assecurity for loan, deposit of money bills in a bank in the ordinary course of business ofcurrent account and deposits a sum at interest at a fixed deposit in a bank. Amountgiven to Mahila Haat was neither for the purpose a sum at interest at a fixed depositof investment nor deposit, more particularly in the factual background as highlightedabove. Amountgiven to Mahila Haat was neither for the purpose a sum at interest at a fixed depositof investment nor deposit, more particularly in the factual background as highlightedabove. The transaction with which the present dispute is linked cannot be treated asinvestment or deposit as has been factually found by the Tribunal. The conclusionbeing essentially factual, no question of law arises out the order of the Tribunal. Accordingly, the Petition is dismissed.