TaxTMI 
TaxTMI 
2014 (7) TMI 909
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....x Act, 1961 (hereinafter referred to as 'the Act'). The assessee - Islamic Academy of Education at Mangalore, has been granted exemption under Sections 11 and 12 of the Act. The trustees of the assessee - Trust were the directors of Yenepoya Institute of Medical Science Research Private Limited. The funds of the assessee Trust were invested in the said Yenepoya Institute of Medical Science Research Private Limited. The assessing officer held that the funds invested exceeds 5% of the capital and therefore, Section 13(4) of the Act is not applicable and accordingly, held that the income of the assessee is not exempted in view of Section 13(2)(h) of the Act. Aggrieved by the same, they preferred an appeal to the Commissioner of Income ....
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....essee, the Commissioner of Income Tax (Appeals) held that the assessee is entitled to the benefit under Sections 11 and 12 of the Act. Aggrieved by the said order, the revenue preferred an appeal to the Tribunal. They contended that the capital of that concern mentioned in Section 13(4) of the Act means share capital of the company. It does not include the borrowed capital. If share capital is taken into consideration the amount of investment made by the trust in the said company exceeds 5% and therefore, they are not entitled for the benefit of exemption. The Tribunal after taking note of the various judgments has held that the capital of the concern cannot be restricted to only share capital. Therefore, the word 'Capital' includes....
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....titution invested in a concern in which any person referred to in sub-section (3) has a substantial interest, does not exceed five per cent of the capital of that concern, the exemption under section 11 [or section 12] shall not be denied in relation to any income other than the income arising to the trust or the institution from such investment, by reason only that the [funds] of the trust or the institution have been invested in a concern in which such person has a substantial interest. 5. A reading of the aforesaid Section makes it clear that if the funds invested in a concern in which any person referred to in sub-Section (3) of Section 13 of the Act has substantial interest, does not exceed 5% of the capital of that concern, the exemp....