1996 (7) TMI 100

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....of the Income-tax Act, 1961, in respect of the contribution of Rs. 2,12,970 made to B. M. Institute ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the interest received by the assessee on fixed deposits made with Shahibag Entrepreneurs was covered under section 13(2)(a) of the Act, and, therefore, the assessee's claim for exemption under section 11 of the Income-tax Act, 1961, was not affected ? " So far as income-tax Reference No. 56 of 1985 is concerned, the following questions are referred to this court for opinion : " 1. Whether, on the facts and in the circumstances of the case, the assessee was entitled to claim exemption under section 11 of the Income-tax Act, 1961, in....

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.... account of the Institute as on April 1, 1977. Thus, it appears that during the year the assessee has paid in all Rs. 4,85,008.25. The Commissioner of Income-tax (Appeals) upheld the Income-tax Officer's action in disallowing deduction of Rs. 2,12,970 under section 11 of the Act. Against which, on appeal, the Tribunal held that " once the assessee had shown that it had earned income of Rs. 2,16,304 in the previous year relevant to the assessment year under appeal, we are not prepared to accede to the stand taken on behalf of the Revenue, that the assessee would not be entitled to claim exemption under section 11 of the Act in respect of the contribution of Rs. 2,12,970 made to B. M. Institute, merely because the assessee had not paid in cas....

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....as under : " The Central Board of Direct Taxes Circular No. 45, dated September 2, 1970, clearly indicates that section 13(2)(h) will cover only those cases in which investments are made by the assessee-trust in the capital of the concerns to which section 13(3) applies. The circular further indicates that in case of lendings by the trust, the provisions of clause (a) of sub-section (2) of section 13 will apply and not section 13(2)(h) and any contrary interpretation would not be a harmonious interpretation of clauses (a) and (h) of sub-section (2) of section 18. It is, therefore, obvious that if at all, clause (a) of sub-section (2) of section 13 will apply and not clause (h) thereof, if it is shown that the lending was without adequate....