1980 (1) TMI 72

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..... References Nos. 13 and 14 of 1978 pertain to the assessment years 1973-74 and 1974-75, under 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 tha....

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....he interest income of the assessee trust is exempt from tax under section 11 read with first proviso 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 an....

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....tutions from contributions ; whereas s. 12A of the Act deals with the conditions as to registration 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 g....

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....institution. " The answers to the questions referred to us would depend on the interpretation 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 ....