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TaxTMI 
TaxTMI 
TaxTMI 
2024 (11) TMI 1393
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....y the Andhra Pradesh State Civil Supplies Corporation Limited (hereinafter referred to as 'the assessee'). The subject matter of appeals pertains to the assessment years 1994-1995 to 2001-2002. 3. In all these appeals, the following substantial question of law arises for determination: "Whether on the facts and circumstances of the case, the equity participation made by the appellant Corporation in its Joint Venture Companies for the attainment of its objectives could be treated as an investment in violation of Section 11(5) read with Section 13(1)(d) of the Income Tax Act, 1961 leading to the denial of exemption granted under Section 11 of the Income Tax Act, 1961 and taxing its entire income?" Therefore, the appeals were heard analog....
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....e Income Tax Act, 1961 (hereinafter referred to as 'the Act'). 6. The assessee filed the return of income for the assessment year 1996-97 on 29.11.1996 declaring an income of Rs. 46, 87, 847/- and an exemption under Section 11 of the Act was claimed. The assessing officer, however, held that surplus income of the assessee has not been accumulated in accordance with Section 11(1) of the Act and therefore, the exemption under Section 11 of the Act is not available to the assessee. Accordingly, the claim of exemption under Section 11 of the Act was rejected and total income of the computed at Rs.9,81,28,695/-. Being aggrieved, the assessee filed an Appeal before the Commission of Income Tax (Appeals), who, by an order dated 04.02.2000 inter a....
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....en referred to in support of his submission that the word 'investment' would be associated with profit motive. 9. It is contended that the Tribunal ought to have appreciated that the assessee was found to be a charitable institution within the meaning of Section 2(15) of the Act and the expression 'charitable purposes' includes relief of the poor, education, yoga, medical relief, preservation of environment and advance of any other object of general public utility. Alternatively, it is submitted that Section 13(1)(d) of the Act provides only the income from investment which is made in violation of Section 13(1)(d) of the Act is liable to tax and it does not result in denial of exemption under Section 11 of the Act. It is pointed out that t....
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.... Counsel for the Revenue has supported the order passed by the Tribunal and has pointed out that the joint venture companies in which the assessee made the investments are neither joint venture companies nor are government companies or corporations established under the Central, State or provincial companies. It is further submitted that the investments made by the assessee is not covered by the exceptions provided in proviso to Section 13(1)(d) of the Act. It is submitted that the exemption provision should be interpreted strictly and once the violation of Section 13(1)(d) of the Act is established, the entire income from such investment has to be taxed. It is therefore contended that the substantial question of law deserves to be answered....
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.... However, Section 11 is subject to provisions of Section 13 of the Act. Section 13 (1) (d) and Section 13 (1) (d) (iii) provides that if any funds of the trust or charitable institution is invested or deposited before first of March, 1983, otherwise than in any one or more of the forms or modes specified in Section 11 (5), continue to remain so invested or deposited after 30.11.1983, the assessee shall not be entitled to the benefit of exemption. 13. In the instant case, the assessee is a charitable institution and invested the funds in the shares of the joint venture companies, namely, (1) Sudha Modern Dhall Mill Limited (2) Delta Oils & Fats Limited (3) Sri Guruvaurappan Swamy Oil Foods & Fats Limited, and (4) Godavari Edible Bran Oil Li....
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....at the aforesaid decisions were relied on by a Division Bench of Karnataka High Court in Commissioner of Income-Tax and Another v. FR. Mullers Charitable Institutions [2014] 363 ITR 230 (Kar). We are in respectful agreement with the view expressed by Division Benches of Bombay, Delhi and Karnataka High Courts. It is also pertinent to note that the Special Leave Petition preferred by the Revenue against the decision of Karnataka High Court in FR. Mullers Charitable Institutions (supra) has been dismissed by the Supreme Court in the decision in M/s. J. Sikile Foundation, Chennai v. DCIT, Exemption-Iii, Chennai [2014] 51 Taxmann.com 378 (SC). 16. For the aforementioned reasons, the substantial question of law framed in these Appeals is answer....