TaxTMI 
TaxTMI 
2026 (8) TMI 1563
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....ct in respect of the sale considerations of Rs 11.90 Crore received from Sale of immoveable property of the trust which was fully utilized for acquiring another capital asset or invested/deposited in eligible capital assets. 2. That the learned CIT(A) was not justified in disallowing deduction under section 11(1A) in respect of the sum of Rs. 1,95,00,000 out of the total sale consideration of Rs. 11.90 crores received by the appellant trust, even though the entire amount was utilized in the prescribed modes and was fully eligible for exemption under section 11(1A), 3. That learned CIT (Appeals) was not justified in rejecting the claim of the appellant of deduction u/s 11 (1A) in respect of fixed deposits with ICICI bank made from sale proceeds of Rs. 11.90 crores which were duly qualified as prescribed modes of investment, on the ground that these were not held for more than 6 months. 4. That the learned CIT(A) erred in law and on facts in denying deduction under section 11(1A) of the Income-tax Act in respect of the utilization of the sale consideration of Rs. 1,00,00,000 in IDFC Mutual Funds on 24.05.2013 and 28.05.2013, and the balance sum of Rs. 95,00....
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....The learned AO accordingly in the second round issued notice under section 142(1) of the Act along with the questionnaire on 2-2-2022 asking the assessee trust to furnish the details of investments made in new capital asset in nature of mutual funds and other relevant supporting documents required to substantiate the claim of the assessee trust. The facts as discussed by the learned AO in the assessment order or as under:- The return of income was filed by the assessee trust for assessment year 2013- 14 on 28-09-2013 declaring nil income. The assessee society is registered under section 12A of the Act vide order dated 22-11-1983. The trust was formed on 27-08-1966 with the primary aim of carrying out public charitable objects and purpose including relief of the poor, education, medical relief and advancement of any other object of general public utility not involving the carrying on of any activity for profit. It was noted that assessee had earned income from sale of immovable property amounting to Rs. 12,48,97,764 which had been directly taken to the income and expenditure account. The assessee was also asked to provide Form No. 10 for accumulation of funds. Howe....
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....the learned AO himself) and had deposited a sum of Rs 1 crore in fixed deposit with a bank and Rs 95 lakhs maintained with savings bank account. Now the short point of dispute to be decided in this appeal is as to whether the amounts maintained as fixed deposit on 24-5-2013 of Rs 50 lakhs and on 28-5-2013 of Rs 50 lakhs (both dates fall after the end of the financial year 2012-13) would be eligible for exemption under section 11(1A) of the Act and similarly the remaining amount of Rs 95 lakhs retained in savings bank account as on 31-3-2013 would be eligible for exemption under section 11(1A) of the Act or not. This issue is no longer res integra in view of the decision of the Hon'ble Madras High Court in the case of ADIT (Exemption) vs Murugappa Chettiar Trust reported in 303 ITR 360 (Mad) wherein it was held as under: - Learned standing counsel appearing for the Revenue submitted that only a sum of Rs. 4,58,321 was invested during the year of account in another capital asset, namely, fixed deposit and the balance amount was lying in current account in the Bank of India and also by way of cheque on hand and the amounts lying in the current account and the cheque on hand c....
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....t. The details regarding the cheque amount is not available on record. Hence, we remand the matter to the Tribunal with a direction to find out the details regarding the cheque amount and the deposition of the same, so that the Tribunal can determine whether the assessee has satisfied all the conditions as per the provisions of the Act or not, and pass appropriate orders in accordance with law. We make it clear that as far as the amount invested in the current account is concerned, the same has to be considered as "classified and proper investment" and the remand is only to find out the details regarding the cheque amount and also to find out whether the cheque was deposited or not, for the purpose of giving benefit under the provisions of the Act and pass appropriate orders in accordance with law. With the above observations, the tax case is disposed of. No costs. ■■ 7. Similar view was taken by the Hon'ble Calcutta High Court in the case of CIT vs Hindusthan Welfare Trusts reported in 206 ITR 138 (Cal) wherein it was held that 7. The only question that falls for our consideration is whether making of the fixed deposit for a period of 6....
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....the trust after 28-2-1983 are to be invested or deposited in any of the forms or modes specified in section 11(5). Special significance may be attached to the manner in which the words 'invested' and 'deposited' are juxtaposed. The two words are meant to be interchangeable. They are completely equated. 11. Section 11(5) which also applies to the trust lays down the forms and modes of investments of the trust funds. Apart from the various other investments like - Unit Trust, securities of the Government, debentures, etc., in clause (iii) of section 11(5) deposit in any scheduled bank is also specified as a permissible mode of investment. This clearly establishes that bank deposits are one of the forms of investments for the trust like any other form of investment, such as, National Savings Certificates, Government securities, immovable properties, unit trust, etc. It would further be seen that in section 11(5) similarly in sub-clause (ii) deposit in post office savings account, in sub-clause (vii) deposit in public sector companies and in sub-clause (xi) deposits with Industrial Development Banks are specified modes of investments for the trust. 12.....
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....ish that bank deposits are distinct and separate assets from cash which are capable of being owned and held. 14. The true nature of a bank deposit is that it is a debt receivable from the bank. When a person deposits money with the bank, the bank does not hold any specific coins or money in trust for the depositor. The relationship created between the bank and the depositor is that of a debtor and a creditor. The relationship is not that arising in a contract of bailment. The nature of the relationship between a bank and its depositor has been settled since the decision of the House of Lords in the case of Foley v. Hill [1948] 2 HLC 28. The said decision and its efficacy was considered by the Supreme Court in the case of Shanti Prasad Jain. v. Director of Enforcement AIR 1962 SC 1764 at 1775 (paragraph 37). It was held by the Supreme Court as under: "37. Now the law is well settled that when moneys are deposited in a bank, the relationship that is constituted between the banker and the customer is one of the debtor and the creditor and not trustee and beneficiary. The Banker is entitled to use the monies without being called upon to account for such user, his only....
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....he said Circular reads as follows : "Instruction No. 883 XXI/1/74 - Section 11(1A) of the IT Act, 1961- "Another Capital asset" - Scope of the expression - Section 11(1A) of the Income-tax Act, 1961 provided that where a capital asset being property held under trust wholly for charitable or religious is transferred and the whole or any part of the net consideration is utilised for acquiring another capital asset to be so held, then the capital gain arising from the transfer shall be deemed to have been applied to charitable or religious purpose to the extent specified therein. 2. The Board had occasion to examine whether investment of the net consideration in fixed deposit with a bank would be regarded as utilisation of the amount of the net consideration for acquiring 'another capital asset' within the meaning of section 11(1A) of the Income-tax Act, 1961. The Board has been advised that investment of the net consideration in fixed deposit with a Bank for a period of 6 months or above would be regarded as utilisation of the net consideration 'another capital asset' within the meaning of section 11(1A) of the Income-tax Act, 1961.....
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....o interest on the money deposited, he is his customer's debtor and not a bailee, because he undertakes to repay on demand a sum, equivalent to the amount deposited with him, and the customer has no right whatsoever to claim the identical coins or notes, deposited by him with his banker. The latter can pay the amount in any kind of legal tender. ..." (p. 279) This passage occurs in Tannan Banking Laws and Practice in India, 11th Edition, Page 79. This is not only true of the relation between a banker and its customer in India which takes after English Banking Law. The same is the concept in American Jurisprudence as well. 21. The following passages from paragraphs 339 and 340 at pages 301 to 304 of Volume 10, American Jurisprudence, 2nd edn. bear out this position: "Although money on deposit in a bank is commonly considered to the property of the depositor, the relationship in fact between him and the bank is that of debtor and creditor; the amount on deposit represents merely an indebtedness by the bank to the depositor. It is therefore a fundamental rule of banking law that in the case of a general deposit of money in a bank, the moment the ....
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....lending of the money and the letting out on hire any asset on hire charge. In other words, the money lent remains the property of the lender, the person to whose order the money lent is subject, whose right thereto is beyond dispute by the borrower. But the facts of that case are different. There the money was advanced as an accommodation loan to a party not operating as a banker. No case was brought out that the borrower invited the loan in the course of his banking operation. Moreover, in that case the borrowing was not in the shape of a deposit but as loan simpliciter. It is well established that despite the fundamental character of loan and deposit being that of lending, there is a vital difference between the two. The loan is recoverable the minute it is advanced while the deposit is not. It is only upon the expiration of the term that a deposit falls repayable by the depositee - See Abdul Hamid Sahib v. Rahmat Bi AIR 1965 Mad. 427. Therefore, the two distinguishing factors (1) lending to a person not a banker, and (2) lending by way of loan repayable the minute it is advanced, distinguish the facts of that case. 23. The circular of the Board as referred to earlier ac....