Case Law Details
Sir Ratan Tata Trust Vs DCIT (ITAT Mumbai)
Conclusion: Commissioner was clearly in error in invoking powers under section 263 on the ground that the Assessing Officer failed to examine the investments of the trust complying with the provisions of Section 11(5) and Section 13(1)(d) as how the trust was treating the investment, i.e., in the capital field or not, was thus truly determinative of the investment being part of the corpus, the mere fact of these investments being held as capital for at least more than four decades-as conclusively established by the material before AO, and only income from these investments being applied for the purposes of the trust, clearly established the fact of these investments being part of the corpus of the trust.
Held: Assessee trust was registered as a charitable institution under section 12A, had filed its return of income and its assessment, under section 143(3) was completed determining ‘Nil’ taxable income. Subsequently, however, CIT (Exemptions) issued a show cause notice requiring assessee to show cause as to why this order not be subjected to revision under section 263. It was noticed that there was an investment of funds of assessee in shares which was in a prohibited mode of investment prescribed in the section 11(5) r.w.s. 13(1)(d) of the Act, unless it was covered by exceptions. This important aspect, however, had not been verified. It was held that what essentially followed was that it’s not the declaration of an investment being a corpus investment but the fact of its being treated as capital and rather than using the investment for the purposes of the trust, using the income from investment for the purposes of the trust, which was determinative of its being in the nature of corpus investment. How the trust was treating the investment, i.e., in the capital field or not, was thus truly determinative of the investment being part of the corpus. Viewed thus, the mere fact of these investments being held as capital for at least more than four decades-as conclusively established by the material before the Assessing Officer, and only income from these investments being applied for the purposes of the trust, clearly established the fact of these investments being part of the corpus of the trust. Thus, Commissioner was clearly in error in invoking powers under section 263 on the ground that the Assessing Officer failed to examine the investments of the trust complying with the provisions of Section 11(5) and Section 13(1)(d) of the Act.
1. By way of this appeal, the assessee appellant has challenged the correctness of the order dated 30th March 2019 passed by the learned Commissioner of Income Tax (Exemptions) under section 263 r.w.s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’), for the assessment year 2014-15.
2. Grievances raised by the appellant, which, being interconnected, will be taken up together, are as follows:
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