Director of Income-tax (Exemptions) Vs. Sir M. Ct. Muthiah Chettiar Family Trust - Court Judgment

SooperKanoon Citationsooperkanoon.com/824288
SubjectDirect Taxation
CourtChennai High Court
Decided OnNov-12-2001
Case NumberTax Case Nos. 144 to 146 of 1997 (Reference Nos. 133 to 135 of 1997)
JudgeR. Jayasimha Babu and ;A.K. Rajan, JJ.
Reported in[2002]257ITR287(Mad)
ActsFinance Act, 1991; Finance (Amendment) Act, 1992; Income-tax Act, 1961 - Sections 11(5) and 13(1)
AppellantDirector of Income-tax (Exemptions)
RespondentSir M. Ct. Muthiah Chettiar Family Trust
Appellant AdvocateChitra Venkataraman, Adv.
Respondent AdvocateP.P.S. Janardhana Raja, Adv.
Excerpt:
- r. jayasimha babu, j.1. the question referred to us for the assessment years 1985-86, 1986-87 and 1987-88 at the instance of the revenue is :'whether, on the facts and in the circumstances of the case, the income-tax appellate tribunal was right in law in holding that there was no contravention of section 13(l)(d) of the income-tax act, 1961, for the assessment years 1985-86, 1986-87 and 1987-88 in view of the proviso (iia) to section 13(l)(d) extending the time for complying with the specified pattern of investment up to march 31, 1993 ?'a question similar to the one referred to us was considered by this court in the case of cit v. kumudam endowments : [2000]242itr159(mad) . it was held therein that extension of time for disinvestment up to march 31,1993, allowed by the finance (no. 2) act, 1991, read with the finance act, 1992, has retrospective effect from april 1, 1983. during the assessment year to which that provision applies, investments could be held by the trust contrary to the provisions of section 11(5) of the income-tax act, 1961, but the trust was under an obligation to disinvestment on or before march 31,1993. thereafter, the investments could be held in the modes permitted by law.there was, therefore, no contravention of section 13(l)(d) of the act by reason of the assessee having held the investments during the assessment year.we answer the question referred to us in favour of the assessee and against the revenue.
Judgment:

R. Jayasimha Babu, J.

1. The question referred to us for the assessment years 1985-86, 1986-87 and 1987-88 at the instance of the Revenue is :

'Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that there was no contravention of Section 13(l)(d) of the Income-tax Act, 1961, for the assessment years 1985-86, 1986-87 and 1987-88 in view of the proviso (iia) to Section 13(l)(d) extending the time for complying with the specified pattern of investment up to March 31, 1993 ?'

A question similar to the one referred to us was considered by this court in the case of CIT v. Kumudam Endowments : [2000]242ITR159(Mad) . It was held therein that extension of time for disinvestment up to March 31,1993, allowed by the Finance (No. 2) Act, 1991, read with the Finance Act, 1992, has retrospective effect from April 1, 1983. During the assessment year to which that provision applies, investments could be held by the trust contrary to the provisions of Section 11(5) of the Income-tax Act, 1961, but the trust was under an obligation to disinvestment on or before March 31,1993. Thereafter, the investments could be held in the modes permitted by law.

There was, therefore, no contravention of Section 13(l)(d) of the Act by reason of the assessee having held the investments during the assessment year.

We answer the question referred to us in favour of the assessee and against the Revenue.