Law:

Section:

Section 13 of the Income-tax Act, 1961 - Charitable or religious trust - Denial of exemption - Assessee was a charitable trust - Assessing Officer refused to grant benefit of exemption under section 11 to assessee on ground that it had infringed provisions of section 13(1)(d) by making investment in bonds - However, appellate authority and Tribunal allowed such exemption under section 11 to assessee holding that 'debentures' include bonds as well and, therefore, by making investment in bonds, assessee had not contravened provisions of section 13(1)(d) - Whether in absence of any definition of 'debenture' in Act, reliance could be placed upon definition given in section 2(12) of Companies Act, 1956 as per which 'bond' is covered under expression 'debenture' and, therefore, Tribunal rightly held that assessee did not contravene provisions of section 13(1)(d) - Held, yes FACTS The assessee was a charitable trust. Though the Assessing Officer also accepted that the aims and objectives of the assessee-trust would make it a charitable trust within the meaning of section 2(15), yet he refused to grant the benefit of section 11 to the assessee on the ground that it had infringed the provisions of section 13(1)(d) by making investment in bonds. According to the Assessing Officer, the benefit of exemption under section 11 was available only in respect of income derived from the debentures and not from the income derived from bonds. On appeal, the appellate authority held that 'debentures' include bonds as well and, therefore, by making investment in bonds, the assessee had not contravened the provisions of section 13(1)(d) and was entitled to the exemption and the income from the bonds as well as debentures was not to be included as income for the purpose of tax as provided under section 11. On the revenue's appeal, the Tribunal concurred with the opinion of the appellate authority. On reference : HELD The word 'debenture' is nowhere defined under the Act. However, the Companies Act, 1956 specifically defines this term and as per the definition provided in section 2(12) of the said statute, 'bond' is covered under the expression 'debenture'. [Para 3] The Kerala High…

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