Law:

Section:

Section 5(i) of the Wealth-tax Act, 1957, read with section 13 of the Income-tax Act, 1961 - Exemptions - Property held by charitable and religious trust - Assessment years 1987-88 and 1988-89 - Assessing Officer denied exemption claimed by assessee-trust under section 5(i), on ground that it had made certain investments contrary to section 13(1)(d) of 1961 Act - Tribunal reversed order of Assessing Officer - Whether where time for disinvesting from such investments and making investments in accordance with requirements of section 13 of 1961 Act had been extended by the Finance (No. 2) Act, 1991, read with Finance Act, 1992 up to 31-3-1993, with retrospective effect from 1-4-1983, assessee would be entitled to benefit of exemption under section 5 for relevant assessment years - Held, yes CASE REFERRED TO Director of Income-tax v. Sir M.Ct. Muthiah Chettiar Family Trust [2002] 257 ITR 287/ 124 Taxman 717 (Mad.) [Para 5]. J. Nareshkumar for the Applicant. JUDGMENT R. Jayasimha Babu, J. - The assessee is a charitable trust, which was denied exemption from wealth-tax by the Assessing Officer for the assessment years 1987-88 and 1988-89 on the ground that it had made investment contrary to section 13(1)(d) of the Income-tax Act, 1961. 2. The Commissioner reversed the order of the Assessing Officer and that reversal was sustained by the Tribunal. At the instance of the Revenue, the following question has been referred to us for consideration : "Whether the Tribunal was right in holding that the assessee-trust is exempt from wealth-tax under section 5(1) of the Wealth-tax Act without considering the provisions of section 21A(iii) which was brought into effect from April 1, 1985 ?" 3. It is no doubt true that section 21A(iii) of the Wealth-tax Act, which came into force on April 1, 1985, provides that if any funds of the trust are invested or…

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