Law:

Section:

Section 13(2)(h) of the Income-tax Act, 1961 - Charitable or religious trust - Denial of exemptions Where some of trustees of assessee-trust were directors of a company called MG Ltd., and those persons were also trustees in some other trust, shares received by assessee-trust could not be treated as investments made by it in companies in which trustees had substantial interest so as to deny its claim of exemption Some of the trustees of the assessee-trust were directors of a company called MG Ltd. Those persons were also trustees of some other trust. The Wealth-tax Officer was of the view that the shares received by the assessee were, in fact, investments made by the trustees and, therefore, it was not entitled to the benefit under section 13(2)(h), read with section 13(3), as applicable to the Wealth-tax Act: Held that in CIT v. Sir Sobha Singh Public Charitable Trust [2001] 250 ITR 475 the instant Court had dealt with a similar issue. In that case, one of the trustees of the assessee had donated 1,500 shares in a company and 2,000 shares in another company to the assessee-trust. The Court had came to the conclusion that the shares received by the assessee were not investments made by it in those companies in which the donor had a substantial interest and, therefore, the assessee was entitled to the benefit of under section 13(2)(h), read with section 13(3), of the Income-tax Act. There was no occasion to take a different view from what had already been taken by the instant Court. Therefore, the assessee was entitled to the exemption. JUDGMENT In this reference under section 27(1) of the Wealth-tax Act, 1957, the following question of law has been referred for our opinion : "Whether, on the facts and circumstances of the case, the Tribunal was right in holding that 50,000 shares of M/s. Motor and General Finance Ltd. are not 'invested' in a concern, in which any person referred to in sub-section (3) of section 13 of the Income-tax Act, 1961, has substantial interest as provided in Explanation 3 thereof ?" 'Some of the trustees of the assessee were directors of a company called Motor and General Finance Ltd. It appears that these persons were also trustees in…

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