Decided on February 05,1982



T.V.K. Natarajachandran, Accountant Member - (1.) THIS is an appeal by Karam Chand Thapar Memorial Charitable Trust, Calcutta, which is directed against the order of the Commissioner (Appeals) dated 23-5-1980 wherein he has sustained the assessment of capital gains arising on sale of shares and also the voluntary contributions received from Mohini Thapar Charitable Trust. The appeal relates to the assessment year 1971-72 for which the accounting year ended 28-9-1971. In this appeal the assessee has taken two grounds challenging the decision of the Commissioner (Appeals), which are dealt with hereunder :
(2.) The first ground relates to the assessment of capital gains of Rs. 90,610 as income which arose on sale of investments to Mohini Thapar Charitable Trust, Calcutta. The assessee claimed exemption of capital gains as the assessee invested the entire sale proceeds of the investments, including capital gains, with Mohini Thapar Charitable Trust, Calcutta, at interest and, therefore, satisfied the condition in Section 11(1A)(a) of the Income-tax Act, 1961 ("the Act"). This plea did not prevail with the ITO who held that the assessee has not acquired another capital asset as contemplated in the Act inasmuch the loan is not a capital assest as defined in Section 2(14) of the Act. Therefore, he subjected the capital gains to tax. In this connection, it is to be observed that it was admitted by the assessee's representative that the trust's funds were invested in Karamchand Thapar & Bros. (P.) Ltd. and it exceeded 5 per cent of capital of that concern and, therefore, the exemption under Section 11 was not available to the assessee. The ITO has also stated that the assessee having sold the investments to Mohini Thapar Charitable Trust at less than the market value, exemption is not available to the assessee-trust. On appeal, the assessee reiterated this contention but the Commissioner (Appeals), agreeing with the decision of the ITO, confirmed the assessment and rejected the claim of the assessee.
(3.) AT the time of hearing, the learned counsel for the assessee has been heard at great length. He has referred to various provisions of law that existed for the year under consideration. On this basis, he contended that the investment, by way of deposits of the entire sale proceeds, made with Mohini Thapar Charitable Trust for interest, constituted acquiring of another capital asset and, therefore, the condition in Section 11(1A)(a) has been satisfied. Accordingly, he contended that the ITO ought not to have subjected the capital gains to tax. The learned departmental representative has been heard and has solely relied on the orders of the authorities.;

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