- (1.) ON an application under Section 256(2) of the Income-tax Act, 1961, this court has directed to refer the following question for our opinion : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that there was no violation of any of the provisions of Section 13 of the Income-tax Act, 1961, by the assessee-trust in advancing money amounting to Rs. 98,000 to the two employees to warrant denial of the benefit of Section 11 ?"
(2.) IN compliance with the direction of this court the aforesaid question has been referred for our opinion. The assessee is a charitable trust. During the course of assessment and on an examination of the accounts, the Income-tax Officer found that a sum of Rs. 98,000 has been shown as refundable aids in the assets side of the balance-sheet. On further scrutiny of details filed during the course of the hearing, the Assessing Officer further found that the said sum of Rs. 98,000 was paid to one Sri N. K. Kothari and K. D. Soni. Rs. 63,000 was paid to N. K. Kothari and Rs. 38,000 was paid to K. D. Soni as loan. The Assessing Officer took the view that as Sri Kothari was a manager in the trust therefore the advance of loan of Rs. 60,000 to him is indirect accommodation to a person referred to in Section 13(3) of the Act. Therefore, it is hit by the mischief of the provisions of Sections 13(1)(c) and 13(2)(a) of the Income-tax Act. In appeal before the Commissioner of Income-tax (Appeals), the Commissioner of Income-tax (Appeals) found that the appellant-trust cannot be said to have used any part of its income directly or indirectly for the benefit of any person referred to in Section 13(3). Therefore, the provisions of Section 13(1)(c) are not applicable. In appeal by the Revenue before the Tribunal, the Tribunal has also confirmed the view taken by the Commissioner of Income-tax (Appeals) that the assessee is a trust and not an institution. Therefore, the loan advanced to Mr. Kothari cannot be treated as benefit to persons falling within the provisions of Section 13(3) of the Act.
(3.) LEARNED counsel for the Revenue submits that when there is no dispute that money has been advanced to a manager of the trust, the manager falls within the provisions of Section 13(3) of the Act. Mr.Khaitan, learned counsel for the Revenue, brought to our notice that the apex court in the case of Asst. CIT v. Thanthi Trust [2001] 247 1TR 785, has considered one of the questions whether the word and phrase "trust" and the "institution" referred to entities differently constituted.;