INCOME TAX
INSTRUCTION NO. 1913/1993
Dated: November 23, 1993
Section(s) Referred: 11
Statute: Income - Tax Act, 1961
U/s.13 (1)(d) as substituted by the Finance Act, 1983 with effect from 1st April 1983 the income of any charitable trust or institution was not entitled to exemption u/s.11 or sec.12, if any period during the previous year:-
i) any funds of the trust or institution are invested or deposited after 28-02-83 otherwise than in any one or more of the forms or modes specified in sub-sec.(5) of sec.11; or
ii) any funds of the trust or institution invested or deposited before 1-3-83 otherwise than in any one or more of the forms or modes specified in sec.11(5) continue to remain so invested or deposited after 30-11-83 or
iii) any shares in a company not being a Govt. company as defined in sec.617 of Companies Act, 1956 or a corporation established by or under a central, state or provincial act- are held by the trust or institution after 30-11-83.
These provisions were not applicable to assets covered by the proviso to this section.
2. The finance Act, 1991 inserted clause (iia) to proviso to clause (d) of sub-sec(1) of sec.13 with retrospective effect from 1/4/83 extending time for disinvestment in respect of unapproved assets either within one year from the end of the previous year in which such asset was acquired or by 31st March, 1992 whichever is later.
3. The date was again extended to 31st March 1992 by Finance Act, 1992. Thus the condition under reference i.e. investment in the modes specified in sec.11(5) need not be complied with during the previous year but may be complied even after the end of the previous year but definitely on or before 31-03-93. Therefore, exemption even for assessment years 1983-84 to 1992-93, exemption u/s.11 will be available only if investment in prohibited modes are disinvested on or before 31-3-93. If such disinvestments is not made even by 31st March, 1993 remedial action u/s.154 or 263 or 147 as the case may be should be taken to withdraw the exemption if any granted on the expectation that the trust would convert its investments into specified forms within the extended period.
4. In cases in which assessments for A.Y. 1992-93 and earlier years are pending benefit of section 11 should be allowed only after due verification that investment in prohibited modes have been disinvested on or before 31-3-93.
5. This interpretation will also apply in respect of cases falling u/s.10(23), 10(23C) and similar other sections.