COMMISSIONER OF INCOME-TAX VS T. N. K. AND EDUCATIONAL TRUST
2000 P T D 948
[233 I T R 182]
[Madras High Court (India)]
Before Abdul Hadi and N. V. Balasubramanian, JJ
COMMISSIONER OF INCOME-TAX
versus
T.N.K. AND V. EDUCATIONAL TRUST
Tax Cases Nos.411 to 416, 786 of 1984 and 1 to 54 of 1997 (References Nos.361 to 365, 701 of 1984 and 1 to 54 of 1997), decided on 17/04/1997.
Income-tax---
----Charitable purpose---Charitable trust---Trust for educational purposes-- Provision that if at any time objects of trust become impossible of fulfilment trustees to utilise funds for charitable purposes---Donations made by trust to ten family trusts---Donations placed by family trusts in deposit with private company---No finding that objects of assessee trust impossible of fulfilment---No power in trustees to make donations ---No transfer in law in favour of family trusts---Interest on deposits to be treated as income of assessee trust---Whether family trusts charitable and exempt not relevant-- Indian Income Tax Act, 1961, Ss. 11 & 13,
The assessee, the TNKV Educational Trust, was a charitable trust constituted under a declaration of trust, dated December 15, 1960. The author of the trust was one TNK, the trustees being himself and five others, who were his relations. The object of the trust was particularly to establish and maintain educational institutions and hospitals for the public. Clause 12 of this declaration of trust provided that if at any time the objects of the trust should become impossible of fulfilment, the properties and funds belonging to the trust shall be utilised for such charitable purposes as the trustees in office at that time may determine. On August 1, 1969, ten family trusts were constituted, the authors of each of them being related to one or the other of the trustees of the TNKV trust. On August 13, 1969,' the TNKV trust, out of its fund, parted with Rs.12,80,000, representing the sum total of ten cheques of Rs.1,28,000 each in favour of each of the ten family trusts. The said sums were, thus, paid by cheques drawn in favour of the family trusts. But endorsed by the trustees of the family trusts in favour of a company D, with which company, the sums in question remained deposited in their respective names. D was to pay interest -on such deposits. In the company D, out of the 17 shareholders, five were the trustees of the TNKV trust. Alongwith the said cheques, the TNKV trust wrote ten identical letters, addressed to each of the family trusts stating, in effect, that the said contribution and any accumulations thereto should be utilised for certain specified educational purposes for the general public and that the investments of the said contributions and accumulations thereto should be kept separate from the investment of. the other funds of the family trust. Each of the family trusts received in due course interest from the company D and, in the returns of income, filed by each of the said family trusts, the interest received less the amount applied for charitable purposes, was admitted as the income: For the assessment years 1970-71 to 1976-77, the Income-tax Officer held that the income from the investments made by the ten family trusts should be held as the investments of TNKV trust and the said income was assessed in the hands of the said TNKV .trust. On appeal, the Commissioner (Appeals) set aside the assessments made on the TNKV trust, and this was confirmed, on further appeal, by the Tribunal, which held that the transfer of Rs.12,80,000 was valid and amounted to application of income for charitable purposes. In the assessments of the family trusts, the Assessing Officer denied the benefit of exemption contemplated under section 11 of the Income Tax Act, 1961, to the ten family trusts in respect of the interest income on the ground that the deposits with the company D, were not approved investments under section 11(5) read with section 13(1)(d) of the Act. The Tribunal, however, held the family
trusts were entitled to exemption for the assessment -years 1987-88 and 1988-89 by virtue of proviso (iia) to section 13(1)(d) and also held that the trusts created on August 13, 1969 were charitable trusts. On references:
Held, (i) that, even apart from the concession made by the assessee- trust that the transfer of Rs.12,80,000 in favour of the ten family trusts was invalid, the transfer was not within the powers of the trustees of the TNKV trust under clause 12 of the declaration, because there was no finding that the objects of the said trust had become impossible of fulfilment. Moreover, under clause 12, the trustees could themselves utilise the said properties and funds for some other charitable objects and it would not mean that they could transfer the said Rs.12,80,000 to the abovesaid ten family trusts.
(ii) That, therefore, the entire interest income received from the company D was the income of the TNKV trust taxable only in its hands. The interest could not be taxed in the hands of the family trusts.
(iii) That, therefore, it was not necessary to decide whether the family trusts were charitable trusts. The question of trust being created on August 13, 1969 by the letter of that date did not arise and no valid trust came into existence on that as the transfer was not valid. The further question whether there was a violation of section 13(1)(d)(ii) in relation to the family trusts did not arise.
[The Court observed that if a proper application was filed by the assessee before the authority concerned incorporating the request that since already assessment had been made on the family trusts on their respective interest income received, less the portions of the said incomes spent for charitable purposes, and since accordingly the tax also had been paid by the said family trusts, credit should be given to the total amounts of tax paid when the TNKV trust was assessed, on the footing that the transfer was invalid, the authority was to deal with the application in accordance with law].
C. V. Rajan for the Commissioner
P.P.S. Janarthana Raja for the Assessee (in all the Cases)
JUDGMENT
ABDUL HADI, J. -----All these tax case references preferred by the Revenue under section 256 of the Income Tax Act, 1961 (hereinafter referred to as "the Act") are connected and hence they were heard together.
Out of the above cases, the following cases, which relate to the same respondent assessee, viz., T. N. K. and V. Educational Trust, Madras, relate to the assessment years as shown below:
| Case No. | Assessment year |
| T.C. No. 786 of 1984 | 1970-71 |
| T.C. No. 411 of 1984 | 1971-72 |
| T.C. No. 412 of 1984 | 1972-73 |
| T.C. No. 413 of 1984 | 1973-74 |
| T.C. No. 414 of 1984 | 1974-75 |
| T.C. No. 415 of 1984 | 1975-76 |
| T.C. No: 416 of 1984 | 1976-77 |
The respondents-assessees and the assessment years in respect of the rest of the cases are as follows:---
| Case No, | Name of the respondents-assessed | Assessment year |
| T.C. No. l of 1997 | K. N. Varadarajan Family Trust | 1988-89 |
| T.C. No. 18 of 1997 | - do - | 1987-88 |
| T.C. No.2 of 1997 | P. Natarajan Family Trust | 1987-88 |
| T.C. No.3 of 1997 | - do - | 1988-89 |
| T.C. No.4 of 1997 | Ramesh Family Trust | 1987-88 |
| T.C. No.5 of 1997 | - do - | 1988-89 |
| T: C. No. 6 of 1997 | Chandrasekhar Family Trust | 1987-88 |
| T.C. No.7 of 1997 | - do - | 1988-89 |
| T.C. Nos.21 to 37 of 1997 | - do - | 1973-74 to 1986-87 and 1989-90 to 1991-92 |
| T. C. No. 8 of 1997 | K. N. Gnanaprakasam Family Trust | 1987-88 |
| T. C. No. 14 of 1997 | - do - | 1988-89 |
| T.C. No.9 of 1997 | M. Sivaprakasam Family Trust | 1988-89 |
| T. C. No. 17 of 1997 | - do - | 1987-88 |
| T.C. No. 10 of 1997 | P. Srinivasan Family Trust | 1987-88 |
| T.C. NO. 11 of 1997 | - do - | 1988-89 |
| T.C. Nos.38 to 54 of 199" | - do - | 1973-74 to 1986-87 And 1989-90 to 1991-92 |
| T. C. No. 12 of 1997 | K. N. Mohanram Family Trust | 1987-88 |
| T. C. No. 13 of 1997 | - do - | 1988-89 |
| T. C. No. 15 of 1997 | K. N. Krishnaswamy. Family Trust | 1987-88 |
| T. C. No. 16 of 1997 | - do - | 1988-89 |
| T. C. No. 19 of 1997 | P. Gowrisankar Family Trust | 1987-88 |
| T.C. No. 20 of 1997 | - do - | 1988-89 |
(Thus, there are these ten assessees, who are respondents in T.C. Nos. l to 54 of 1997).
There is the under mentioned concession by learned counsel for the respondents-assessees in all the tax cases. However, all these tax cases are disposed of on their merits. (The concession is referred to in paragraph 21 (page 191) and below.
Even before setting out the questions referred to us in the above tax cases, it would be better to state the relevant facts. The common assessee in T. C. Nos. 411 to 416 and 786 of 1984, viz., T. N. K. and V. Educational Trust, Madras, is a charitable trust constituted under a declaration of trust, dated December.15, 1960. The author of the trust was T. N. K. Nanjappa Chettar, the trustees being himself and five others, who are his relations. The object of the trust was particularly to establish and maintain educational institutions and hospitals for the public. On August 1, 1969, the above referred to ten family trusts . were constituted, the authors of each of them being related to one or the other of the above referred to trustees of the above referred to T. N. K. and V. Educational Trust. The objects of each of the abovesaid family trusts are the following:--
"(a) to meet the education, maintenance, marriage and other expenses of my (author's) major children (emphasis supplied):
(b) to help my other relatives by making money grants and in other ways;
(d) to make the contributions if funds permit for any charitable benevolent or religious object or objects." (emphasis supplied) ,
The abovesaid declaration of trust, dated December 15, 1960, provided in clause 12 therein that "if at any time the objects of the trust should become impossible of fulfilment, the properties and funds belonging to the trust shall be utilised for such charitable purposes as the trustees, in office at that time, may determine". (emphasis supplied)
On August 13, 1969, the abovesaid T. N. K and V. Educational Trust, out of its fund, parted with Rs.12,80,000 representing the sum total of ten cheques of Rs:1,28,000 each in favour of each of the above referred to ten family trusts. The said sums were, thus, paid by cheques drawn. in favour of the family trusts, but endorsed by the trustees of the family trusts in favour of Devi Films (Private) Limited, with which company, the sums in question remained deposited in their respective names. Devi Films (Private) Limited was to pay interest on such deposits. The abovesaid Devi Films (Private) Limited was a company, in which, out its 17 shareholders, five were the trustees of the above referred to T. N. K and V. Educational Trust.
Alongwith the aforesaid cheques, the abovesaid T. N. K and V. Educational Trust wrote ten identical letters, addressed to each of the family trusts stating in effect, that the said contribution and any accumulation thereto should be utilised for certain specified educational purposes for the general public and that the investments of the said contributions and accumulations there to should be kept separate from the investment of the other funds of the family trust.
Each of the family trusts received in due course interest from the abovesaid Devi Films (Private) Limited and in the returns of income filed by each of the said family trusts, the interest received less the amount applied for charitable purposes, was admitted as their income.
For the assessment years 1970-71 to 1972-73, the Income-tax Officer in the assessments of the abovesaid T. N. K and V. Educational Trust, held that there was no valid transfer to the abovesaid Rs.12,80,000 in favour of the ten family trusts and that, therefore, the family trusts were holding the said sum on behalf of the said T. N. K and V. Educational Trust. On that footing, the income-tax Officer treated the investment of the abovesaid sum on Devi Films (Private) Limited as the investment of the T. N. K. and V. Educational Trust. Thus, he held that the interest earned by the abovesaid ten family trusts, as stated above, was chargeable to tax in the hands of the abovesaid T. N. K and V. Educational Trusts.
But the said assessments were set aside by the Commissioner (Appeals) in appeal. On further appeal to the Tribunal, the Tribunal directed the Income-tax Officer to re-do the assessments according to law in the light of its observations.
The Income-tax Officer, accordingly, made reassessments for 1970-71 to 1972-73 and also assessments for 1973-74 to 1976-77. In so doing he held that the income from the investments made by the ten family `trusts should be held as the investments of T. N. K. and V. Educational Trust and the said income was assessed in the hands of said T. N. K. and V. Educational Trust. He reasoned out as follows:
"The transfer of the funds to the ten family trusts were in terms of the minutes of the meeting of T. N. K and V. Educational Trust told on August 13, 1969, according to which the object of the said Then, coming to T.C.Nos 21 to 37 of 1997, they arise out of the order of the Tribunal, dated August 31, 1994. Then, T.C.Nos.38 to 54 of 1997 arise out of the order of the Tribunal, dated August 28, 1994. In both these orders, the Tribunal relied on only the above referred to earlier order of the Tribunal, dated April 29, 1994.
Now, we shall set out the questions referred to us under section 256(2) of the Act in T.C. Nos. 21 to 54 of 1997, which are as follows:
"(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the trusts are charitable in nature and are entitled to claim benefit under section 11 of the Income-tax Act?
(2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the grant of certificate under section 12A with regard to these trusts would indicate that the trusts are charitable in nature and it would not be open to the Assessing Officer to reopen this question in the assessment proceedings and reach a different conclusion?
(3) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the assessee is entitled to exemption under section 11 of the Income-tax Act in view of the amended provisions of section 13(1)(d) extending the time limit up to March 31, 1992 for converting the deposits into permissible mode of investment even though the non-specified assets had not been acquired during the previous years?"
Learned counsel for the Revenue mainly argues that the abovesaid transfer of Rs.12,80,000 by the abovesaid T. N: K. and V. Educational Trust to the abovesaid ten family trust is not valid at all as held by the assessing authority in T. C. Nos.411 to 416 and 786 of 1984, and that in this regard both the Commissioner (Appeals) and subsequently the Tribunal by its above referred to order, dated April 29, 1982, erred. He also points out that the other reasoning of the Tribunal to the effect that the abovesaid transfer of Rs.12,80,000 amounts to application of income for charitable purposes is totally extraneous and irrelevant. According to him, the abovesaid interest income, received by the abovesaid family trusts, consequently has to be assessed to tax only in the hands of the abovesaid T.N.K. and V. Educational Trust and not in the hands of the said family trusts. Further, the said learned counsel also points out, in relation to the abovesaid orders of the Tribunal, dated April 29, 1994, August 31, 1994 and August 29, 1994 (that is, in all, with reference to T. C.Nos.l to 54 of 1997), that in view of the fact that the abovesaid transfer of Rs.12,80,000 is not valid, there is no scope at all for granting any exemption to the abovesaid family trusts in relation to the above referred to interest income. He also submits the other reasoning of the Tribunal in this regard to the effect that the above referred to proviso (iia) to section 13(1)(d) is attracted in the present case is also wrong. Further, he also points out that at any rate, the Tribunal, even without giving necessary finding that the abovesaid deposits with Devi Films (Private) Limited had been substituted by approved form of investments as prescribed under section 11(5) of the Act at least later, that is, on or before March 31, 1992, as prescribed in the abovesaid proviso (iia), had grossly erred' in holding that the abovesaid ten assessee (family trusts) would be entitled to get the benefit of exemption under section 11. He also points out that the Tribunal also erred in holding as if the said ten assessees are charitable in nature.
Learned counsel for the assessee, no doubt, initially argued that in view of clause 12 of the abovesaid declaration of trust, dated December 15, 1960, the abovesaid donation of Rs.12,80,000 is valid. But, later, the said learned counsel submitted that the abovesaid transfer of Rs.12,80,000 by the abovesaid T.N.K. and V. Educational Trust to the abovesaid ten family trusts could be held invalid and the assessment for the abovesaid entire interest income could be made on the T.N.K. and' V. Educational Trust itself. He only requests that since already assessments had been made on the abovesaid family trusts on their respective abovesaid interest income received, less the portions of the said incomes spent for charitable purposes, and since accordingly the tax also had been paid by the said family trusts, credit should be given to the total amounts of tax paid, when T.N.K. and V. Trust is going to be assessed on the footing that the abovesaid transfer is invalid.
We have considered the rival submissions. Apart from the abovesaid concession by learned counsel for the assessee, it is clear to us that the abovesaid transfer of Rs.12,80,000 by T.N.K. and V. Educational Trust in favour of the abovesaid ten family trusts, is invalid. Clause 12 of the abovesaid declaration of trust, dated December 15, 1960, whereby the T. N. K. and V. Educational Trust was constituted, runs as follows:
"If at any time the objects of the trust should become impossible of fulfilment, the properties and funds belonging to the trust shall be utilised for such charitable purposes as the trustees in office at that time may determine."
This clause, in the present case, does not empower the T. N. K. and V. Educational Trust to effect the abovesaid transfer at all. The reasons are: Strictly speaking, there is no finding that the objects of the said trust had "become impossible of fulfilment". No doubt, what initially learned counsel for the assessees submitted was that the said transfer was in terms of the minutes of the meeting of the T. N. K and V Educational Trust held on August 13, 1969, according to which the object of the said T. N. K. and V. Trust was to establish a polytechnic institute either in Madras or in Salem, but since the said funds were insufficient for such purpose, the trustees decided to transfer to the ten family trusts. But, it must be noted, as also mentioned by the Income-tax Officer, that the said declaration of trust, dated December 15, 1960, does not at all contain any specific object of establishing a polytechnic, though it generally mentions educational purposes as its object. Therefore, it cannot be said that the said objects, so generally stated, had become impossible of fulfilment. Therefore, the said clause 12 cannot be taken to have come into operation at all in the present case.
That apart, clause 12 also says that in case the abovesaid objects have become impossible of fulfilment, the properties and funds of the said trust should be "utilised for such charitable purposes as the trustees in office at that time may determine." In other words, this would only mean that the said trustees could themselves utilise the said properties and funds for some other charitable objects and it would not mean that they could transfer the said Rs.12,80,000 to the abovesaid ten family trusts. If really the founders of the said trust of 1960 wanted to give such power to the trustees for ,transferring such funds to other trusts even with a view to. utilise the said funds for charitable purposes, they would have specifically provided so in the said declaration of trust itself. In the absence of such specific provision in the said declaration of trust and in the light of the abovesaid expression used in clause 12, it cannot be said that what the trustees therein had done by their abovesaid minutes of the meeting, dated August 13, 1969, is valid in law.
After so holding, and while dealing with the abovesaid questions referred to us in T.C. Nos.411 to 416 and 786 of 1984, we must first of all point out that the above-referred to common question of law (vide para.14 above page 188) referred to us in T. C. NosA11 to 416 of 1984 is not happily worded. No doubt the abovesaid question of law (vide para. 15 above page 188) referred to us in T. C. No.786 of 1984 is correctly worded though it related to the assessment year 1970-71 only. In the circumstances, we reframe both the abovesaid questions as one common question in T.C. Nbs.411 to 416 and 786 of 1984, as follows:
"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the interest income received from Devi Films (Private) Limited is not income of the assessee trust (T. N. K. and V. Educational Trust, Madras) and should not be taxed in its hands, in relation to the assessment years 1970-71 to 1976-77"
In the light of the abovesaid conclusion reached by us regarding the abovesaid transfer, we have to answer this common question, as refrained, in the negative and in favour of the Revenue, holding that the said entire interest income received from Devi Films (Private) Limited, is only the income of T. N. K. and V. Educational Trust, Madras, and the said income is taxable only in the hands of the said T. N. K. and V. Educational Trust.
We must also point out that one other reasoning of the Tribunal is in a way irrelevant and extraneous to the questions at issue. In other words, there is no necessity for the Tribunal (after having confirmed the order of the Commissioner (Appeals), which set aside the assessments on the ground that only the abovesaid ten family trusts could be assessed to tax on the abovesaid interest income), to hold that the abovesaid donation of Rs.12,80,000 amounted to application of income by the said T. N. K. and V. Educational Trust for charitable purposes.
As a consequence of our above referred to decision in T.C. Nos.411 to 416 and 786 of 1984, we have only to hold that the abovesaid interest incomes cannot be assessed to tax in the hands of the abovesaid ten family trusts, and that the assessments, which are said to have been made already on these family trusts, are not valid. Having come to the above conclusion, we are of the view that there is no necessity for us to give our views with reference to the question whether the trusts in T. C. Nos. l to 20 are charitable in nature or not. However, it is necessary to clarify the factual position. As already seen, ten family trusts were constituted by a deed, dated August 1, 1969. The Income-tax Officer, in the orders of assessment, passed in the (Private) family trusts, held that the family trusts created by the deed, dated August 1, 1969, are not charitable trusts. He further proceeded on the basis that there was a violation of the provisions of section 13(1)(d)(ii) of the Act, as the investments were found to be unapproved securities and the assessee-trusts were not entitled to exemption under section 11 of the Act, even assuming that the trusts are charitable trusts. He further found that the trusts are (Private) trusts and the recognition accorded by the Commissioner of Income-tax under section 12A of the Act was not conclusive in the determination of the question either as to the nature of the trust or to the applicability of the provisions of the Act granting exemption. The Appellate Assistant Commissioner, in one group of appeals, held that the assessee was only a (Private) discretionary trust, and therefore, not entitled to the exemption under section 11 of the Act. He also held that there was a violation of the provisions of section 13(1)(d) of the Act, as investments were made in unapproved securities in violation of section 11(5) of the Act. In that view of the matter, he dismissed the appeals preferred by the assessee. The assessee, as referred to by the Assessing Officer as well as by the Commissioner of Income-tax (Appeals), meant only the (Private) family trust created on' August 1, 1969. But in the orders passed, by the other Commissioner of Income-tax (Appeals) in the other group of appeals, the Commissioner (Appeals) held that a special trust was created by a letter, dated August 13, 1969, and that the trust created on August 13, 1969, was entitled to exemption under section 11 of the Act. Against the orders passed by the Commissioner of Income-tax (Appeals), dated June 30, 1992, the Revenue preferred appeals before the Income-tax Appellate Tribunal. The appeals filed by the assessee, i.e., the (Private) family trust, came up for consideration before the Appellate Tribunal and by its order, dated April 29, 1994, the Appellate Tribunal held that the trusts created by the letter, dated August 13, 1969, are charitable trusts. It is relevant to notice that the family trusts were formed by a deed-, dated August 1, 1969, and the reference to the letter, dated August 13, 1969, appears to be a mistake. Hence, the Commissioner of Income-tax also seems to have granted recognition only to the trusts created by a deed, dated August 1, 1969. The other appeals filed by the Revenue were heard by the Tribunal. The Appellate Tribunal passed orders on August 4, 1994, August 28, 1994 and August 31, 1994. In these orders also, the Appellate Tribunal held that the assessee is a charitable trust, entitled to exemption under section 11 of the Act. The Appellate Tribunal followed its earlier orders passed in the assessee's appeal to hold that the assessee is a charitable trust. The reference to the assessee would refer to the (Private) family trust created on August 1, 1969. We have already held that the transfer of Rs.12,80,000 by T. N. K. and V. Educational Trust in favour of the family trusts is invalid. Even if it is assumed that a special trust, as pointed out by the Commissioner (Appeals) was formed on August 13, 1969, is accepted since we have held that the transfer is invalid, the question of trust being created on August 13, 1969, by the letter of that date does not arise at all. Therefore, when the finding of the Appellate Tribunal that the trusts in question are charitable in nature refers to the trusts created on August 13, 1969, then, in view of the judgment in T. C. Nos.411 to 416 and 786 of 1984, no valid trust has come into existence. If the Appellate Tribunal refers to the trusts created on August 1, 1969, it is not necessary to consider the question whether the trusts created on August 1, 1969, are charitable in nature or not. Therefore, we proceed on the basis that the Appellate Tribunal refers to the trust constituted by the letter, dated August 13, 1969, and since we have held that there was no valid transfer in the eye of law, no valid trust came into existence by a letter, dated August 13, 1969.
Secondly, it is also not clear whether the order of the Commissioner granting recognition under section 12A of the Act, refers to the (Private) trust created on August, 1, 1969, or to the special trust created on August 13, 1969. Since we are proceeding on the basis that no special trust was created on August 13, 1969, it is not necessary to consider the question whether the exemption granted to the (Private) family trust created on August 1, 1969, would ensure to the benefit the trust said to be created on August 13, 1969. In addition, we have held that there is no valid transfer of money by T. N. K. and V. Educational Trust in favour of the ten family trusts. Therefore, the further question whether there was a violation of section 13(1)(d)(ii) of the Act in relation to the family trusts does not arise.
Now, coming to the request made by learned counsel for the assessees mentioned in paragraph 21 above (page 191), we are sure that if a proper application is filed by the assessee before the authority concerned incorporating the said requests, the said authority would deal with the said application in accordance with law.
The net result is, the common question in T. C. Nos.411 to 416 and 786 of 1984 as refrained (vide paragraph 24 page 192 above)) is answered in the negative and in favour of the Revenue. In so far as T. C. Nos. l to 20 and 21 to 54 of 1997 are concerned, the common questions of law referred to us are answered as under:
(I) First question: 'the Tribunal was not correct in holding that the trusts created' on August 13, 1969, are charitable in nature and entitled to claim the benefit of exemption, under section 11 of the Act. Accordingly, we answer the first question of law in the negative and in favour of the Revenue.
(II) Second question: Since we have held that there was no valid transfer, the question whether it would be open to the Assessing Officer to consider the question whether the trusts are charitable in nature or not in spite of grant of certificate under section 12A of the Act does not arise, accordingly, we return the second question unanswered.
(III) Third question: It. relates to the applicability of section 13(1)(d), proviso (iia) of the Act. Since we have held that there was no valid transfer by T. N. K. and V. Educational Trust, it is also not necessary to consider in the hands of the family trusts whether the trusts have complied with the provisions of section 11(5) of the Act in making the investment in the approved forms, the third question of law does not arise and it is also returned without providing an answer. No costs.
M.B.A./3333/FCReference answered.