Judgment · High Court

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 18.06.2007Coram :THE HONOURABLE MR.JUSTICE P.D.DINAKARANANDTHE HONOURABLE MR.JUSTICE P.P.S.JANARTHANA RAJATax Case (Appeal) No.200 of 2004 The Asst. Director of Income Tax (Exemption) I,Madras. ..AppellantVsM/s.Murugappa Chettiar Trust,12, Boat Club Road, Adyar, Madras-600 028. ..RespondentAppeal under Section 260A of the Income-tax Act, 1961against the order of the Income Tax Appellate Tribunal, Bench'C', Chennai in I.T.A. No.513(Mds)/94 dated 15.02.2001 for theassessment year 1990-91. against the order of the Commissioner of Income Tax (Appeals) III Madras 34 in IT Appeal NO. 21/93-94ABDE)/I dated 4/11/93 against the order of the Office of the Director of Income tAx (Exemptions) 121, Mahatma Gandhi Salai, Chennai 34 in DIT (E) 12(2)/93-94 dated 20.11.1995For Appellant :Mr.T.Ravi Kumar, Standing Counsel for Income-tax DepartmentFor Respondent :Mr.M.P.SenthilkumarJUDGMENT(Judgment of the Court was delivered byP.P.S.Janarthana Raja, J.)This appeal is filed under Section 260A of the Income TaxAct, 1961 by the Revenue, against the order of the Income TaxAppellate Tribunal, Bench 'C', Chennai in I.T.A. No.513(Mds)/94dated 15.02.2001.

On 16.06.2004, this Court admitted the appealand formulated the following substantial question of law:- "Whether on the facts and circumstances of thecase, the Appellate Tribunal was right in lawin holding that Rs.4,86,304/- which was not https://hcservices.ecourts.gov.in/hcservices/ invested in another capital asset could beeligible for exemption under Section 11(1A) ofthe Income Tax Act?"2. The facts leading to the above substantial question oflaw are as under: The assessee is a Trust. The relevant assessment year is1990-91 and the corresponding accounting year ended on31.03.1990. The assessment was completed under Section 143(1)(a)of the Income-tax Act ("Act" in short) raising a demand ofRs.4,60,433/-. The assessee-Trust sold certain lands forRs.9,65,625/- and out of the sale proceeds, invested an amount ofRs.4,58,321/- in fixed deposits and Rs.21,000/- in building underconstruction. Later, the assessee filed a petition under Section154 of the Act stating that the assessment could not be madeunder Section 143(1)(a), because the prima facie adjustments madeby the Assessing Officer were beyond his scope.

However, theapplication was dismissed. Aggrieved by the same, the assesseefiled an appeal before the Commissioner of Income-tax (Appeals).The C.I.T.(A) allowed the appeal and set aside the order of the Assessing Officer. Aggrieved, the Revenue filed an appeal to the Income-tax Appellate Tribunal ("Tribunal" in short). TheTribunal dismissed the appeal and confirmed the order of theC.I.T.(A). Hence the present appeal by the Revenue. 3. Learned Standing Counsel appearing for the Revenuesubmitted that only a sum of Rs.4,58,321/- was invested duringthe year of account in another capital asset, namely, fixeddeposit and the balance amount was lying in Current Account inthe Bank of India and also by way of cheque on hand and theamounts lying in current account and cheque on hand could not beclassified as investment in another capital asset. Therefore, the Assessing Officer is right in holding that the amount lyingin the current account as well as the cheque on hand, could notbe taken as a classified investment.

4. Learned counsel appearing for the assessee submittedthat the assessee had invested the balance amount in the currentaccount and hence the assessee has satisfied the requirement ascontemplated under the provisions of the Act. Hence the orderpassed by the Tribunal is in accordance with law. 5. Heard the counsel. It was found by the Assessing Officerthat a sum of Rs.4,58,321/- was alone invested during the year ofaccount in another capital asset, viz., Fixed Deposit. Thedispute here is whether the balance amount of Rs.4,86,304/- lyingin the Current Account in the Bank of India as well as the chequeon hand, would be considered as classified investment or not, under the provisions of the Act. Section 11(5)(iii) of the Act, reads as under:- https://hcservices.ecourts.gov.in/hcservices/ "(5) The forms and modes of investing ordepositing the money referred to in clause (b)of sub-section (2) shall be the following, namely:- (i) ... (ii) ...(iii) deposit in any account with ascheduled bank or a co-operative societyengaged in carrying on the business of banking(including a co-operative land mortgage bankor a co-operative land development bank)." In the present case, the deposit was made in the current accountwith the Bank of India and hence the same will come within themeaning of the words "deposit in any account with a scheduledbank".

"Any account" includes current account also. It is notdisputed by the learned Standing Counsel appearing for the Revenue. The amount involved in the present case isRs.4,86,304/-. For this amount, there is no particularsavailable regarding the amount deposited in the current accountand also the details regarding the cheque on hand. In respect ofdeposit in the current account, both the authorities havecorrectly taken the view that it is a classified investment, ascontemplated under the provisions of the Act. It is seen from Paragraph-2 of C.I.T.(A)'s order that out of Rs.4,86,304/-, a sumof Rs.3,31,36.75 was invested in the current account with Bank of India and hence, the said amount is a proper investment and thesame is covered by Section 11(5)(iii) of the Act. The detailsregarding the cheque amount is not available on record. Hence, we remand the matter to the Tribunal with a direction to find outthe details regarding the cheque amount and the deposition of thesame, so that the Tribunal can determine whether the assessee hassatisfied all the conditions as per the provisions of the Act ornot, and pass appropriate orders in accordance with law.

6. We make it clear that as far as the amount invested in thecurrent account is concerned, the same has to be considered as"classified and proper investment" and the remand is only to findout the details regarding the cheque amount and also to find outwhether the cheque was deposited or not, for the purpose ofgiving benefit under the provisions of the Act and passappropriate orders in accordance with law. https://hcservices.ecourts.gov.in/hcservices/

With the above observations, the tax case is disposedof. No costs. kmSd/Asst. Registrar/true copy/Sub Asst. RegistrarTo1. The Assistant Registrar, Income-tax Appellate Tribunal, Bench 'C', Rajaji Bhavan, Besant Nagar, Chennai.2. The Commissioner of Income-tax (Appeals)-III, Madras-34.3. The Director of Income-tax (Exemptions), 121, Mahatma Gandhi Salai, Madras-600 034.4. The Assistant Director of income Tax (Exemptions) IMadras+ one cc to Mr. N. Muralikumaran Sr.Standing Counsel IT advocatesr no. 35722mj(co)nm(09.07.07) T.C.(A) No.200 of 2004