JUDGMENT
D.K. Jain, J.
1. By this application under Section 27(3) of the Wealth-tax Act, 1957 (for short “the Act”), the Revenue seeks a direction to the Income-tax Appellate Tribunal, New Delhi (for short “the Tribunal”), to state the case and refer the following questions, stated to be of law, for the opinion of this court :
“1. Whether, on the facts and in the circumstances of the case, the learned Income-tax Appellate Tribunal was justified in deleting the addition of Rs. 7,03,838 for the assessment year 1975-76, respectively, made by the Wealth-tax Officer on account of assets held by the assessed-trust in two excluded companies under Section 13(2) of the Income-tax Act ?
2. Holding that for the assessment year 1973-74 also the assessed’s case is covered by the proviso 2 to Section 21A that any part of the property or income of a trust shall be deemed to have been used or applied for the benefit of prohibited category of person within the meaning of Section 13(3) if it is so used or applied at any time during the period of twelve months ending with the valuation date and the assessed held shares of more than 5 per cent. of total equity share capital of the two companies up to March 30, 1973 ?”
2. Briefly stated, the material facts giving rise to the present application are as follows :
The assessed is a charitable trust. While completing the assessment for the assessment year 1975-76, for which the valuation date was March 31, 1975, the Assessing Officer noticed that the assessed-trust held shares in two companies, viz., Motor General Finance Ltd., and Goodwill India Ltd. He felt that since in both the said companies the trustees of the assessed-trust were substantially interested within the meaning of Section 13 of the Income-tax Act, 1961, the value of shares was to be included in the net wealth of the assessed under Section 21A of the Act. It may be noted that as on March 30, 1973, the investment of the trust in the said companies was more than 5 per cent. of the share capital of the companies. However, from March 30, 1973, the trust had reduced its investment in both the companies to exactly at 5 per cent. The Assessing Officer accordingly computed the market value of these shares and included the same in the net wealth of the assessed.
3. Aggrieved, the assessed took the matter in appeal to the Appellate Assistant Commissioner. The Appellate Assistant Commissioner, by following the decision of the Tribunal in the case of Eternal Science of Man’s Society, wherein it had been held that the shares forming part of corpus of the trust, could not be treated as investment by the trust so as to attract the provisions of Section 21A of the Act, held that the aggregation of the shareholding of the trust in two companies, was not in order.
4. The Revenue carried the matter in further appeal to the Tribunal but without any success. The Tribunal also felt that the assessed’s case was clearly covered by the second proviso to Section 21A of the Act, as its shareholding in the two companies did not exceed 5 per cent. of the capital of each of the companies.
5. On Revenue’s moving an application under Section 27(1) of the Act, the Tribunal referred the question with regard to the valuation of the shares held by the trust in the two companies but declined to refer the aforenoted questions on the ground that these were pure questions of fact. Hence, the present application.
6. We have heard learned counsel for the parties.
7. It is vehemently submitted by Mr. Pandey, learned counsel for the Revenue, that since the proposed questions involve the interpretation of the second proviso to Section 21A of the Act, the same are pure questions of law and the Tribunal was not justified in not referring them.
8. Mr. Goswamy, learned counsel for the assessed, on the other hand, while supporting the order passed by the Tribunal, declining to make reference on the aforenoted questions, has submitted that apart from the fact that the language of the second proviso to Section 21A leaves no scope for doubt that the investment of the trust has to be considered in each of the concerns, the question as to whether the shares held by the assessed-trust as its corpus, received by way of donation, stands answered by this court, in favor of the assessed in CIT v. Eternal Science of Man‘s Society [1981] 128 ITR 456. The contention of learned counsel for the assessed is that the donated shares, held by the assessed, cannot be treated as an investment by the assessed-trust in the two above named companies, within the meaning of Section 21A of the Act.
9. Having carefully perused the order of the Tribunal, we feel that apart from the question of valuation of shares, the only other issue, which was raised and considered by the Tribunal was whether the investment of the assessed-trust in the aforenoted two companies exceeded 5 per cent. of the respective share capital of the two companies or not. In the light of the averments on this aspect the Tribunal recorded the finding that the investment by the trust in each of the concerns did not exceed 5 per cent. of their respective capitals and, therefore, the second proviso to Section 21A of the Act was clearly attracted in the case of the assessed-trust. Obviously, this is a pure finding of fact.
10. We are not impressed with the contention of learned counsel for the Revenue that since the issue raised involves interpretation of the second proviso, the proposed questions are questions of law. To our mind the language of the second proviso is very clear and there is no scope for any debate. The said proviso stipulates that “in a case where the aggregate of the funds of the trust invested in a concern in which any person referred to in Sub-section (3) of Section 13 of the Income-tax Act has a substantial interest as provided in Explanation 3 to that section does not exceed 5 per cent. of the capital of that concern, the exemption under Clause (i) of Sub-section (1) of Section 5 of the Act shall not be denied . . .” . A bare reading of the provision makes it clear that the percentage of investment of the funds of the trust has to be considered with reference to the respective capital of each of the concerns. The language of the provision is plain and clear and is not capable of any other interpretation. Besides, in view of the decision in Eternal Science of Man’s Society’s case , the shares in question cannot otherwise be held to be investment by the trust, falling within the ambit of Section 21A of the Act.
11. For the foregoing reasons, we do not find any infirmity in the order of the Tribunal declining to make reference on the aforenoted questions. The application is accordingly dismissed with no order as to costs.