( 1 ) THE material facts on record and the proceedings leading up to this reference are, inter alia, that Birla Charity Trust, the assessee, is a trust founded in 1920. It is not in dispute that the income of the assessee is spent for charitable purposes. Between 1956 and 1963, the assessee received from time to time ordinary shares of Jiyajee Rao Cotton Mills Ltd. ("the company"), from various parties aggregating 96,490 shares.

( 2 ) IN the assessment year 1971-72, the relevant accounting year ending on March 31, 1971, the assessee received dividends on the said shares amounting to Rs. 1,44,735. In its return of income as well as in its assessment, the assessee claimed that the said amount of Rs. 1,44,735 was not exigible to income-tax under the provisions of Section 13 (1) (c) (ii) of the Income-tax Act, 1961 ("the Act"), read with the second proviso to the said section. The Income-tax Officer rejected the contentions of the assessee and held that the funds of the assessee remained invested in a concern in which the persons referred to in Sub-section (3) of Section 13 of the Act, viz. , the settlor of the trust, the persons who had made a substantial contrib