( 1 ) THESE two reference applications involve identical points for adjudication in relation to Sir Sobha Singh Public Charitable Trust, (hereinafter referred to as the assessee) for the assessment years 1973-74 and 1974-75. At the instance of revenue, the following questions have been referred for opinion of this Court under section 256 (1) of the Income-tax Act, 1961 (in short the Act) by the Income-tax appellate Tribunal, Delhi Bench (in short, the Tribunal)

"whether on the facts and in the circumstances of the case the ITAT was right in law in holding that the provisions of section 13 (2) (h) of the Income-tax act were not applicable to the assessee s case and thereby exempting the assessee from tax under S. 11 of the Income tax Act in respect of the income arising to it from the shares and property donated by Sir Sobha Singh?

"whether on the facts and in the circumstances of the case the Tribunal is correct in law in holding that the provisions of Section 13 (2) (h) of the Income- tax Act are not applicable to the present case and thereby exempting the assessee from tax under S. 11 of the Income-tax Act. "

( 2 ) FACTUAL position in a nutshell is as follows: assessee trust was created on 25-3-1961 with ah amount of Rs. 5000. 00 donated by Sir Sobha Singh. On 28-3-1961, he donated to the trust 1500 shares of Sobha singh and Co (P) Ltd and 2000 shares of NVRP Co. Ltd. He also donated to the trust two properties; one at A-1 Janpath known as "baikunth" and another in Mashobra, near Simla, known as "sunderban". These two properties were occupied by Sir sobha Singh, Chairman of the trust, who was paying rent to the trust for the use of these properties. For the assessment years in question Income-tax Officer (in short, ito) held that in view of the provisions contained in Section 13 (2) (b) and 13 (2) (h) of the Act the trust was not eligible for exemption. Section 13 (2) (b) deals with occupation of any property of the trust by any person referred to in Section 13 (3) for any period during the previous year without payment of adequate rent or other compensation. Section 13 (2) (h) deals with investment of any funds belonging to the trust for any period during the previous year in any concern in which any person referred to in section 13 (3) has a substantial interest. The persons referred to in Section 13 (3) are the author of the trust or founder of the institution, any person who has made a substantial contribution to the trust or institution, any relative of any such person mentioned earlier or any concern in which any of such persons has a substantial interest. According to ITO, Sir Sobha Singh answers the above description inasmuch as he was the founder of the trust and it was he who had transferred shares properties and cash to the trust. Appeals before Appellate Assistant Commissioner (in short AAC) did not bring any relief. Appeals were preferred before Tribunal. As noted above, Sir Sobha Singh was occupying the aforesaid two properties on payment of rent and there was no finding either by ITO or the AAC that rent paid by him was not adequate. Tribunal held that necessary pre-requisites for the application of Section 13 (2) (b) was absent. So far as the provisions of Section 13 (2) (h) are concerned, assessee s stand was that the assessee had held shares of Sir Sobha singh Pvt Ltd and NVRP Co. Ltd. These were not investments made by the assessee out of its own funds. These were shares donated by Sir Sobha Singh and the assessee had nothing to do with those investments. Stand of the Revenue, on the other hand, was that income from the trust was applied for the benefit of the persons referred to in Section 13 (1) (c) (ii) of the Act. Tribunal did not accept this stand and held that shares received by the trust and held by it cannot be said to be investment made by the assessee trust in any Company in which the donor had substantial interest. It was a mere donee and recipient and it cannot be termed as an inves