ITO (OSD), CHENNAI v. M/s. Shanmuga Arts Science Technology and Research Academy (SASTRA), CHENNAI

ITA 1531/CHNY/2010 | 2007-2008
Pronouncement Date: 20-07-2011 | Result: Dismissed

Appeal Details

RSA Number 153121714 RSA 2010
Assessee PAN AAAAN0187C
Bench Chennai
Appeal Number ITA 1531/CHNY/2010
Duration Of Justice 10 month(s) 3 day(s)
Appellant ITO (OSD), CHENNAI
Respondent M/s. Shanmuga Arts Science Technology and Research Academy (SASTRA), CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 20-07-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 20-07-2011
Date Of Final Hearing 06-07-2011
Next Hearing Date 06-07-2011
Assessment Year 2007-2008
Appeal Filed On 16-09-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCH B : CHENNAI [BEFORE SHRI HARI OM MARATHA JUDICIAL MEMBER AND SHRI N.S. SAINI ACCOUNTANT MEMBER] I.T.A.NO.1531/MDS/2010 ASSESSMENT YEAR : 2007-08 THE INCOME-TAX OFFICER (OSD) EXEMPTIONS-III CHENNAI VS M/S SHANMUGA ARTS SCIENCE TECHNOLOGY & RESEARCH ACADEMY (SASTRA) NO.5. MAIN ROAD DR. SUBBARAYA NAGAR KODAMBAKKAM CHENNAI - 24 [PAN AAAAN0187C] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P.B.SEKARAN CIT/DR RESPONDENT BY : SHRI G.NARAYANASWMY O R D E R PER HARI OM MARATHA JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE FOR ASSES SMENT YEAR 2007-08 IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) CH ENNAI DATED 29.6.2010. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PUBLIC CHARITABLE TRUST REGISTERED U/S 12A(A) OF THE ACT. THE TRUST ITA 1531/2010 :- 2 - : OWNS AND RUNS AN EDUCATIONAL INSTITUTION BY THE NAM E SASTRA UNIVERSITY. IT FILED ITS RETURN OF INCOME ON 6.1 .22006 SHOWING NIL INCOME FOR THE ASSESSMENT YEAR 2007-08 WHICH WAS ACCEPTED U/S 141. SUBSEQUENTLY SCRUTINY ASSESSMENT WAS COM PLETED U/S 143(1) ON 31.3.2009 DETERMINING THE TOTAL INCOME O F THE ASSESSEE AT ` 12 19 15 648/-. WHILE DOING SO THE EXEMPTION U/ S 11 OF THE ACT WAS DENIED ON THE GROUND THAT THE ASSESSEE-TRUS T HAD MADE CERTAIN DONATIONS WHICH WERE NOT IN CONFORMITY WITH ITS OBJECTS AS CONTAINED IN THE TRUST DEED. BEING AGGRIEVED THE ASSESSEE PREFERRED FIRST APPEAL. THE LD. CIT(A) FOLLOWING THE DECISION OF HON'BLE A.P HIGH COURT RENDERED IN THE CASE OF TRU STEES OF H.E.H. THE NIZAMS PILGRIMAGE MONEY TRUST VS CWT/IT (171 I TR 323) WHICH WAS LATER APPROVED BY THE APEX COURT IN WHICH IT W AS HELD THAT THE DONATION MADE BY THE ASSESSEE ARE PRIMARILY FOR CHA RITABLE ACTIVITIES RECOGNIZED IN LAW AND ALSO WITHIN THE OBJECTS OF TH E TRUST DIRECTED THE ASSESSING OFFICER TO ALLOW THE DONATION MADE BY THE ASSESSEE AS CLAIMED AND TO FURTHER ALLOW THE EXEMPTION U/S 11 OF THE ACT. NOW THE REVENUE IS AGGRIEVED AND HAS RAISED THE FOLLOW ING GROUNDS BEFORE US: ITA 1531/2010 :- 3 - : 1) THE ORDER OF THE LEARNED CIT(A) IS CONTRARY T O THE LAW AND FACTS OF THE CASE. 2) LEARNED CIT(A) HAS ERRED TO HOLD IN PARA 9 OF T HE APPEAL ORDER THAT' IT IS IMMATERIAL WHETHER THE CHARITABLE OR RELIGIOUS PURPOSES FOR WHICH THE TRUST IS CREATED A RE CONFINED TO THE OBJECTS OF THE TRUST DEED. WHAT IS REQUIRED IS THAT THE INCOME MUST BE APPLIED OR ACCUMULATED FOR APPLICATION OR SET APART FOR APPLIC ATION AS PER THE PROVISIONS OF THE INCOME TAX ACT 1961' IF THE ABOVE FINDINGS IS ACCEPTED THEN ANY TRUSTEE WILL BE AT LIBERTY TO ACT BEYOND THE MANDATE OF THE TRUST DEED . IN THAT CASE THE ACTIVITIES NOT IN CONSONANCE WITH TH E DESIRE OF THE SETTLOR WILL BE PERMISSIBLE. THEREFORE THE A BOVE VIEW OF LEARNED CIT IS AGAINST THE PROVISIONS OF LA W. 2.1) THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT A LL THE DONATIONS MADE BY THE ASSESSEE WERE IN CONFORMITY W ITH THE OBJECTS OF THE TRUST THOUGH THE DONATIONS MADE BY THE ASSESSEE TO VARIOUS DONEES WERE TOWARDS NON- EDUCATIONAL PURPOSE ALSO AND SOME OF THEM WERE NEIT HER HAVING REGISTRATION U/S.12A NOR HAVING EXEMPTIONS U/S.80G OF THE 1.T.ACT. IT IS SUBMITTED THAT THE MA JOR AMOUNT OF DONATIONS ( ` 6.5 CRORES) WERE MADE TO THE TRUSTS WHEREIN THE TRUSTEES IN THE ASSESSEE TRUST O R THEIR RELATIVES ARE ALSO THE TRUSTEES. 2.2) THE LEARNED CIT(A) HAS ERRED BY STATING THAT T HE ASSESSEE TRUST IS A NORMAL PUBLIC CHARITABLE TRUST AND IS GOVERNED BY THE PROVISIONS OF SEC.11 OF THE ACT AND ITS ACTIVITIES ARE RESTRICTED NOT ONLY TO THE EDUCATION AL ACTIVITIES BUT TO ALL PUBLIC CHARITABLE ACTIVITIES. IT IS SUBMITTED THAT THE ASSESSEE HAD FAILED TO INFORM TH E LEARNED CIT(A) THAT IT HAD SUBSEQUENTLY MADE A DECLARATION ON 6.52000 AND AN AMENDMENT ON 19-01- 2001 RESTRICTING ITS OBJECTS SOLELY TO EDUCATIONAL PURPOSES FROM GENERAL PUBLIC CHARITABLE OBJECTS / ACTIVITIES . 2.3 IT IS SUBMITTED THAT THE AMENDMENT TO THE TRU ST DEED DATED 19-04-1984 WAS MADE ON 19-01-2001.AND AS PER THE AMENDMENT DEED PRODUCED DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE HAS RESTRICTED THE OBJECT S OF THE TRUST TO ONLY EDUCATIONAL PURPOSES. IT IS SUBMI TTED THAT WHERE THE AMENDMENT IS RELEVANT TO THE ASSESSM ENT YEAR 2007-08 THE ACT OF THE ASSESSEE GIVING DONATI ON AS DESCRIBED IN PARA 2 ABOVE FOR OTHER THAN EDUCATIONA L ITA 1531/2010 :- 4 - : PURPOSES AMOUNTS TO VIOLATION OF THE OBJECTS OF THE TRUST. 2.4. THE LEARNED CIT(A) OUGHT TO HAVE SEEN THAT IN ORDER TO GET DEEMED UNIVERSITY STATUS THE ASSESSEE TRUST HA D MADE THE CHANGES IN THE TRUST DEED IT IS SUBMITTED THAT RELYING ON THIS AMENDMENT ONLY THE ASSESSEE TRUST H AS BEEN NOTIFIED FOR CLAIMING EXEMPTION U/S. 10(23C)(V I) OF THE ACT IT IS SUBMITTED HERE THAT IN CASE. THE INST ITUTION (DEEMED-TO-BE-UNIVERSITY) FAILS TO COMPLY WITH THE DIRECTION(S) OF THE CENTRAL GOVERNMENT/UGC AND I OR FAILS TO PERFORM AS PER EXPECTATIONS OF THE CENTRAL GOVERNMENT I UGC THE DEEMED TO BE UNIVERSITY STATUS CONFERRED ON THE INSTITUTION CAN BE WITHDRAWN BY TH E CENTRAL GOVERNMENT ON THE RECOMMENDATIONS OF THE UGC. 2.5. THE LEARNED CIT(A) OUGHT TO HAVE SEEN THAT AS PER THE RECORDS THE OBJECTS ARE ONLY EDUCATIONAL IN NATURE AND DO NOT INCLUDE GIVING DONATIONS TO RELIGIOUS INSTIT UTIONS OR POLITICAL PARTIES. THE ASSESSEE-TRUST AT THE TIME OF FILING FORM 35 HAS STATED IN THE GROUNDS OF APPEAL THAT NO PART OF THE FUNDS OF THE TRUST HAD BEEN USED FOR NO N- CHARITABLE PURPOSES IT IS SUBMITTED THAT ON VERIFIC ATION RECORDS IT WAS FOUND THAT THE ASSESSEE HAD MADE DONATIONS TO POLITICAL PARTIES / OTHERS WHICH WERE NOT IN LINE WITH THEIR OBJECTS IT WAS STATED BEFORE THE LE ARNED CIT(A) VIDE SI. NO.6 OF THE GROUNDS OF APPEAL THAT 'WITHOUT PREJUDICE TO THE ABOVE THE APPELLANT SUBM ITS THAT THE GROSS REVENUE OF THE APPELLANT WAS IN EXCE SS OF ` 60 CRORES AND THE AMOUNT INVOLVED IS LESS THAN 0.4 % OF THE GROSS REVENUE'. IT IS SUBMITTED THAT THE ASSESS EE CONSIDERS ONLY THE AMOUNT INVOLVED NEGLECTING THE OBJECTS OF THE TRUST. 2.6. THE LEARNED CIT(A) OUGHT TO HAVE SEEN THAT FI VE MAJOR DONATIONS AMOUNTING TO ` 6.5 CRORES WERE MADE TO THE TRUSTS WHEREIN THE TRUSTEES IN SASTRA OR THEIR RELA TIVES ARE ALSO THE TRUSTEES IN THE DONEE TRUSTS THE OBJEC TS / ACTIVITIES OF THE DONEE TRUSTS INCLUDE NOT ONLY THE EDUCATIONAL PURPOSES BUT ALSO THE OTHER CHARITABLE PURPOSES. IT IS SUBMITTED THAT THE ASSESSEE TRUST H AD NOT PROVIDED ANY EVIDENCE THAT THE AMOUNTS DONATED WERE APPLIED ONLY TOWARDS EDUCATIONAL PURPOSES AND HENCE VIOLATED THE OBJECTS. ITA 1531/2010 :- 5 - : 2.7. THE LEARNED CIT(A) OUGHT TO HAVE SEEN THAT THE AMOUNT OF ` 5 LAKHS HAD BEEN REMITTED BY THE FOUNDER OF THE INSTITUTION TO THE ASSESSEE TRUST DURING THE YEAR I TSELF BUT NO EVIDENCE IN SUPPORT OF THE SAME HAD BEEN SUBMITT ED BEFORE THE ASSESSING OFFICER EITHER AT THE TIME OF ASSESSMENT PROCEEDINGS OR AT THE TIME OF REMAND REP ORT CALLED FOR. 2.8 THE LEARNED CIT(A) OUGHT TO HAVE SEEN THAT ON EXAMINATION OF RECORDS IT WAS FOUND THAT THE DONAT IONS MADE BY INDIAN PEOPLE YOUTH FEDERATION. MMTC LTD. DELHI GURUCHARAN SINGH'S MARRIAGE TSUNAMI ACTIVITI ES CARRIED OUT CHANMUGA DESIKA GNANA SAMBANDHA PARAMACHARI SWAMIGAL SADHABISHEKA COMMITTEE THANGAMUTHU RAMKUMAR RAMANATHAN SHRI.NANJIKVARADARAJAR\ GRAMA KOVIL POOJARIS PERAVA I SIVANANDA ORPHANAGE NEITHER ANY EVIDENCE PRODUCED NOR WAS THE EVIDENCE PRODUCED FOUND TO BE ADEQUATE. 2.9 THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT EX EMPTION U/S 11 CAN BE DENIED ONLY IF THE REGISTRATION U/S.1 2A OR 12M IS NOT GRANTED OR IS WITHDRAWN OR WHEN THE TRUS T HAS CONTRAVENED THE SECTION 13 OF THE ACT HAVING REGARD TO THE FINDINGS IN THE CASE OF ADITANAR EDUCATIONAL IN STITUTION VS. ADDL. CIT (224 ITR 310)(SC) WHEREIN IT WAS HEL D THAT THE AVAILABILITY OF EXEMPTION IS TO BE EVALUATED EA CH YEAR IN EACH CASE THE LEARNED CIT(A) OUGHT TO HAVE UPHE LD THE FINDINGS OF THE ASSESSING OFFICER THAT ON VIOLA TION THE TRUST WAS NOT ELIGIBLE FOR EXEMPTION U/S 11 FOR THE RELEVANT ASSESSMENT YEAR. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUC ED AT THE TIME OF HEARING IT IS PRAYED THAT THE ORDER OF THE LEARNED CIT(A) BE SET ASIDE AND THAT OF THE ASSESSING OFFIC ER RESTORED. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HA VE CAREFULLY PERUSED THE ENTIRE RECORD. IN EFFECT ONLY ONE ISSUE HAS BEEN RAISED IN THIS APPEAL. THE LD. CIT/ DR SHRI P.B.SEKARAN ARGUED THAT THE INCOME OF THE TRUST MUST BE APPLIED FOR OR SET APART ITA 1531/2010 :- 6 - : FOR APPLICATION AS PER THE PROVISIONS OF THE INCOM E-TAX ACT 1961. ACCORDING TO HIM DONATIONS WERE MADE IN VIOLATION OF THE OBJECTS OF THE TRUST. THE ASSESSEE WAS ASKED TO FURNISH THE D ETAILS OF DONATIONS MADE DURING THE YEAR. ON 27.10.2009 THE ASSESSEE FILED DETAILS OF INVESTMENTS ADDITION TO FIXED ASSETS DONATIONS RE CEIVED DURING THE YEAR DONATIONS PAID DURING THE YEAR ETC. ALONGWIT H A COVERING LETTER BEFORE THE ASSESSING OFFICER. ON PERUSAL OF THE DE TAILS SO FURNISHED IN BOX FILES IT WAS NOTICED THAT THE ASSESSEE HAD PAID DONATIONS THROUGH SASTRA AN AMOUNT OF ` 6 70 21 273/- WHICH INCLUDED DONATIONS PAID TO THE DONEES AS PER ANNEXURE A IN CLUDING DONATIONS MADE TO SOME POLITICAL PARTIES INDIVIDUALS AND OTH ERS. THE ASSESSEE HAS CLAIMED DONATIONS PAID AS ` 6 65 60 886/-IN ITS RETURN OF INCOME UNDER THE HEAD DONATIONS AND CHARITIES. THE DIFF ERENCE HAS BEEN EXPLAINED AS ADDITIONAL DONATION OF ` 39 613/- TOWARDS CHARITIES FOR TSUNAMI AND DONATION OF ` 5 00 000/- RECEIVED FROM S.RAMACHANDRA IYER WHICH HAS BEEN DEDUCTED FROM THE TOTAL AMOUNT PAID AS PER ANNEXURE A. THE DETAILS OF DONATIONS PAID AND MONE Y SPENT TOWARDS CHARITABLE ACTIVITIES WERE ALSO GIVEN. THE ASSESSI NG OFFICER FOUND THE DETAILS GIVEN IN THE LIST AND THE COVERING LETTER T O BE CONTRARY TO EACH OTHER SO HE ASKED THE ASSESSEE TO EXPLAIN WHETHER SUCH DONATIONS WERE TOWARDS THE ACTIVITIES LAID DOWN AS PER THE OB JECTS OF THE TRUST ITA 1531/2010 :- 7 - : OR NOT. THE ASSESSEE AGAIN FILED THE REQUISITE EXP LANATION BUT THE ASSESSING OFFICER WAS NOT SATISFIED. HE HELD THAT THE TRUST HAD CARRIED ON ACTIVITIES NOT ALLOWED BY THE OBJECTS OF THE TRUST SO THE TRUST IS NOT ELIGIBLE FOR EXEMPTION U/S 11 AND THER EFORE HE BROUGHT TO TAX THE ENTIRE IN THE STATUS OF AOP. HAVING FOUN D AS ABOVE AN AMOUNT OF ` 22 00 56 146/- CLAIMED AS CAPITAL EXPENDITURE BEI NG APPLICATION OF INCOME WAS NOT CONSIDERED BY THE AS SESSING OFFICER BECAUSE THE ASSESSEE WAS TREATED IN THE STATUS OF AOP. SINCE THE ASSESSEE WAS ASSESSED AS AOP DEPRECIATION OF ` 10 09 67 711/- ALTHOUGH NOT CLAIMED BY THE ASSESSEE WAS ALLOWED B Y THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS FINALIZED THE ASSESSMENT WITH THE FOLLOWING REASONING: AMONG ALL OTHER DETAILS CALLED FOR THE ASSESSEE W AS ASKED TO FURNISH THE DETAILS OF DONATIONS MADE DURI NG THE YEAR. THE ASSESSEE'S REPRESENTATIVE HAS FILED DETAILS ON 27.10.09 ENCLOSING BOX FILES WITH DETAIL S OF INVESTMENTS ADDITION TO FIXED ASSETS DONATION RECEIVED DURING THE YEAR DONATIONS PAID DURING THE YEAR ETC. ALONG WITH A COVERING LETTER. ON PERUSAL OF THE DETAILS FURNISHED IN THE BOX FILE NO.6 IT IS SEEN THAT THE ASSESSEE HAD 'PAID DONATIONS THROUGH SASTRA' AN AMOUNT OF ` 8 70 21 273/- WHICH INCLUDE DONATIONS PAID TO THE DONEES AS PER ANNEXURE-A INCLUDING DONATIONS MADE TO SOME POLITICAL PARTIES INDIVIDUA LS AND OTHERS. THE ASSESSEE HAS CLAIMED DONATIONS PAID AS ` 6 65 60 886/- IN ITS RETURN OF INCOME UNDER THE HEAD 'DONATIONS AND CHARITIES'. THE DIFFERENCE HAS E XPLAINED AS ADDITIONAL DONATION OF ` 39 613/- - CHARITIES FOR TSUNAMI AND DONATION OF ` 5 00 000/- RECEIVED FROM S. RAMACHANDRA IYER WHICH HAS BEEN ITA 1531/2010 :- 8 - : DEDUCTED FROM THE TOTAL AMOUNT PAID AS PER ANNEXURE A. AS PER POINT NO.8 OF THE LETTER FILED ON 27.10.0 9 THE DETAILS OF DONATIONS PAID AND MONEY SPENT TOWARDS CHARITABLE ACTIVITIES WERE GIVEN (ANNEXURE -B) WHE REIN SOME OF THE DONATIONS LISTED IN ANNEXURE A WERE CLUBBED UNDER SUNDRIES. ANNEXURE A NAME OF THE DONEE AMOUNT(IN ` ) ) 1 CHARITIES FOR TSUNAMI 39 613 2 SIVANAND SARASWATHI SEVASHRAM CHENNAI. 10 000 3 SENTHALAI VILLA SHRI MUTHUMARIAMMAN TEMPLE 5 000 4 SHRI TINDIVANAM RAMAMURTHY 2 00 000 5 SHRI RAMA RAMANATHAN 1 00 000 6 SHRI KOSI MANI 1 00 000 7 SHRI THANGAMUTHY 2 00 000 8 SHRI RAMKUMAR 50 000 9 COMMUNIST PARTY .. 50 000 10 SHANMUGHA DESIGA GNANA SAMBANDA 1 75 000 SWAMIQAL SATHABISHEKA COMMITTEE MAY URAM 11 JAWAHARLAL NEHRU CENTRE 48 000 12 STATION COMMANDER AIR FORCE STATION 18 000 13 SHRI JAVA BHAMINI TRUST 25 000 14 SHRI NANJIL K. VARADARAJAN - GKMOOPANAR MEMORIAL CELEBRATION 15 000 15 GRAMA KOVIL POOJ ARIS PERAVAI 2 00 000 16 SHIV MANDIR TRUST LUCKNOW. 50 001 17 INDIAN YOUTH PEO P LE FEDERATION 2 000 18 SRI VISHNU SAHASRANAMA SATSANQAM 12 500 19 SRI SRI MAHALAKSHMI MATHRUBUTHESWARAR TRUST 5 00 000 20 SECURITY SY STEMS INSTALLED AT GURUVAY UR TEMPLE 1 00 000 21 MMTC LIMITED (GIFT ITEMS) 60 772 22 DELHI GURU CHARAN SINGH'S MARRIAGE 25 000 ITA 1531/2010 :- 9 - : 23 THANJ AVUR EWARI NAG AR PRITHVINGA TEMPLE 25 000 24 50 000 CONGRESS PARTY - 25 SHRI V RAG HAVA IY ER FOUNDATION 1 25 00 000 1 25 00 000 26 S. RAMACHANDRA IYER & RAJALAKSHMI RAMACHANDRA IYER SATHABISHEKA TRUST 27 -- NEMMELI SUBRAMANIY A RAMACHANDRA IY ER FOUNDATION 1 50 00 000 28 N. R. SUBRAMANIA IYER FOUNDATION 1 25 00 000 29 SHRI R. SETHURAMAN & CHANDRA SETHURAMAN SILVER JUBILEE TRUST 1 25 00 000 TOTAL 6 70 60 886 AS THE DETAILS GIVEN IN THE LIST AND THE COVERING L ETTER ARE CONTRARY ASSESSEE WAS ASKED TO EXPLAIN WHETHER SUCH DONATION S WERE TOWARDS THE ACTIVITIES LAID DOWN AS PER THE OBJECTS OF THE TRUST. LETTER FILED BY THE REPRESENTATIVE ON 30.12.2009 AL SO COVERS ONLY THE MAJOR PARTIES TO WHOM THE DONATIONS WERE GIVEN ALONG WITH THEIR PAN NUMBERS AS LISTED BELOW WHICH ARE THE SAME AS THOSE LISTED BY THE ASSESSEE IN ANNEXURE A SERIAL NOS. 25 TO 29. S.NO NAME OF THE DONEE PAN AMOUNT (IN ` ) 1. SHRI V. RAGHAVA IYER FOUNDATION AAAIV0469L 1 25 00 000 2. S. RAMACHANDRA IYER & RAJALAKSHMI RAMACHANDRA IYER SATHABISHEKA TRUST AAATS2952S 1 25 00 000 3. NEMMELI SUBRAMANIYA RAMACHANDRA IYER FOUNDATION AAATN7677G 1 50 00 000 4. N.R. SUBRAMANIA IYER FOUNDATION AAATN0573B 1 25 00 000 5. SHRI R.SETHURAMAN & CHANDRA SETHURAMAN SILVER JUBILEE TRUST AAATS2951G 1 25 00 000 NO EXPLANATION HAS BEEN OFFERED IN RESPECT OF THE OTHER DONATIONS AS CALLED FOR. IN THE ABSENCE OF ANY SATISFACTORY EXPLANATION IT IS CONCLUDED THAT THE OTHER DONATIONS LIKE DONATIONS M ADE TO POLITICAL ITA 1531/2010 :- 10 -: PARTIES INDIVIDUALS AND TOWARDS OTHER PURPOSES ARE NOT TOWARDS ANY CHARITABLE PURPOSE AND NOT IN ORDER TO CARRY OUT TH E ACTIVITIES IN CONFORMITY WITH THE OBJECTS OF THE TRUST. AS THE TR UST HAS CARRIED OUT ACTIVITIES NOT ENABLED BY THE OBJECTS OF THE TRUST THE TRUST IS NOT ELIGIBLE FOR EXEMPTION U/S 11 AND THE INCOME IS BROUGHT TO TAX IN THE STATUS OF AOP. THE ASSESSEE HAS CLAIMED CAPITAL EXPENDITURE OF ` 22 00 56 146/- AS APPLICATION OF INCOME. THE SAME IS NOT CONSIDERE D AS THE ASSESSEE IS BEING FAXED IN THE STATUS OF AOP. THE D EPRECIATION OF ` 10 09 67 711/- THOUGH NOT CLAIMED BY THE ASSESSEE I S ALLOWED FOR THE REASON THAT THE ASSESSEE IS BEING TAXED IN THE STATUS OF AOP.' 4. AT THE TIME OF HEARING OF APPEAL BEFORE THE LD. CIT (A) FOLLOWING WRITTEN SUBMISSION ALONGWITH EVIDENCE IN RESPECT OF CLAIM MADE THEREIN WERE FILED BY THE ASSESSEE : THIS APPEAL IS AGAINST THE ORDER OF THE ASSESSING OFFICER WHEREIN THE EXEMPTION CLAIMED U/S 11 OF THE IT ACT 1961 HAS BEEN DENIED ON THE GROUND THAT THE APPELLANT HAD MA DE CERTAIN DONATIONS WHICH IN THE OPINION OF THE ASSESSING OFF ICER WERE NOT INTENDED FOR CHARITABLE PURPOSES AND ALSO NOT IN OR DER TO CARRY ON THE ACTIVITIES IN CONFORMITY WITH ITS OBJECTS OF THE APPELLANT. A TOTAL OF ` 6 70 60 886/- HAS BEEN INCURRED TOWARDS 'CHARITY AND DONATIONS' DURING THE YEAR 2006-07 ( ASST. YEAR 2007-08) OUT OF WHICH THE ASSESSING OFFICER HAS ACCEPTED A S UM OF ` 6 50 00 000/- AS DONATIONS MADE IN PURSUANT TO THE OBJECTS OF THE APPELLANT AND THE BALANCE OF ` 20 60 886/ - ACCORDING TO THE ASSESSING OFFICER ARE NOT FOR CHARITABLE PURPOSES A ND ALSO NOT IN PURSUANT TO THE OBJECTS OF THE APPELLANT. THE DETAILS OF THE DONATIONS PAID BY THE APPELLANT AND NOT ACCEPTED BY THE ASSESSING OFFICER ARE AS UNDER: (A). DONATIONS TO VARIOUS TRUSTS HAVING THE BENEFI T OF 80G GRANTED BY THE INCOME-TAX DEPARTMENT IN RESPECT OF DONATIONS RECEIVED BY THEM: ITA 1531/2010 :- 11 -: SNO. NAME OF THE TRUST 80G NO. AMOUNT (IN ` ) 1 SRI SRI MAHALAKSHMI MATHURBUTHESWARAR TEMPLE DIE(E)NO.231/91- 92 DATED 27.6.05 5 00 000 2 GRAMA KOIL POOJARI PERAVAI DIT(E) NO.2(525)/95-96 DATED 22.2.06 2 00 000 3 JAYABHAMINI TRUST C.1752 E(34)/CIT/II/PRY 25 000 4 VISHNU SAHASRANAMA SATHSANGHAM NEW DELHI DIT(E)2004-05 S- 3257/02/147 DATED 27.4.05 10 000 5 SIVANANDA SARASWATHI SEVASHRAM D 1802939(88)/86- 87 DATED 17.7.03 10 000 TOTAL 7 47 500 (B) OTHER DONATIONS ` 68 000/- 1. DONATION OF ` 48 000/- HAS BEEN MADE TO JAWAHARLAL NEHRU CENTRE FOR ADVANCED SCIENTIFIC RESEARCH A DEEMED U NIVERSITY ADMINISTERED BY THE DEPARTMENT OF SCIENCE & TECHNOL OGY AT BANGALORE FOR PURCHASE OF COPIES OF THE BOOK LEARN ING SCIENCES WRITTEN BY PROF. C.N.R. RAO. THESE BOOKS WERE PURCHASED AND DISTRIBUTED TO ALL HIGHER SECONDARY A ND HIGH SCHOOLS IN THANJAVUR DISTRICT FOR DISSEMINATION OF KNOWLEDGE. IN THE EARLIER YEARS 200 BOOKS WERE PURCHASED AND DIST RIBUTED TO LOCAL HIGH SCHOOLS. 2. DONATION OF ` 18 000/- HAS BEEN MADE TO STATION COMMANDER AIR FORCE STATION THANJAVUR. THE AIR FORCE STATION CONDUCTED AN OUTDOOR PROGRAMME AT THANJAVUR ON 23.06.06 AND AN I NDOOR PROGRAMME ON 25.06.06 TO CREATE AWARENESS AMONG THE STUDENTS OF VARIOUS COLLEGES AND SCHOOLS AND TO MAK E THE PEOPLE UNDERSTAND THE EXISTENCE OF AIR FORCE AND ITS PURPO SE. A REQUEST FROM GROUP CAPTAIN SHRI R. NAGARAJAN WAS MADE IN TH IS REGARD AND SASTRSA WAS WILLINGLY PARTICIPATED IN THAT EVEN T BY SPONSORING HIRING OF PROJECTOR AND SCREEN FOR THE E VENT. 3. DONATION OF ` 2000/- HAS BEEN MADE TO INDIAN PEOPLE YOUTH FEDERATION FOR THEIR CONDUCTING A CAMP AGAINST RELI GIOUS COMMUNAL AND LINGUISTIC CHAUVINISM. ITA 1531/2010 :- 12 -: (C) STAFF WELFARE ACTIVITIES ` 85 772/- 1. ` 60 772/- REPRESENTS GIFT ITEMS PURCHASED FROM MMTC FOR PRESENTATION AT THE TIME OF MARRIAGE AND OTHER IMPORTANT OCCASIONS RELATING TO STAFF MEMBERS. THE APPELLANT BELIEVES IN KEEPING ITS STAFF HAPPY. THERE IS NO ARGUING ABOUT THE FACT THAT THE GIVING OF GIFTS ON SPECIAL OCCASIONS (SUCH AS M ARRIAGES ETC.) HAS BECOME A VERY BIG PART OF STAFF WELFARE ACTIVIT IES BECAUSE THE EMPLOYEES PERCEIVE GESTURE OF THANKS AND AS AN EXPR ESSION OF GRATITUDE TO THE EMPLOYEES. 2. ` 25 000/- GIFT MADE AT THE TIME OF MARRIAGE OF THE DAUGHTER OF SHRI GURU CHARAN SINGH FORMER JOINT SECRETARY O F UNIVERSITY GRANTS COMMISSIONER HE WAS ALSO THE HONORARY CONSUL TANT TO THE APPELLANT AT DELHI. (D) OTHER WELFARE ACTIVITIES : ` 39 613/- 1. ` 39 613/- WAS INCURRED TOWARDS TSUNAMI ACTIVITIES CARRIED ON BY THE APPELLANT. THE DEPARTMENT OF SCIENCE & TECHNOLOGY GOVT. OF INDIA HAS SANCTIONED A SUM OF ` 40. 00 LAKHS FOR CONSTRUCTION OF COMMUNITY HALLS AND CATAMARAN BOATS ETC. AT TWO PLACES IN TSUNAMI AFFECTED AREA. THE APPELLANT WAS ASSOCIATED WITH THE WORK AND AFTER SETTLEMENT OF THE BILLS AND SUBMISSION OF ACCOUNTS A FEW MASONS REPRESENTED FOR WAGES BELATEDLY AND IT WAS SETTLED BY SASTRA. THE FIRST DEATH ANNIVERSARY OF LATE SHRI G. K. MOOPANAR WAS ORGANISED AT KUMBALWNAM WITH POOR FEEDING AND DISTR IBUTION OF CLOTHES TO SCHOOL CHILDREN'S. A SUM OF ` 50000/- WAS INCURRED IN THIS REGARD. (E) ADVERTISEMENT CHARGES ` 1 75 000/- ONE OF THE OBJECTS OF THE APPELLANT IS TO PROMOTE O THER CHARITABLE INSTITUTIONS BY WAY OF GRANTS ENGAGED IN WELFARE AC TIVITIES OF THE GENERAL PUBLIC LIKE PROPAGATING PHILOSOPHY THAT SUS TAINS HUMAN LIFE HARMONY WITH NATURE AND WITH THE LAW THAT SUST AINS THE UNIVERSE AND 'TO TRUTHS/INSTITUTIONS THAT PROPAGATE THE NATURAL LAWS ASSOCIATED WITH THE PHYSICAL PHENOMENON OF THE UNIV ERSE SUCH AS THE LAWS OF MATTER SCIENCE AND PLANETARY MOTIO NS AND HUMAN ACTIONS WHICH MAINTAIN THE INDIVIDUAL SOCIAL AND E NVIRONMENTAL ORDER. IN THIS REGARD THE APPELLANT HAS PAID A SUM OF ` 1 75 000/- TO SHANMUGHA DESIKA GNANASAMBANDAR PARAMACHARAYA SWAMIGAL COMMITTEE WHO ARE ENGAGED IN THE ABOVE ACTIVITIES. ITA 1531/2010 :- 13 -: (F) ANNADANAM (POOR FEEDING) ` 3 50 000/- SCRIPTURES OF EVERY RELIGION AFFIRM THAT OF ALL THE CHARITIES LIKE GIVING MONEY CLOTHES LAND TO POOR AND DOWNTRODDEN ; ANNADHAN (OFFER OF FOOD) IS THE BEST. FOOD GIVEN TO THE HUNG RY UNIFIES THE COMMUNITY. NO OTHER CHARITY CAN MAKE A MAN FEEL SAT ISFIED AS FOOD SERVED WHEN A PERSON IS HUNGRY. THE APPELLANT DOES ANNADHANAM TO THE POOR AND NEEDY IN VILLAGES/TOWNS AROUND ITS CAMPUSES TO DEVELOP COMMUNAL HARMONY. SUCH OCCASION S ARE FOLLOWED BY A MASS AWARENESS PROGRAMS TO HELP THE P ARTICIPANTS TO GAIN INSIGHT INTO THE NATURE OF REALITY WHERE D ISCUSSIONS HAPPENS ON PHILOSOPHY. EMINENT SPIRITUAL PERSONALIT IES ARE ALSO INVITED TO ADDRESS AND PARTICIPATE ON SUCH OCCASION S. DURING THE YEAR THE APPELLANT HAD CONDUCTED ANNADA NAM (POOR FEEDING) ON VARIOUS OCCASIONS EITHER UNDER THE SUPERVISION OF T HE FOLLOWING INDIVIDUALS VIZ 1. MR.THANGAMUTHU ` 2 00 000 2. MR.RAMKUMAR ` 50 000 3. MR RAMANATHAN ` 1 00 000 (G) DONATIONS GIVEN FOR RELIGIOUS ACTIVITIES : ` 80 001/- THE APPELLANT HAS INCURRED A SUM OF ` 80 001/- TOWARDS PARTIAL RENOVATION OF VARIOUS TEMPLES NEAR THE CAMP US AND FAR OFF PLACES. THE EXPENDITURE IS WITHIN THE LIMITS OF 5% ALLOWED UNDER THE INCOME TAX ACT 1961. 1. SHIVA MANDIR TRUST LUCKNOW ` 50 001 2. THANJAVUR ESWARI NAGAR PRATYINGA TEMPLE ` 25 000 3. MUTHUMARIAMMAN TEMPLE ` 5 000 (H) OTHERS: NIL A SUM OF ` 5 00 000/- REPRESENTS PAYMENTS MADE DURING THE YEAR TO THE FOLLOWING TEMPLES/PERSONS/INSTITUTIONS AT THE REQUEST OF THE FOUNDER OF THIS INSTITUTION AND THE AMOUNT HAS BEEN REMITTED BY HIM TO THE INSTITUTION IN THE RELE VANT FINANCIAL YEAR ITSELF: ITA 1531/2010 :- 14 -: 1. GURUVAYUR TEMPLE ` 1 00 000 2. MR.TINDIVANAM RAMAMURTHY ` 2 00 000 3. COMMUNIST PARTY ` 50 000 4. CONGRESS PARTY ` 50 000 5. MR. KO. SI MANI ` 1 00 000 AS THE FOUNDER OF THE INSTITUTION REMITTED THE MONE Y BACK TO THE APPELLANT IN THE RELEVANT FINANCIAL YEA R ITSELF THERE IS NO OUTFLOW BY THE APPELLANT WITH REGARD TO THE ABOVE PAYMENTS. BY STATING THE ABOVE IN ITS WRITTEN SUBMISSIONS TH E APPELLANT HAD SUMMED UP THAT THE 'ABOVE MENTIONED DONATIONS MADE BY THE APPELLANT ARE PRIMARILY CHARITABLE ACTIVITIES RECOGNISED IN LAW AND ALSO WI THIN THE OBJECTS OF THE TRUST' AND THAT IT WAS PRAYED B Y THE APPELLANT THAT THE DONATIONS PAID BE ALLOWED AS CLA IMED AND THE EXEMPTION U/S 11 OF THE INCOME-TAX ACT 196 1 BE RESTORED. 5. THE ABOVE WRITTEN SUBMISSION WAS SENT TO THE ASSESS ING OFFICER FOR HIS COMMENTS/REMAND REPORT. THE ASSES SING OFFICER VIDE HER LETTER DATED 25.5.2010 SUBMITTED REMAND REPORT CALLED FOR WHICH HAS BEEN EXTRACTED BY THE LD. CIT(A) IN PARA 5 OF O RDER AND WE ARE ALSO REPRODUCING THE SAME FOR READY REFERENCE: 2. THE ASSESSEE DURING THE COURSE OF SCRUTINY HEA RINGS HAD FILED DETAILS OF DONATIONS PAID BY IT. THESE DETAI LS HAD BEEN FILED UNDER THE CAPTION 'PAID DONATIONS THROUGH SASTRA' F OR AN AMOUNT OF ` 6 70 21 273/-. THESE ARE ENUMERATED AS PER ANNEXURE-A THESE DETAILS INCLUDE DONATIONS MADE TO POLITICAL PARTIES INDIVIDUALS ETC. ANNEXURE A OF THE ASSESS EE IS REPRODUCED HERE FOR EASY AND READY COMPREHENSION. ITA 1531/2010 :- 15 -: ANNEXURE A SL NO. NAME OF THE DONEE AMOUNT 1. CHARITIES FOR TSUNAMI 39 613 2. SIVANAND SARASWATHI SEVASHRAM CHENNAI 10 000 3. SENTHALAI VILLA SHRI MUTHUMARIAMMAN TEMPLE 5 000 4. SHRI TINDIVANAM RAMAMURTHY 2 00 000 5 SHRI RAMA RAMANATHAN 1 00 000 6 SHRI KOSI MANI 1 00 000 7 SHRI THANGAMUTHU 2 00 000 8 SHRI RAM KUMAR 50 000 9 COMMUNIST PARTY 50 000 10 SHANMUGHA DESIGA GNANA SAMBATDA PARAMACHARIYA SWA~IGAL 1 75 000 SATHABISHEKA COMMITTEE MAYURAM 11 JAWAHARLAL NEHRU CENTRE 48 000 12 STATION COMMANDER AIR FORCE STATION 18 000 13 SHRI JAYA BHAMINI TRUST 25 000 14 SHRI NANJI K VARADARAJAN - G.K. MOOPANAR MEMORIAL CELEBRATION 15 000 15 GRAMA KOVIL POOIARIS PERAVAI 2 00 000 16 SHIV MANDIR TRUST LUCKNOW 50 001 17 INDIAN PEOPLE YOUTH FEDERATION 2 000 18 SRI VISHNU SAHASRANAMA SATSANGAM 12 500 19 SRI SRI MAHALAKSHMI MATHRUBUTHESWARAR TRUST 5 00 000 20 SECURITY SYSTEMS INSTALLED AT GURUVAYUR TEMPLE 1 00 0 00 21 MMTC LTD.(GIFT ITEMS) 60 772 22 DELHI GURU CHARAN SINQH'S MARRIAQE 25 000 23 THANJAVUR ESWARI NAQAR PRITHYINGA TEMPLE 25 000 24 CONGRESS PARTY 50 000 25 SHRI V. RAGHAVA IYER FOUNDATION 1 25 00 000 26 S. RAMACHANDRA IYER & RAJALAKSHMI RAMACHANDRA IYER 1 25 00 000 SATHABISHEKA TRUST 27 NEMMELI SUBRAMANIYA RAMACHANDRA IYER FOUNDATION 1 5 0 00 000 28 N.R. SUBRAMANIA IYER FOUNDATION 1 25 00 000 29 SHRI R. SETHURAMAN & CHANDRA SETHURAMAN SILVER JUBI LEE TRUST 1 25 00 000 TOTAL 6 70 60 886 3. ON PERUSAL OF THE RETURN OF INCOME AND THE ANN EXURE A DISCUSSED ABOVE IT IS NOTICED THAT THE ASSESSEE HA D CLAIMED TO HAVE PAID DONATIONS OF ` 6 65 60 886 /- IN ITS RETURN OF INCOME UNDER THE HEAD 'DONATIONS AND CHARITIES'. WHEREAS A S PER THE ANNEXURE THE DONATIONS MADE BY SASTRA ARE SHOWN AS ` 6 70 21 273/-. THE DIFFERENCE AS EXPLAINED BY THE ASSESSEE IS ON ACCOUNT OF THE FOLLOWING. . ITA 1531/2010 :- 16 -: A) ADDITIONAL DONATION OF ` 39 613/- TOWARDS CHARITIES FOR TSUNAMI. B) DONATION OF ` 5 00 000/- RECEIVED FROM S. RAMACHANDRA IYER WHICH HAS BEEN DEDUCTED FROM THE TOTAL AMOUNT PAID AS PER ANNEXURE A AND RECONCILED AND FILED IN THE RETURN OF INCOME. 4. THE ASSESSEE HAD FILED LETTER DATED 27-10-2009 IN WHICH THE DETAIIS OF DONATION PAID AND MONEYS SPENT TOWARDS C HARITABLE ACTIVITIES WERE FURNISHED. THE SAME WAS FURNISHED ( ANNEXURE B) VIDE THAT LETTER. IT IS NOTICED THAT SOME OF THE DO NATIONS LISTED IN ANNEXURE A ABOVE FILED BY THE ASSESSEE VIDE THE SAM E LETTER DT 27-10-2009 WERE ALSO CLUBBED UNDER THE HEAD 'SUNDRI ES' OF ANNEXURE B. IT WOULD BE PERTINENT TO NOTE HERE THAT THE ASSESSEE HAS CLUBBED DONATIONS NOT COVERED BY SEC. 80G UNDER THE UMBRELLA OF SUNDRIES '. 5. IT IS NOTICED THAT AS PER PARA H OF THE WRITT EN SUBMISSIONS OF THE ASSESSEE MADE BEFORE CIT (A) -XII THE ASSESSEE HAS CLAIMED THAT THE FOLLOWING DONATIONS MADE BY THE TR UST HAVE BEEN RECOVERED FROM THE FOUNDER TRUSTEE SHRI S RAMACHA NDRA IYER WITHIN THE SAME FINANCIAL YEAR. HOWEVER DURING THE COURSE OF THESE PROCEEDINGS AT NO POINT OF TIME DID THE ASSES SEE PROVIDE ANY EVIDENCE FOR SUCH RECOVERIES BEING EFFECTED FOR M THE FOUNDER TRUSTEE. IN LIGHT OF THE SAME THIS CONTENTION OF TH E ASSESSEE IS UNCORROBORATED. THE LIST OF THE DONATIONS CLAIMED T O BE RECOVERED IS AS UNDER: 1 CHARITIES FOR TSUNAMI 39 613 4 SHRI THINDIVANAM RAMAMURHTY 2 00 000 . 6 SHRI KOSI MANI 1 00 000 9 COMMUNITST PARTY 50 000 20 SECURITY SYSTEMS INSTALLED AT GURUVAYUR TEMPLE 1 00 000 24 CONGRESS PARTY 50 000 6. ON PERUSAL OF THE SUBM I SSIONS OF THE ASSESSEE AND THE PAPER BOOK FORWARDED B Y TH E LEARNED CIT (A) - XII IT IS VERIFIED AND FOUND THAT THE FOLLOWING DONATIONS WE R E MA D E T O WARDS EDUCATIONAL ACTIV I TIES AND ARE IN CONFORMITY WITH THE OBJECTS OF THE TRUST. TH EY ARE LI S TE D AS UNDER : 11 JAWAHARLAL NEHRU CENTRE 48 000 12 STATION COMMANDER AIR FORCE STATION 18 000 25 SHRI V. RAGHAVA IYER FOUNDATION 1 25 00 000 ITA 1531/2010 :- 17 -: 26 S. RAMACHANDRA IYER & RAJALAKSHMI RAMACHANDRA IYER 1 25 00 000 IYER SATHABISHEKA TRUST 27 NEMMELI SUBRAMANIYA RAMACHANDRA IYER FOUNDATION 1 50 00 000 28 N.R. SUBRAMANIA IYER FOUNDATION 1 25 00 000 29 SHRI R. SETHURAMAN & CHANDRA SETHURAMAN SILVER JUBILEE TRUST 1 25 00 000 6. IN RESPECT OF THE FOLLOWING DONATIONS THOUG H THE DONEES HAVE EXEMPTION U/S 80G THE ASSESSEE DURING THE COURSE OF THESE PROCEEDINGS COULD NOT PRODUCE ANY EVIDENCE THAT I! THESE PARTICULAR DONATIONS WERE TOWARDS EDUCATIONAL ACTIVITIES. THE LIST OF SUCH DONEES IS AS UNDER: 15 GRAMA KOVIL POOJARI'S PERAVAI 2 0 0 000 18 SR I VISHNU SAHASRANAMA SATSANGAM 12 5 0 0 1 9 SRI SRI MAHALAKSHMI MATHRUBUTHESWARAR TRUST 5 00 00 0 7. IN REGARD TO THE FOLLOW I NG DONEES IT I S NOT I CED THAT NEITHER EXEMPTION U / S 8 0G I S AV AI L AB L E TO THESE DONEES NOR HAS THE ASSESSEE BEEN ABLE TO FURNISH ANY EVIDENCE THA T T HE F OLLOW I NG DONAT I ONS WERE MADE FOR SOLELY EDUCATIONAL ACTIV I T I ES. THE ASSESSEE V I DE HI S W R I TTEN SUBMISS I ONS BEFORE THE CIT ( A ) -XII IN PARA G HAS ACCEPTED THE FACT THAT DONAT I ONS I N S . NOS . 3 16 AND 23 L I STED BELOW WERE TOWARDS REL I GIOUS ACTIVITIES AND NO T TOWA R DS E DUCAT I ONAL ACT I VITIES . S . NO. NAME OF THE DONEE AMOUNT(RS . ) 2 S I VANANDA SARASWATHI SE . VASH R AM CHENNAI 1 0 0 00 3 SENTHALAI VILLA SHRI MUTHUMARIAMMAN TEMPLE 5 000 5 SHRI RAMA RAMANATHAN 1 00 000 7 SHRI THANGAMUTHU 2 00 000 8 SHRI RAM KUMAR 50 000 10 1 75 000 SHANMUGHA DESIGA GNANA SAMBATDA PARAMACHARIYA SWAMIGAL SATHABISHEKA COMMITTEE MAYURAM 13 SHRI JAYA BHAMINI TRUST 25 000 14 SHRI NANJI K. VARADARAJAN - G.K. MOOPANAR MEMORIAL CELEBRATION 15 000 16 SHIV MANDIR TRUST LUCKNOW 50 001 17 INDIAN PEOPLE YOUTH FEDERATION 2 000 21 MMTC LTD.(GIFT ITEMS) 60 772 22 DELHI GURU CHARAN SINGH'S MARRIAGE 25 000 23 THANJAVUR ESWARI NAGAR PRITHYINGA TEMPLE 25 000 ITA 1531/2010 :- 18 -: 8. NEEDLESS TO SAY THAT THE OBJECTS OF THE TRUST DEED ARE BIND I NG ON THE TR U S TE E S . THE REGISTRATION U/S 12AA IS GRANTED BY THE DIT(EXEMPTION) BASED ON THE OB J E C T S I N THE T RUST DEED . IN THE INSTANT CASE THE ASSESSEE IS A DEEMED UN I VERS I TY & HAS OB JE C TS SO LE L Y EDUCATIONAL IN NATURE . AS IT HAS ALREADY BEEN HELD IN THE CASE OF AD I TANAR EDUCAT I ONA L INSTITUTION VS . ADDL.CIT (224 ITR 310)(SC) THE AVAILABILITY OF EXEMPTION HAS TO B E EVALUATED EACH YEAR IN EACH CASE . L I KEWISE THE BENEFIT OF EXEMPTION I S TO BE EVA LU ATE D EACH YEAR EVEN IN TH I S CASE . THE ASSESSEE'S CONTENTION VIDE HIS ADD I TIONAL WR I TTE N SUBMISSIONS BEFORE CIT(A)-XII DATED 19-4-2010 THAT EXEMPTION U/S 11 CAN BE D E N IED O NLY IF THE R EG I STRATION U/S SEC 12A OR 12AA IS NOT GRANTED OR WHEN THE TRUST HAS CONTRAVENE D SEC . 13 OF THE ACT IS NOT CORRECT BECAUSE WITHDRAWAL OF REGISTRATION U/S 12AA IS NOT A PRE- R EQU I S I TE F OR W I THDRAWAL OF EXEMPT I ON U/S 11 . 9. AS PER THE LIST OF DONATIONS FILED BY THE ASS ESSEE IT WAS NOTICED THAT I T HAD D E V IA T ED FROM THE OBJECTS STATED IN THE TRUST DEED BY MAKING THE ABOVE DONAT I ONS ESPE CI A L L Y OUT OF THE FEES RECEIVED FROM THE STUDENTS WHICH IS THE MAIN RESOURCE FOR THE TRUST TO C A R RY OUT T HE OBJECTIVES LAID DOWN IN THE TRUST DEED . IT HAD CARRIED OUT ACTIV I TIES NOT ENABLED BY THE OB J ECTS OF THE TRUST. HENCE THE TRUST WAS NOT EL I GIBLE FOR EXEMPTION U/S 1 1 FO R TH E SA I D . ASST.YEAR . THE ACTIVITY SHOULD BE COVERED BY THE AMBIT OF THE DOCUMENT I .E . THE TRUST D E E D A S ENUMERATED IN RUKMANI KANNAN VIDYALAYA TRUST VS CIT (2001) 249 ITR 111(MAD). IN LIGHT OF THE ABOVE DISCUSSIONS IT IS ABUNDANTLY CLEAR THAT THE ASSESSEE T R UST HAS M ADE DONAT I ONS I N V I OLATION OF THE OBJECTS OF THE TRUST. THE NATURAL FO L LOW - UP OF TH IS WO ULD BE DENIAL OF EXEMPTION U/S 11. 6. TO THE ABOVE REMAND REPORT THE ASSESSEE FURNISHED A REJOINDER DATED 15.6.2010 WHICH READS AS UNDER: 'OF THE TOTAL SUM OF ` 6 70 60 886/- DISBURSED BY THE APPELLANT TOWARDS 'CHARITY AND DONATIONS' DURING TH E YEAR 2006-07 (ASST. YEAR 2007-08 THE ASSESSING OFFICER HAS ACCEPTED A SUM OF ` 6 50 66 000 AS DONATIONS MADE IN PURSUANT OF THE OBJECTS OF THE APPELLANT AND THE BA LANCE OF ` 19 94 886/- (CONSTITUTING 0.36% OF THE TOTAL EXPEND ITURE OF THE APPELLANT) ACCORDING TO THE ASSESSING OFFICER ARE H ELD NOT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST (EVEN THOU GH THE ITA 1531/2010 :- 19 -: DONATION MADE IS FOR CHARITABLE PURPOSES) HENCE EXE MPTION U/S 11 OF THE INCOMETAX ACT 1961 NEEDS TO BE DENIE D. IN THIS REGARD THE APPELLANT WOULD LIKE TO HIGHLIG HT THE FOLLOWING INCONSISTENCIES IN THE REMAND REPORT OF T HE ASSESSING OFFICER. 1. AT THE OUTSET THE APPELLANT SUBMITS THAT ALL TH E DONATIONS MADE BY IT ARE PRIMARILY CHARITABLE ACTIVITIES RECO GNIZED IN LAW AND ALSO WITHIN THE OBJECTS OF THE TRUST OF THE APP ELLANT; 2. IN PARA 8 9 & 10 OF THE REMAND REPORT THE ASSES SING OFFICER HAS STATED THAT (A) THE ASSESSEE TRUST HAS MADE DON ATIONS IN VIOLATION OF THE OBJECTS OF THE TRUST. THE NATURAL FOLLOW-UP OF THIS WOULD BE DENIAL OF EXEMPTION U/S 11 OF THE INCOME-T AX ACT 1961; (B) THE REGISTRATION U/S 12AA IS GRANTED BY T HE DIT(EXEMPTION) BASED ON THE OBJECTS IN THE TRUST DE ED; (C) THE ASSESSEE IS A DEEMED UNIVERSITY AND HAS OBJECTS SOL ELY EDUCATION IN NATURE; AND (D) WITHDRAWAL OF REGISTRA TION U/S 12AA IS NOT A PREREQUISITE FOR WITHDRAWAL OF EXEMPT ION U/S 11. 3. TO SUPPORT HER CONTENTIONS THE ASSESSING OFFICE R HAS RELIED ON THE DECISION OF THE RUKMANI KANNNAN VIDYA/AYA TR UST VS. CIT (2009) 249 ITR 111 (MAD.); 4. THE APPELLANT HEREWITH ENCLOSES A COPY OF ITS TR UST DEED DT. 19.04.1984 AND ALSO AN ANNEXURE WHEREIN THE DETAILS OF THE DONATIONS (THAT ARE ALLEGED BY THE ASSESSING OFFICE R ARE NOT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST) WITH THE RELEVANT CLAUSES OF THE TRUST DEED UNDER WHICH THE DONATIONS HAVE BEEN MADE. IT MAY BE NOTED AS PER TRUST DEED THE TR USTEES ARE GIVEN ABSOLUTE DISCRETION TO APPLY THE TRUST FU NDS TO ANYONE OR MORE OF THE SPECIFIED OBJECTS OF THE TRUS T THE TRUSTEES HAVING DONE SO THE SAME DOES NOT CALL FOR INTERFERENCE FROM THE ASSESSING OFFICER; 5. THE ASSESSING OFFICER HAS NOT EVEN ACCEPTED A SUM OF ` 715000 BEING DONATIONS PAID TO PUBLIC CHARITABLE TRUSTS WHICH ALSO ENJOY EXEMPTION U/S 80G OF INCOME TAX A CT 1961 AS THE ASSESSEE COULD NOT PRODUCE EVIDENCE .THAT THESE PARTICULAR DONATIONS WERE TOWARDS EDUCATIONAL ACTIV ITIES. THE APPELLANT SUBMITS THAT ITS TRUST DEED ALLOWS FOR GI VING OF DONATIONS TO TRUSTS WHICH ARE GENERALLY CARRYING ON CHARITABLE ACTIVITIES (CLAUSE 14 OF THE INCIDENTAL OBJECTS CLA USE OF THE TRUST DEED). A TRUST WHICH IS REGISTERED U/S 12A/12 AA AND ALSO HAS THE BENEFIT OF EXEMPTION U/S 8OG IN RESPECT OF DONATIONS ITA 1531/2010 :- 20 -: RECEIVED BY IT IS CERTAINLY A TRUST WHICH CARRIES O N CHARITABLE ACTIVITY AND THEREFORE THERE IS NO VIOLATION OF THE TRUST DEED. 6. IN VIEW OF THE ABOVE THE FACT THAT ALL OF THE D ONATIONS ARE COVERED BY THE OBJECT CLAUSES OF THE TRUST DEED OF THE APPELLANT IT CANNOT BE CONSIDERED AS NOT A PROPER CHARGE TO THE INCOME AND EXPENDITURE ACCOUNT OF THE APPELLANT I.E. ONE WHICH WOULD NOT QUALIFY AS FALLING WITHIN ITS 'OBJE CTS' AND ONCE IT IS SO THERE CANNOT BE ANY QUESTION OF ITS DISALLOW ANCE AND/OR CONSIDERED AS NOT A PROPER APPLICATION (OF INCOME). FURTHER INCOME UNDER THE ACT HAS TO BE CONSIDERED NOT IN A TECHNICAL SENSE BUT AS A MAN OF BUSINESS/COMMERCE WOULD UNDE RSTAND SO THAT ALL EXPENSES THAT GO IN THE CONDUCT OF THE BUSINESS WOULD WARRANT A DEDUCTION AS PER THE SETTLED LAW. THUS THERE IS AN ERROR ON THE PART OF THE ASSESSING OFFICER I N CONSTRUING CERTAIN SUMS AS AN APPLICATION OF INCOME SO AS TO MERIT EXAMINATION U/S 11 (1)(A) BEING ONLY AN EXPENSE IN CURRED IN THE RUNNING OF THE TRUST BY ITS MANAGEMENT AND OVE R THE AFFAIRS OF WHICH IT HAS COMPLETE CHARGE AND NO INT ERFERENCE FROM ANY QUARTER CAN BE CALLED FOR LEAST OF ALL FR OM THE TAX AUTHORITIES. 7. THE CASE RELIED BY THE ASSESSING OFFICER RUKMANI KANNAN VIDYALAYA TRUST VS. CIT (2001) 249 ITR 111 (MAD.) W AS ON THE FOLLOWING ISSUES : (A) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE TRIBUNAL IS RIGHT IN LAW IN HOLDING THAT THE INCOME OF THE TRUST FROM KINDERGAR TEN SECTION IS NOT ENTITLED TO EXEMPTION AS RUNNING OF A KINDER GARTEN SCHOOLS IS NOT WITHIN THE AMBIT OF THE TRUST'S OBJE CTS? (B) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE TRIBUNAL IS RIGHT IN LAW IN HOLDING THAT THE ENTIRE INCOME OF THE TRUST HAS NOT BEEN UTILIZED FOR EDUCATION ACTIVITIE S AND AS SUCH THE INCOME FROM KINDERGARTEN SCHOOL AND THE LADIES HOSTEL IS NOT EXEMPT? (C) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE TRIBUNAL IS RIGHT IN LAW IN HOLDING THAT THE INCOME FROM THE LADIES HOSTEL AS I T IS NOT ENTITLED FOR EXEMPTION AS IT IS NOT A CHARITABLE OB JECT AND INVOLVES AN ACTIVITY FOR PROFIT? (D) WHETHER ON TH E FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE TRIBUNAL IS RIGH T IN LAW IN RENDERING SUCH A FINDING WITHOUT ADVERTING TO THE E VIDENCE AND FINDINGS RECORDED BY THE CIT(A)? (E) WHETHER ON TH E FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE TRIBUNAL IS R IGHT IN LAW IN HOLDING THAT THE RECTIFICATION MADE TO THE OBJECTS OF THE TRUST CANNOT HAVE ANY RETROSPECTIVE OPERATION?' 8. THE DECISION OF THE MADRAS HIGH COURT (REFERRED BY THE ASSESSING OFFICER) IS ONLY A DIRECTION TO THE INCOM E TAX ITA 1531/2010 :- 21 -: APPELLATE TRIBUNAL TO FRAME AFORESAID QUESTIONS THA T REQUIRE CONSIDERATION BY THE COURT AND NOT A JUDGEMENT ON T HE QUESTIONS REFERRED THEREIN. HENCE THE ASSESSING OF FICER'S VIEW THAT THE APPELLANT IS NOT ELIGIBLE FOR EXEMPTION U/ S 11 BASED ON THE DIRECTIONS IN THE JUDGEMENT OF RUKMANI KANNAN V IDYALAYA TRUST VS. CIT (249 ITR 111) IS AN INCORRECT APPLICA TION OF A DIRECTION. . 9. THE ASSESSEE'S RELIANCE OF THE JUDGEMENT OF ADIT ANAR EDUCATIONAL INSTITUTION VS. ADD!. CIT (224 ITR 310) (SC) IS TOTALLY OUT OF PLACE FOR THAT JUDGEMENT DEALT WITH THE PROV ISIONS OF SEC. 10(22) OF THE INCOME TAX ACT 1961 WHEREAS THIS IS A CASE OF EXEMPTION U/S 11 OF THE INCOME TAX ACT 1961. 10. THE APPELLANT ALSO SUBMITS THE FOLLOWING WEL L ACCEPTED PROPOSITIONS OF LAW FOR YOUR KIND CONSIDERATION: (A) IT HAS BEEN HELD IN THE CASE OF BARODA CRICKE T ASSOCIATION VS ITO 8 SOT 735 THAT AN ASSOCIATION AS A RUNNING CONCERN DOES NOT REQUIRE THE CONTINUOUS SUPPORT OF ITS MEMB ERS. BY APPRECIATING THEIR SERVICES THEREFORE IT WAS NOT ONLY CELEBRATING ITS LONG HISTORY A SENSE OF WHICH WAS NECESSARY FO R AN INSTITUTION TO REMAIN ON COURSE BUT ALSO ENCOURAGING THEM BY G ENERATING SOME SELF-ESTEEM AND THUS TARGETING ITS NEEDS. T HERE WAS THUS A LIVE LINK BETWEEN THE OBJECT OF THE ASSO CIATION AND THE IMPUGNED LAYOUT. THEREFORE THE ASSESSEES CLAIM O F DEDUCTION WAS SUSTAINABLE. (B) IT HAS BEEN HELD IN THE CASE OF SHRIMAD VA LLABH VISHWA DHARMA SANSTHA VS. ADDL. CIT 102 TT J 653 THAT PAR TICULARLY WHEN GENUINENESS OF PAYMENTS INCURRED BY ASSESSEE W AS NOT DOUBTED THE ASSESSING OFFICER SHOULD NOT MAKE ANY DISALLOWANCE. 11. IN PARA 5 OF THE REMAND REPORT THE ASSESSING OFFICER HAS STATED THAT THE APPELLANT DID NOT PROVIDE ANY EVIDE NCE FOR RECOVERIES BEING EFFECTED FROM THE FOUNDER TRUSTEE SHRI S. RAMACHANDRA IYER OF A SUM OF ` 5 00 000 IN RESPECT OF CERTAIN DONATIONS PAID ON HIS BEHALF AND HENCE THE CONTENTI ON OF THE ASSESSEE IS UNCORROBORATED. THE ASSESSING OFFICER I N PARA 3 OF HER REMAND REPORT HAS STATED THAT THE DONATIONS PA ID WERE ` 665 60 886 ONLY. THE VERY FACT THAT THE TOTAL AMOUN T OF DONATIONS DISBURSED BY THE APPELLANT IS LOWER THAN THE DONATI ONS ACTUALLY CLAIMED BY THE APPELLANT (BOTH IN HER ASSESSMENT OR DER AND IN HER REMAND REPORT) CLEARLY PROVES THAT THERE HAS BE EN A RECOVERY OF ` 5. 00 LAKHS FROM SHRI S. RAMACHANDRA IYER. ITA 1531/2010 :- 22 -: IN VIEW OF THE ABOVE SUBMISSIONS ON FACTS THE APPE LLANT HEREBY PRAYS THAT THE APPEAL BE ALLOWED ON THE FACTS OF TH E CASE. IN ADDITION TO THE ABOVE THE APPELLANT HAD SUBMITT ED IN THE SAID WRITTEN SUBMISSIONS AS UNDER : 'IN ADDITION TO THE ABOVE SUBMISSIONS ON FACTS THE APPELLANT SUBMITS FOLLOWING SUBMISSIONS ON LAW FOR YOUR KIND CONSIDERATION: 1. THE APPELLANT SUBMITS THAT THE ASSESSING OFFICER 'S VIEW THAT 'WITHDRAWAL OF REGISTRATION U/S 12AA IS NOT A PRERE QUISITE FOR WITHDRAWAL OF EXEMPTION U/S 11 IS NOT CORRECT. SEC . 12A OF THE INCOME TAX ACT 1961 (UNDER WHICH THE APPELLANT TRU ST IS REGISTERED) STATES 'THE PROVISIONS OF SEC. 11 AND S EC. 12 SHALL NOT APPLY IN RELATION TO THE INCOME OF ANY TRUST OF INSTITUTION UNLESS THE FOLLOWING CONDITIONS ARE FULFILLED ..... '. THUS THE LEGISLATURE ITSELF PROVIDES THE PROCEDURE FOR WITHD RAWAL OF EXEMPTION U/S 11 VIZ: ' A. WHEN THE PROVISIONS OF SEC. 13 ARE APPLIED BY THE A SSESSING OFFICER WHICH NOT IN APPELLANT'S CASE B. THE REGISTRATION GRANTED TO A TRUST IS WITHDRAWN BY THE COMMISSIONER OF INCOME TAX U/S 12AA(3) OF THE INCO ME TAX ACT 1961 - WHICH IS NOT DONE IN APPELLANT'S CA SE . THEREFORE APPLICABILITY OF THE PROVISIONS OF SEC. 11 OF THE INCOME TAX ACT 1961 (SAVE SEC. 13 OF THE IT ACT 1961) IS GOVERNED BY SEC. 12A. SEC. 12AA(3) OF THE INCOME TAX ACT 1961 PROVI DES FOR WITHDRAWAL OF REGISTRATION GRANTED U/S 12A UNDER C ERTAIN CIRCUMSTANCES. THEREFORE IF THE ASSESSING OFFICER WANTED TO DENY EXEMPTION U/S 11 SHE WOULD HAVE FIRST REFERRED TH E MATTER TO THE COMMISSIONER OF INCOME TAX FOR WITHDRAWAL OF REGIST RATION U/S 12AA(3) OF THE ACT AND UPON RECEIPT OF THE ORDER OF THE COMMISSIONER CANCELLING THE REGISTRATION U/S 12 P ROCEEDED TO DENY THE EXEMPTION U/S 11 OF THE ACT. THE APPELLANT THER EFORE SUBMITS THAT SINCE THE ASSESSING OFFICER HAS NOT FOLLOWED T HE PROCEDURE LAID DOWN UNDER THE INCOME TAX ACT 1961. IN THIS REGARD THE APPELLANT WOULD LIKE TO BRING TO YOUR KIND ATTENTION THE OBSE RVATIONS OF THE BOMBAY HIGH COURT IN THE CASE OF S. C. PRASHAR VS. VASANTSEN DWARKADAS (29 ITR 857) 'THEREFORE THESE AUTHORITIE S CLEARLY ESTABLISH THAT A PATENT WANT OF JURISDICTION ENTITL ES THE PETITIONER TO OBTAIN IMMEDIATE RELIEF FROM THE HIGH COURT EVEN T HOUGH HE COULD ITA 1531/2010 :- 23 -: RAISE THE PLEA OF WANT OF JURISDICTION IN A HIGHER TRIBUNAL EVEN THOUGH AS THE ENGLISH CASES POINT OUT HE MAY HAVE ACQUIES CED IN THE WANT OF JURISDICTION MUST BE A PATENT ONE. IN OUR OPINI ON THE WANT OF JURISDICTION PLEADED BY THE PETITIONER IN THE CASE BEFORE US IS UNDOUBTEDLY A PATENT ONE AND IF IT IS A PATENT WAN T OF JURISDICTION NOT ONLY WOULD BE RIGHTLY EXERCISING OUR DISCRETION IN INTERFERING BUT ACCORDING TO THE ENGLISH COURTS IT WOULD BE OUR DUT Y AND OUR OBLIGATION TO PREVENT AN AUTHORITY FROM ASSUMING JU RISDICTION WHICH IT PATENTLY DOES NOT POSSESS'. 2. EVEN ASSUMING BUT NOT CONCEDING THE CONTENTION OF THE ASSESSING OFFICER THAT THE DONATIONS MENTIONED IN T HE ASSESSMENT ORDER AS NOT COVERED BY THE OBJECTS OF THE TRUST IT WOULD BY ITSELF DISENTITLE THE ASSESSEE THE EXEMPTION U/S 11 AS LON G AS THE AMOUNT SPENT IS FOR CHARITABLE PURPOSES FOR SEC. 11 OF TH E INCOME TAX ACT 1961 STATES THAT: 'SUBJECT TO THE PROVISIONS OF SECTIONS 60 TO 63 TH E FOLLOWING INCOME SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON IN RECEIP T OF THE INCOME; (A) INCOME DERIVED FROM PROPERTY HELD UNDER TRUST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES TO THE EXTENT TO WHICH SUCH INCOME IS APPLIED TO SUCH PURPOSES IN INDIA; AND WHERE ANY SUCH INCOME IS ACCUMULATED OR SET APART FOR APPLICATION TO SUCH PURPOSES IN INDIA TO THE EXTENT TO WHICH THE INCOM E SO ACCUMULATED OR SET APART IS NOT IN EXCESS OF FIFTEEN PER CENT OF THE INCOME FROM SUCH PROPERTY; ..... ' THE SUBSTANTIVE PART OF CLAUSE (A) IS IN TWO PARTS: THE FIRST PART RELATES TO THE INCOME DERIVED FROM PROPERTY HELD UN DER TRUST WHOLLY FOR RELIGIOUS OR CHARITABLE PURPOSES AND THE SECOND PART TO INCOME DERIVED FROM PROPERTY SO HELD IN PART ONLY FOR SUCH PURPOSES. BUT THE NECESSARY CONDITION FOR ATTRACTING THE FIRST PART O F THE CLAUSE IS THAT HE SAID INCOME IS APPLIED OR ACCUMULATED FOR APPLIC ATION TO SUCH RELIGIOUS OR CHARITABLE PURPOSES AND TO ATTRACT TH E SECOND PART THE INCOME FROM THE PROPERTY SO HELD IN PART SHALL HAVE BEEN APPLIED OR FINALLY SET APART FOR APPLICATION TO THE SAID PURPO SES. A COMPARATIVE STUDY OF THE TWO PARTS CLARIFIES THE SCOPE OF THE P ROVISION. THE EXPRESSION USED IN THE FIRST PART IS 'APPLIED OR AC CUMULATED FOR APPLICATION' AND THE EXPRESSION USED IN THE SECOND PART IS 'APPLIED ITA 1531/2010 :- 24 -: OR FINALLY SET APART FOR APPLICATION'. THE WORDS 'A PPLIED OR FINALLY SET APART FOR APPLICATION' IN THE SECOND PART INDICATE THAT UNLESS THE INCOME FROM THE SAID PROPERTY IS APPLIED OR FINALLY SET APART FOR THE PURPOSES THE SAID INCOME DOES NOT EARN THE EXEMPTI ON. THERE CANNOT BE ANY REASON WHY A DIFFERENT MEANING SHOULD BE GIVEN TO THE EXPRESSION 'APPLIED OR ACCUMULATED FOR APPLICAT ION' IN THE FIRST PART OF THE CLAUSE FOR ON PRINCIPLE THERE CANNOT BE ANY POSSIBLE DISTINCTION BETWEEN SUCH INCOME FROM THE PROPERTY W HOLLY HELD UNDER TRUST OR A PART OF THE PROPERTY HELD IN TRUST . THE WORDS 'APPLIED' AND 'ACCUMULATED' THEREFORE MUST MEAN ' APPLIED OR FINALLY SET APART'. 'APPLIED' MEANS THAT THE INCOME IS ACTUALLY APPLIED FOR THE SAID PURPOSES. IT IS THEREFORE MANIFEST T HAT UNDER CLAUSE (I) ONLY INCOME FROM THE PROPERTY WHOLLY OR IN PART HEL D IN TRUST ACTUALLY APPLIED OR SET APART FOR APPLICATION FOR FUTURE SPE NDING ON CHARITABLE PURPOSES IS EXEMPTED FROM INCLUSION IN THE TOTAL IN COME. FURTHER UNDER THE INCOME TAX ACT IT IS IMMATERIAL WHETHER THE CHARITABLE OR RELIGIOUS PURPOSES FOR WHICH THE TRUS T IS CREATED ARE CONFINED TO THE OBJECTS OF THE TRUST DEED WHAT IS REQUIRED IS THAT THE INCOME MUST BE APPLIED OR ACCUMULATED FOR APPLICATI ON OR SET APART FOR APPLICATION AS PER THE PROVISIONS OF THE INCOME TAX ACT 1961. FOR WHAT IS RELEVANT UNDER THE INCOME TAX ACT IS TH E 'APPLICATION OF INCOME'. THUS EVEN THOUGH THE OBJECTS OF THE TRUST DO NOT EMPOWER THE TRUSTEES TO SPEND ANY PART OF THE INCOME OF THE TRUST PROPERTY FOR A PARTICULAR PURPOSE STILL IF THEY DO SPEND ANY P ART OF THE INCOME OR ACCUMULATE OR SET IT APART FOR APPLICATION FOR CHA RITABLE OR RELIGIOUS PURPOSES IN INDIA IT WOULD BE ENTITLED TO EXEMPTIO N U/S 11(1)(A) FOR THAT YEAR. IT MAY BE THAT THE TRUSTEES WOULD BE ACT ING CONTRARY TO THE TERMS OF THE TRUST DEED BUT THAT MAY NOT BE A RELE VANT CIRCUMSTANCE U/S 11 (1 )(A) SINCE UNDER THIS PROVISION WHAT IS RELEVANT IS THE APPLICATION OF THE INCOME AND NOT THE OBJECTS. A SI MILAR VIEW HAS BEEN TAKEN BY THE ANDHRA PRADESH HIGH COURT IN THE CASE OF TRUSTEES OF H.E.H. THE NIZAM'S PILGRIMAGE MONEY TRU S VZ. CWT/IT (171 ITR 323) WHEREIN THE HON'BLE COURT HAS HELD TH AT 'IF ANY PART OF THE INCOME OF THE TRUST HAS BEEN APPLIED TO CHARITA BLE OR RELIGIOS PURPOSES IN INDIA IN THE ASSESSMENT YEAR 1974-75 OR IS ACCUMULATED OR IS SET APART FOR APPLICATION TO SUCH PURPOSES IN INDIA THE INCOME TO THAT EXTENT IS ENTITLED TO BE DEALT WITH UNDER S ECTION 11(1)(A) AND EXEMPTION GRANTED IN ACCORDANCE WITH THE SAID SECTI ON. IT MAY BE NOTED THAT THE HON'BLE SUPREME COURT COURT HAD UPHE LD THE AFORESAID ORDER OF THE ANDHRA PRADESH HIGH COURT R EPORTED IN 243 ITR 676. ITA 1531/2010 :- 25 -: 3. IT MAY NOT BE OUT OF CONTEXT TO QUOTE THE JUD GEMENT OF THE ANDHRA PRADESH HIGH COURT IN THE CASE OF COMMISSION ER OF THE WEALTH- TAX VS. TRUSTEES OF H.E.H THE NIZAM'S RELIG IOUS ENDOWMENT TRUST (108 ITR 229) 'COURTS SHOULD LEAN I N FAVOUR OF CHARITY AND PREVENT ITS EXTINCTION BY THE ONSLAUGHT S OF THE REVENUE. HE RELIED ON THE FOLLOWING PASSAGE FROM TUDOR ON CH ARITIES (6 TH EDITION PAGE 188): 'IN REGARD TO THE CONSTRUCTION OF CHARITABLE GIFTS THE RULE OF WIDEST APPLICATION IS THAT THE COURT LE ANS IN FAVOUR CHARITY. ' THERE IS NO BETTER RULE ' SAID LORD LOREBUM 'THA N THAT A BENIGNANT CONSTRUCTION WILL BE PLACED UPON CHARITABLE BEQUEST S'. 'WHERE A BEQUEST IS CAPABLE OF TWO CONSTRUCTIONS ONE OF WHI CH WOULD IT VOID AND THE OTHER WOULD MAKE IT EFFECTUAL THAT LATTER WILL BE ADOPTED. IT IS BETTER TO EFFECTUATE THAN TO DESTROY THE INTENTION' . THE PASSAGE QUOTED FROM TUDOR IS ABOUT THE CONSTRUCTION OF TRUS TS AND NOT ABOUT THE CONSTRUCTION OF TAXING STATUTES. IN REGARD TO T AXING STATUTES WE HAVE NOT DOUBT THAT IN A WELFARE STATE DEDICATED TO THE SECURING OF SOCIAL ECONOMIC AND POLITICAL JUSTICE TO ALL ITS C ITIZENS SEVERAL OF THE OLD AND NARROW RULES OF CONSTRUCTION MUST YIELD TO NEW AND OBJECTION RULES OF CONSTRUCTION. ' 7. FROM THE ABOVE IT BECOMES MANIFESTLY CLEAR THAT OUT OF TOTAL SUM OF ` 6 65 60 886/- DISBURSED BY THE ASSESSEE-TRUST TOWA RDS CHARITIES AND DONATIONS DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSING OFFICER HAS ACCEPTED AN AMOUNT OF ` 6 50 66 000/- AS DONATION MADE IN PURSUANCE OF THE OBJECTS OF THE ASSESSEE-TRUST. TH E BALANCE AMOUNT OF ` 14 94 886/- CONSTITUTING 0.34% OF THE TOTAL EXPEND ITURE ARE FOUND NOT IN ACCORDANCE WITH THE OBJECTS OF THE TRU ST THOUGH THE DONATIONS WERE MADE FOR THE CHARITABLE PURPOSES. T HE TRUST DEED CONTAINS MAIN OBJECTS SECONDARY OBJECTS AND OTHER INCIDENTAL OBJECTS TO ACHIEVE THE MAIN OBJECTS. THE ASSESSING OFFICER HAS ACCEPTED THE MAJOR SHARE OF DONATIONS BUT HAS NOT ACCEPTED THE P ALTRY AMOUNT OF ITA 1531/2010 :- 26 -: DONATIONS. MOST OF THE DONATIONS DENIED BY THE ASS ESSING OFFICER ARE IN RELATION TO TRUST HAVING EXEMPTION U/S 80G OF TH E ACT. THE OTHER DONATIONS WERE IN RELATION TO TSUNAMI RELIEF STAFF WELFARE ACTIVITIES ADVERTISEMENT TO PROMOTE ENVIRONMENT/NATURE DISBUR SEMENT OF CLOTH AND FEEDING OF THE POOR AND SMALL DONATION GIVEN T O YOUTH ORGANIZATION. THE ASSESSEE HAS ALSO SPENT A SMALL AMOUNT TOWARDS RENOVATION OF VARIOUS TEMPLES FALLING WITHIN THE LI MIT OF 5% PERMITTED IN THE ACT. SOME DONATIONS WERE MADE DURING THE YE AR TO VARIOUS PERSONS/INSTITUTIONS AT THE REQUEST OF THE FOUNDER OF THE ASSESSEE- TRUST. SINCE THE MONEY WAS REMITTED BACK BY THE FO UNDER IN THE SAME FINANCIAL YEAR THE ASSESSEE-TRUST HAS NOT CL AIMED IT AS EXPENDITURE. IT CANNOT BE DISPUTED NOW THAT SUCH D ONATIONS ARE NOT PERMITTED BY THE OBJECTS OF THE TRUST AND THE TRU STEES ARE GIVEN ABSOLUTE DISCRETION TO APPLY THE TRUST FUNDS TO ANY ONE OR THE OTHER SPECIFIC OBJECTS OF THE TRUST. THE ASSESSING OFF ICER IN HIS REMAND REPORT HAS ACCEPTED ALMOST ALL THE DONATIONS. 8. IN HIS REMAND REPORT THE ASSESSING OFFICER HAS N OT FOUND THE APPLICATION OF FUNDS OF THE TRUST TO BE CONTRARY TO THE OBJECTS OF THE TRUST. NEEDLESS TO SAY THAT THE OBJECTS OF THE TRU ST DEED ARE BINDING ON THE TRUSTEES. WHAT IS REQUIRED BY THE TRUST I S THAT THE INCOME ITA 1531/2010 :- 27 -: MUST BE APPLIED OR ACCUMULATED FOR APPLICATION OR S ET APART FOR APPLICATION TO ACHIEVE THE OBJECTS OF THE TRUST A S PER THE PROVISIONS OF THE INCOME-TAX ACT 1961. THE APPLICATION OF IN COME IS RELEVANT. EVEN IF THE OBJECTS OF THE TRUST DO NOT EMPOWER THE TRUSTEES TO SPEND A PART OF THE INCOME OF THE TRUST PROPERTY F OR A PARTICULAR PURPOSE AND STILL THEY SPEND ANY PART OF THE INCO ME OR ACCUMULATE OR SET IT APART FOR APPLICATION FOR CHARITABLE OR RELIGIOUS PURPOSES IN INDIA IT WOULD BE ENTITLED TO EXEMPTION U/S 11(1)( A) OF THAT YEAR AS HAS BEEN HELD BY THE HON'BLE A.P. HIGH COURT IN T HE CASE OF TRUSTEES OF H.E.H. THE NIZAMS PILGRIMAGE MONEY TRU ST VS CWT/IT (SUPRA) WHICH HAS BEEN CONFIRMED BY THE HON'BLE APE X COURT. 9. IN THE REMAND REPORT THE ASSESSING OFFICER HAS N OT APPLIED PROVISIONS OF SECTION 13 TO THE FACTS OF THE CASE N OR HE HAS PROPOSED TO WITHDRAW THE REGISTRATION U/S 12AA(3) OF THE ACT . WITHOUT DOING SO THE ASSESSING OFFICER CANNOT DENY EXEMPTION U/S 11 OF THE ACT. FROM THE RECORDS PLACED BEFORE US WE FIND THAT THE RESPONDENT A PUBLIC CHARITABLE TRUST IS CONSTITUTED BY A DEED O F TRUST DATED 19.4.1984 WITH SUPPLEMENTARY DEEDS DATED 6.5.2000 A ND 19.1.2001 [PAGES 11 TO 38 OF THE PAPER BOOK]. THE TRUST IS R EGISTERED U/S 12A OF THE ACT AND ITS INCOME IS EXEMPT U/S 11 OF THE A CT. HOWEVER THE ITA 1531/2010 :- 28 -: ASSESSING OFFICER HAS HELD THAT THE TRUST IS NOT EL IGIBLE FOR EXEMPTION U/S 11 BECAUSE IT HAS GIVEN CERTAIN DONATIONS IN C ONTRAVENTION OF THE OBJECTS OF THE TRUST. THE REMAND REPORT WHICH IS A DETAILED REPORT SPEAKS OTHERWISE. THE LD. CIT(A) HAS MAINL Y RELIED ON THIS REPORT. THE ASSESSING OFFICER HAS NOT DETAILED ANY VALID REASON(S) BASED ON WHICH EXEMPTION U/S 11 CAN BE REFUSED TO T HE TRUST. THE LD. CIT(A) HAS VERILY MADE THE REMAND REPORT WHIC H IS EXTRACTED IN THE EARLIER PART OF THE ORDER AS A BASIS TO ARRIVE AT HIS CONCLUSION THAT THE TRUST WAS ENTITLED TO EXEMPTION U/S 11 OF THE ACT. ALTHOUGH PRIMA-FACIE THERE SEEMS TO BE NO FALLACY IN THIS F INDING OF THE LD. CIT(A) YET WE WOULD LIKE TO FURTHER DISCUSS THIS CO NTROVERSY. 10. THE MAIN ISSUE FOR OUR CONSIDERATION IS WHETHER T HE DONATIONS/EXPENSES REFERRED TO IN PARAGRAPHS 5 6 & 7 OF THE REMAND REPORT ARE WITHIN THE OBJECTS OF THE TRUST OR NOT. WE HAVE ALREADY DETAILED SUCH EXPENDITURE/ DONATIONS IN THE EARLIER PART OF THE ORDER. WE MAY MENTION EVEN AT THE COST OF REPETITION THAT VERY SMALL AMOUNT COMPARED TO THE DONATIONS ACCEPTED BY THE AS SESSING OFFICER IS DISPUTED BY HIM. THE MAJOR PORTION OF THE AMOUNT DISALLOWED BY THE ASSESSING OFFICER PERTAINS TO THE DONATIONS MADE TO VARIOUS TRUSTS HAVING EXEMPT U/S 80G OF THE ACT AND OTHER ITA 1531/2010 :- 29 -: DONATIONS ARE VERY SMALL AMOUNTS RELATED TO EXPENSE S TOWARDS VARIOUS WELFARE ACTIVITIES AS DISCUSSED ABOVE. IN O UR OPINION THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF AD ITANAR EDUCATIONAL INSTITUTION VS ADDL. CIT (224 ITR 310) IS NOT APPLICABLE TO THE FACTS OF THE GIVEN CASE BECAUSE THAT JUDGMENT D EALS WITH THE PROVISIONS OF SECTION 10(22) OF THE ACT WHEREAS THI S CASE IS REGARDING EXEMPTION U/S 11 OF THE ACT. SECTION 10(22) DEALS WITH TOTAL EXEMPTION FROM INCOME-TAX OF A UNIVERSITY OR OTHER EDUCATIONAL INSTITUTIONS EXISTING SOLELY FOR EDUCATIONAL PURPO SES AND NOT FOR THE PURPOSE OF PROFIT WHEREAS THE ASSESSEE IN THIS CAS E IS A NORMAL PUBLIC CHARITABLE TRUST WHICH IS GOVERNED BY THE PR OVISIONS OF SECTION 11 OF THE ACT AND ITS ACTIVITIES ARE NOT RESTRICTED ONLY TO THE EDUCATIONAL ACTIVITIES BUT ALL PUBLIC CHARITABLE AC TIVITIES. IT IS A WELL SETTLED PROPOSITION OF LAW THAT MINOR DISCREPANCIES FOUND IN ANY TRUSTS CASE HAVE TO BE IGNORED. TO BE MORE SPECIF IC MINOR DISCREPANCIES CANNOT TERMINATE INTO DENIAL OF BENEF IT OF EXEMPTION U/S 11 OF THE ACT. IN THIS REGARD DECISIONS OF J.K.TRUST VS CWT 205 ITR 524 (CAL) AND DY. CIT VS COSMOPOLITAN EDUC ATION SOCIETY 244 ITR 494(RAJ) ARE RELEVANT. THE RATIO DECIDENDI OF THE HON'BLE CALCUTTA AND RAJASTHAN HIGH COURTS INTER ALIA SUP PORT OUR ABOVE CONCLUSION. OBVIOUSLY NON-WITHDRAWAL OF REGISTRAT ION ALREADY ITA 1531/2010 :- 30 -: GRANTED U/S 12AA OF THE ACT IS A FACTUM WHICH COLO SSAL OVERTURES BECAUSE THE ACT ITSELF PROVIDES THAT EXEMPTION CA N BE WITHDRAWN ONLY AND ONLY WHEN EITHER THE PROVISIONS OF SECTION 13 ARE SUCCESSFULLY INVOKED BY THE ASSESSING OFFICER OR T HE REGISTRATION ALREADY GRANTED IS WITHDRAWN U/S 12AA(3) OF THE A CT. AS IS EVIDENT FROM THE REMAND REPORT THE ASSESSING OFFICER HAS N OT INVOKED SECTION 13 OF THE ACT AND UNDENIABLY THE ASSESSEE-T RUST CONTINUES TO BE REGISTERED U/S 12AA OF THE ACT. THUS WE ARE OF THE CONSIDERED VIEW THAT IN THE GIVEN FACTS AND CIRCUMSTANCES OF T HE CASE IT IS NOT CORRECT AND WOULD RATHER BE UNJUST TO DENY EXEMPTIO N U/S 11. THE ASSESSEE HAS NOT IN EFFECT CARRIED ON ANY ACTIVITY WHICH IS NOT CHARITABLE IN NATURE AND NOT COVERED UNDER ITS MAI N OBJECTS OR IN ANY OTHER CASE ANCILLARY OBJECTS AND OTHER INCIDENT AL OBJECTS NECESSARY TO ACHIEVE THE MAIN OBJECT. THEREFORE T HE CUMULATIVE EFFECT OF OUR FOREGOING DISCUSSION IS THAT THE LD. CIT(A) HAS TAKEN A CORRECT VIEW AS PER LAW. THE REASONING GIVEN IN TH E GROUNDS AS WELL AS THROUGH ORAL SUBMISSIONS BY THE LD. CIT/DR DO N OT DRIVE US TO INTERFERE IN HIS FINDING. HENCE WE CONFIRM THE VI EW TAKEN BY THE LD. CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. ITA 1531/2010 :- 31 -: 11. IN THE RESULT THE APPEAL OF THE REVENUE STANDS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT O N 20.7.2011. SD/- SD/- (N.S. SAINI) ACCOUNTANT MEMBER ( HARI OM MARATHA ) JUDICIAL MEMBER DATED: 20 TH JULY 2011 RD COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR