2011 (1) TMI 1539 - HC - Indian Laws

Tax Tribunal Upholds Exemption for Charitable Trust

CIT and Anr. Versus Shamnur Savithramma Kallappa Public Trust

The Assessee trust, formed for charitable purposes, was granted exemption under Section 11 of the Income Tax Act by the Tribunal. The donations made to ... - Issues involved: Revenue challenging exemption granted to Assessee trust, utilization of donations for charitable purposes, interpretation of trust deed clauses.Exemption granted to Assessee trust:The Assessee trust, formed for charitable purposes including education and relief activities, made donations to various trusts and institutions. The Assessing Officer (AO) disallowed the deductions claiming the donations were not utilized for the trust's objects as per the trust deed. However, the CIT(A) and Tribunal found that the donations were applied for the trust's objects, making the Assessee eligible for exemption under Section 11 of the Income Tax Act. The Tribunal noted that the donee trusts were exempted under Section 80G and their objects aligned with those of the Assessee trust. The Tribunal upheld the order of the CIT(A) and dismissed the appeals by the Revenue.Utilization of donations for charitable purposes:The Revenue contended that the Assessee trust had no clause in the trust deed allowing donations to other trusts, and that the donee trusts did not use the funds for charitable purposes. The appellate authorities, however, considered the trust deed's clause authorizing financial assistance to educational institutions and found that the donations were in line with the trust's objects. The Tribunal emphasized that the donee trusts were recognized for charitable activities under Section 80G and renewed annually, holding that the donations were valid and dismissing the Revenue's appeals.Interpretation of trust deed clauses:The trust deed clearly authorized the Assessee trust to establish and support educational institutions for the public benefit, indicating a broad scope for financial assistance to such institutions. The Tribunal concluded that the AO's interpretation of the trust deed was incorrect, as the donations were in line with the trust's objectives and the donee trusts' charitable activities. The Court found no substantial question of law and upheld the decisions of the lower authorities, dismissing the appeals by the Revenue.