AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2011 (7) TMI 767
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.... 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 Trustees of H.E.H. the Nizam's Pilgrimage Money Trust vs CWT/IT (171 ITR 323), which was later approved by the Apex court, in which it was held that the donation made by the assessee are primarily for charitable activities recognized in law and also within the objects of the 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 following grounds before us: "1) The order of the learned CIT(A) is contrary to the law and facts of the case. 2) Learned CIT(A) has erred to hold in para 9 of the appeal order that" it is immaterial whether the charitable or religious purposes for which the trust is created are 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 application as per the provisions of the Income Tax Act, 1961" If the above findings is accepted then any trustee will b....
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....overnment 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 institutions 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 noncharitable purposes It is submitted that on verification 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 learned CIT(A) vide SI. NO.6 of the grounds of appeal that "without prejudice to the above, the appellant submits that the gross revenue of the appellant was in excess of Rs. 60 crores and the amount involved is less than 0.4% of the gross revenue". It is submitted that the assessee considers only the amount involved neglecting the objects of the trust. 2.6. The learned CIT(A) ought to have seen that five major donations amounting to Rs. 6.5 crores were made to the trusts wherein the trustees in SASTRA or their relatives are also the trustees in the donee trusts The objects / activities of t....
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....essee filed details of investments, addition to fixed assets, donations received during the year, donations paid during the year etc. alongwith a covering letter before the Assessing Officer. On perusal of the details so furnished, in box files, it was noticed that the assessee had paid donations through SASTRA an amount of Rs. 6,70,21,273/- which included donations paid to the donees as per Annexure 'A' including donations made to some political parties, individuals and others. The assessee has claimed donations paid as Rs. 6,65,60,886/-in its return of income under the head 'donations and charities'. The difference has been explained as additional donation of Rs. 39,613/- towards charities for Tsunami and donation of Rs. 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 money spent towards charitable activities were also given. The Assessing Officer found the details given in the list and the covering letter to be contrary to each other, so, he asked the assessee to explain whether such donations were towards the activities laid down as per the objects of the trust or not. The assess....
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....banda Swamiqal Sathabisheka Committee, Mayuram 1,75,000 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 Poojaris Peravai 2,00,000 16 Shiv Mandir Trust, Lucknow. 50,001 17 Indian Youth People Federation 2,000 18 Sri Vishnu Sahasranama Satsanqam 12,500 19 Sri Sri Mahalakshmi Mathrubutheswarar Trust 5,00,000 20 Security Systems installed at Guruvayur Temple 1,00,000 21 MMTC Limited (Gift Items) 60,772 22 Delhi Guru Charan Singh's marriage 25,000 23 Thanjavur Ewari Nagar Prithvinga 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 Sathabisheka Trust 1,25,00,000 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 Total 6,70,60,886 As the details given in the list and the covering letter are contrary, assessee was asked to explain whether such donati....
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....6,50,00,000/- as donations made in pursuant to the objects of the appellant and the balance of Rs. 20,60,886/- according to the Assessing Officer are not for charitable purposes and 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 benefit of 80G granted by the Income-tax Department in respect of donations received by them: SNo. Name of the trust 80G No. Amount (in Rs. ) 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 - Rs. 68,000/- 1. Donation of Rs. 48,000/- has been made to Jawaharlal Nehru Centre for advanced Scientific Research, a Deemed University administered by the Department of Science & Technology, at Bang....
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....n's. A sum of Rs. 50000/- was incurred in this regard. (E) Advertisement Charges - Rs. 1,75,000/- One of the objects of the appellant is to promote other charitable institutions by way of grants engaged in welfare activities of the general public like propagating philosophy that sustains human life harmony with nature and with the law that sustains the universe and 'to truths/institutions that propagate the natural laws associated with the physical phenomenon of the universe, such as the laws of matter, science, and planetary motions and human actions which maintain the individual, social and environmental order. In this regard the appellant has paid a sum of Rs. 1, 75,000/- to Shanmugha Desika Gnanasambandar Paramacharaya Swamigal Committee who are engaged in the above activities. (F) Annadanam (Poor Feeding) - Rs. 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 hungry unifies the community. No other charity can make a man feel satisfied as food served when a person is hungry. The appellant does annadhanam to the poor and needy in villages/....
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....tails of donations paid by it. These details had been filed under the caption "paid donations through SASTRA" for an amount of Rs. 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 assessee is reproduced here for easy and ready comprehension. 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 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 1....
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....ed to 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 submissions of the assessee and the paper book forwarded by the learned CIT (A) - XII, it is verified and found that the following donations were made towards educational activities and are in conformity with the objects of the trust. They are listed 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 26 S. Ramachandra Iyer & Rajalakshmi Ramachandra Iyer Sathabisheka Trust 1,25,00,000 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, though 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. ....
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....ions, especially out of the fees received from the students, which is the main resource for the trust to carry out the objectives laid down in the trust deed. It had carried out activities not enabled by the objects of the trust. Hence, the trust was not eligible for exemption u/s 11 for the said. Assessment year. The activity should be covered by the ambit of the document i.e., the trust deed as 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 trust has made donations in violation of the objects of the trust. The natural follow-up of this would 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 Rs. 6,70,60,886/-, disbursed by the appellant towards 'Charity and Donations' during the year 2006-07 (Asst. Year 2007-08, the Assessing Officer has accepted a sum of Rs. 6,50, 66,000 as donations made in pursuant of the objects of the appellant and the balance of Rs. 19,94,886/- (constituting 0.36% of the total expenditure of the appellant) according to the Assessing Officer are h....
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....inly a trust which carries on charitable activity and therefore there is no violation of the Trust Deed. 6. In view of the above, the fact that all of the donations 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 'objects' and once it is so, there cannot be any question of its disallowance 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 understand, 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, in construing certain sums as an application of income, so as to merit examination u/s 11 (1)(a), being only an expense incurred in the running of the Trust by its management, and over the affairs of which it has complete charge, and no interference from any quarter can be called for, least of all from the tax authorities. 7. The case relied by the Assessing Offic....
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....ces, therefore, it was not only celebrating its long history, a sense of which was necessary for an Institution to remain on course, but also encouraging them by generating some self-esteem, and thus, targeting its needs. There was thus, a live link between the 'object' of the association and the impugned layout. Therefore, the assessee's claim of deduction was sustainable. (b) It has been held in the case of Shrimad Vallabh Vishwa Dharma Sanstha vs. Addl. CIT 102 TTJ 653, that particularly when genuineness of payments incurred by assessee was 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 evidence for recoveries being effected from the founder trustee Shri S. Ramachandra Iyer of a sum of Rs. 5, 00, 000 in respect of certain donations paid on his behalf and hence the contention of the assessee is uncorroborated. The Assessing Officer in para 3 of her remand report, has stated that the donations paid were Rs. 665,60,886 only. The very fact that the total amount of donations disbursed by the appellant is lower than the donations actually claimed by the a....
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....ld raise the plea of want of jurisdiction in a higher tribunal even though, as the English cases point out, he may have acquiesced in the want of jurisdiction must be a patent one. In our opinion, the want of jurisdiction pleaded by the petitioner in the case before us is undoubtedly a patent one, and if it is a patent want of jurisdiction, not only would be rightly exercising our discretion in interfering, but according to the English Courts it would be our duty and our obligation to prevent an authority from assuming jurisdiction which it patently does not possess". 2. Even assuming, but not conceding the contention of the Assessing Officer that the donations mentioned in the assessment order as not covered by the objects of the trust it would by itself disentitle the assessee the exemption u/s 11 as long as the amount spent is for charitable purposes, for Sec. 11 of the Income Tax Act, 1961 states that: "Subject to the provisions of Sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income; (a) income derived from property held under trust wholly for charitable or religious purposes, to ....
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....for application as per the provisions of the Income Tax Act, 1961. For what is relevant under the Income Tax Act is the '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 part of the income, 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) for that year. It may be that the trustees would be acting contrary to the terms of the trust deed, but that may not be a relevant circumstance u/s 11 (1 )(a), since under this provision what is relevant is the application of the income and not the objects. A similar view has been taken by the Andhra Pradesh High Court in the case of Trustees of H.E.H. the Nizam's Pilgrimage Money Trus vs. CWT/IT (171 ITR 323) wherein the Hon'ble Court has held that "If any part of the income of the trust has been applied to charitable 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 wit....
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.... relation to Tsunami relief, staff welfare activities, advertisement to promote environment/nature, disbursement of cloth and feeding of the poor and small donation given to youth organization. The assessee has also spent a small amount towards renovation of various temples falling within the limit of 5% permitted in the Act. Some donations were made during the year to various persons/institutions at the request of the founder of the assesseetrust. Since the money was remitted back by the founder in the same financial year, the assessee-trust has not claimed it as expenditure. It cannot be disputed now that such donations are not permitted by the objects of the Trust and the trustees are given absolute discretion to apply the trust funds to any one or the other specific objects of the Trust. The Assessing Officer, in his remand report, has accepted almost all the donations. 8. In his remand report, the Assessing Officer has not 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 Trust Deed are binding on the trustees. What is required by the Trust is that the income must be applied or accumulated for appli....
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....Assessing 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 donations are very small amounts related to expenses towards various welfare activities as discussed above. In our opinion, the decision of Hon'ble Supreme Court in the case of Aditanar Educational Institution vs Addl. CIT (224 ITR 310) is not applicable to the facts of the given case because that judgment deals with the provisions of section 10(22) of the Act whereas this 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 purposes and not for the purpose of profit, whereas the assessee in this case is a normal Public Charitable Trust which is governed by the provisions of section 11 of the Act and its activities are not restricted only to the educational activities but all public charitable activities. It is a well settled proposition of law that minor discrepancies found in any Trust's case have to be ignored. To be more specific, minor discrepancies....