TaxTMI 
TaxTMI 
2014 (7) TMI 990
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....o.6641/Mum./2011 wrongly denied the benefit of exemption u/s 11 on a wrong pretext that the income of the trust from non 35AC funds was spent for 35AC project even though this was not the case and the learned CIT(A) without verifying these facts simply confirmed the action of the ld. A.O. and thus action of the authorities below was totally wrong, arbitrary, unjustified, unwarranted and illegal. 4. For that the learned CIT(A) erred in confirming Rs. 22.25 crores being corpus donation received by the appellant and exmpt u/s 11(1)(d) of the Act and the action fo the learned CIT(A) was totally arbitrary, unjustified, unwarranted and illegal." 4. The assessee is a trust registered under section 12A of the Act, as charitable organisation with the Director of Income Tax (Exemption), Mumbai ,and also with Charity Commissioner , Mumbai. The assessee is also registered under section 35AC, vide notification issued by the Ministry of Finance, Government of India, dated 14th October 2009. The assessee is engaged in the activity of setting up of running of vocational training centre for computer and tailoring classes having 192 computer centers and 386 tailoring classes throughout India. The ....
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....without passing through the income and expenditure account. The Assessing Officer was of the opinion that the assessee cannot enjoy the benefit of the exemption for any income where it failed to carry the direction of the donor. The Assessing Officer finally concluded that the amount donated is not utilised for the purpose of section 35AC project, therefore, the total income of the assessee has to be computed without allowing the benefits of section 11. The Assessing Officer computed the taxable income of the assessee by making the following additions:- i) Corpus Donation of Rs. 22,25,00,000, under section 11(1)(d); ii) Disallowance of donation of Rs. 22,78,212; and iii) Educational Development expenditure of Rs. 80,34,375, being expenditure of capital in nature. 5. Aggrieved by the aforesaid additions, the assessee carried the matter before the learned Commissioner (Appeals), wherein, the assessee reiterated the claim of its exemption by submitting the details which were submitted before the Assessing Officer during the course of the assessment proceedings. For the claim of exemption under section 11, the learned Commissioner (Appeals), vide Para-4.25 at Page-19 of his order, ....
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....me. After considering the reply of the assessee in response to the enhancement notice, the learned Commissioner (Appeals) observed as under:- "7.4 The arguments and submissions of the appellant as summarized above are considered and it is found that the reliance placed by the appellant on the approval notification for the purpose of section 35AC for collecting corpus fund is misplaced in relation to provisions of section 11 and 12 of the I.T. Act. Primarily, the payments received by the appellant u/s 35AC are not in the nature of donation and not out of a donor / done relationship between the transacting parties as discussed above. If the amounts so received by the appellant were required to be maintained as a demarcated fund for specific purpose in terms of the approval / notification, the same was possible under provisions of section 11 & 12 of the I.T. Act by way of "accumulation" without holding such receipts in the manner of "corpus fund" of the trust, which is neither legally valid nor actually in the nature of such transaction of corpus donation, as discussed above in the foregoing paragraphs in detail. 7.5 The submission relating to relevance of section 35AC, 80G is gener....
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....is covered in favour of the assessee by the decision of the Tribunal in assessee's own case for the assessment year 2008-09 in an appeal preferred by the Revenue in ITA no.6641/Mum./2011 dated 13th March 2013. 9. The learned Departmental Representative, on the other hand, could not bring on record any distinguishing facts or any contrary decision on the issue. 10. We have carefully perused the orders of the authorities below and the decision of the Tribunal in assessee's own case for the assessment year 2008-09 in an appeal filed by the Revenue in ITA no.6641/Mum./2011, order dated 13th March 2013. In this appeal, the Revenue has raised the following grounds:- "1. Whether on the facts and circumstances of the case and in law the learned CIT(A) justified in allowing he exemption u/s 11 and 11(1)(d), inspite of the fact that running Vocational Training Centre of Computer and Tailoring are business activity and not a charitable activity as claimed by the assessee. 2. Whether on the facts and circumstances of the case and in law, the learned CIT(A) was right in ignoring the ratio of Hon'ble Supreme Court judgment in the case of Escorts Ltd. v/s Union of India (199 ITR 43) where....
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....e. The relevant findings of the Tribunal on this issue are reproduced below:- "5.2 We have heard the rival submissions on this ground and perused the material on record. It is pertinent to mention that according to the CBDT circular No.1132 dated 5.1.1978, the payment of a sum by one charitable trust to another for utilisation by the donee trust towards its charitable objects is proper application of income for charitable purposes in the hands of the done trust and the donor trust will not lose exemption u/s 11 of the Act. According to the decision of the Gujarat High Court in the case of CIT vs. Sarladevi Sarabhai Trust No. 2, the charitable trust will not lose its exemption u/s 11, if it passes some money to another charitable trust, for utilisation by the donee trust towards its charitable purposes. The argument of the Revenue that since the assessee has not produced 80G certificate, it is not eligible to claim the benefit is not acceptable in view of the fact that the provisions of 80G is not applicable to the facts in this case. In view of that matter, we do not find any infirmity in the decision of the Ld.CIT(A) directing the AO to delete the impugned addition. Accordingly, ....