TaxTMI 
TaxTMI 
2016 (7) TMI 846
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.....Little Flower Monastery, Coimbatore aggregating to Rs. 50,17,100/- on the application of section 13(1)(b) of the Act in the computation of taxable total income without assigning proper reasons and justification. 4. The brief facts of the issue are that the assessee is contributed a sum of Rs. 50,17,100/- to M/s.Little Flower Monastery, Coimbatore. The objection of the AO is that M/s.Little Flower Monastery, Coimbatore is a religious trust and hence contribution to the religious trust cannot be allowed. According to the assessee, M/s.Little Flower Monastery, Coimbatore carried out the following charitable activities out of the funds received from Lisieux Matriculation Hr Sec. School, Coimbatore. Sl. No. Name of Institution Nature of Activities 1 Karunai Illam, Kavundampalayam, Coimbatore-30. Abandoned Aids Patients and HIV positive persons are given treatment and shelter. 2 Shuruth Bhavan, Ottapalayam, Palakkad, Kerala Street roaming children are given shelter and education 3 Alphonsa Bhava Perunthalmanna, Kerala Orphan Children are given shelter and education. 4 Udhayam Trust, Thgoppupalayam,Chennimala i,Erode Special School for ment....
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....ven donation to M/s.Little Flower Monastery, Coimbatore and the same was utilized by the above institution for the purpose of charitable activities and that itself has constituted for charitable activities in terms of sec.11(1) of the Act. Further, he submitted that the provisions of the section 11(3) of clause(d) is not applicable to the facts of case as the assessee has given donation to other institutions out of the 85% income of assessee as mentioned in sec.11(1) of the Act and it is not out of the accumulated income set apart by the assessee. For this purpose, he relied on the CBDT Circular No.8 dated 27.08.2002 clarifying the restriction on the application of accumulated income of the charitable or religious trust. 6. On the other hand, the Departmental Representative submitted that M/s.Little Flower Monastery, Coimbatore received the amount from the assessee and M/s.Little Flower Monastery was advancing money to various provinces of the Christian Missionary and not for the charitable activities and that activity carried on by the M/s.Little Flower Monastery, Coimbatore cannot be constituted as charitable activities. He also placed reliance in the case of ITO Vs. Belivers ....
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....April 1, 2003 if the income is paid or credited to another trust or institution even though they are registered under section 12AA or approved under section 10(23C) of the Act, the same has to be treated as income of the assessee. 7.1 The main contention of ld.A.R is that it was donated out of the income of assessee relating to assessment year under consideration and not out of accumulated income of assessee. As such Sec.11(3) is applicable to the facts of the case and not sec.11(5) (d) of the Act. In the present case, assessee given donation to M/s.Little Flower Monastery. According to AO, the assessee was hit by provisions of the section 13(1)(b) of the Act. Section 13(1)(b) reads as follows:- Sec.13 : Section 11 not to apply in certain cases -(1) Nothing contained in section 11 or section 12 shall operate so as to exclude from the total income of the previous year of the person in receipt thereof- (a) xxxx (b) in the case of a trust for charitable purposes or a charitable institution created or established after commencement of this Act, any income thereof if the trust or institution is created or established for the benefit of any particular religious community or c....
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.... could spend its income for that purpose only. Though ld.A.R agreed that the assessee is a charitable trust, he made a plea that religious activities is also permitted to be carried on. However, charitable Trust cannot carry on religious activities. As such in our opinion the donation given to activities carried on by the assessee to another Trust, which in turn related to the religious activities, then the assessee is hit by provisions of the section 13(1)(b) of the Act. Being so, the assessee cannot be granted the exemption u/s.11 of the Act, though the assessee donated to religious trust out of income of assessee trust. It needless to say herein that any charity donation out of accumulated funds is not possible after 01.04.2002 as it is hit by sec.11(3) (d) of the Act. However, this is not the case herein before us. We are concerned herein about donation out of current income to another institution with religious objects cannot be considered as application of income for charitable purpose. In other words, the charitable trust cannot donate to the trust which is formed for religious purpose. With this observation, we dismiss the appeal of assessee. 7.4 In the result, the appea....
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....." Accordingly we admit the additional grounds of the assessee for adjudication. 10. Regarding main ground in this appeal, which is already discussed in ITA No.2270/Mds./2014. Accordingly, we discuss this issue as covered against the assessee by our findings in para No.7.1 of this order for assessment year 2009-10. Accordingly, this ground is dismissed. 10.1 Regarding additional grounds, the main plea of ld.A.R is that the application of income in this assessment year is more than required and as such provisions of the section 13(1)(b) of the Act cannot be applied. In our opinion, this argument of assessee is having no merit. Once there is violation under section 13(1)(b) of the Act, the assessee losses exemption u/s.11 of the Act, though the assessee made excess application of income for assessment year under consideration. The Trust income of assessment should be spent for the charitable objects for which assessee trust is established. It cannot spend any purpose other than the charitable purpose and the religious activities is not forming the part of the object clause of the assessee trust and there is violation of clause under section 13(1)(b) of the Act, as such the a....