TaxTMI 
TaxTMI 
2017 (1) TMI 555
X X X X Extracts X X X X
X X X X Extracts X X X X
..... 5,61,83,906/- treated by the A.O. as income amounts to be an enhancement of income for which he failed to give the Appellant an opportunity of being heard as required by law; the order passed by the Ld. CLT(A) is therefore bad in law. 3. On the facts and in the circumstances of the case and in law, the Ld. CLT(A) erred in computing appellant's total income at Rs. 3,74,48,948/- as against NIL income declared in the Return of income filed by it. Without prejudice to the above, the Ld. CLT(A) having held that the taxable income of the Appellant was Rs. 3,74,48,948/-(as against Rs. 5,61,83,906/- determined by the A.O.) erred in yet dismissing ground of appeal No. 2 thereby denying the partial relief due even as per the order passed by him. 4. On the facts and in the circumstances of the case and contrary to the position in law, the Ld. CLT(A) erred in holding that donations of Rs. 4,81,13,000/- made by the Appellant to other charitable trusts did not amount to direct application by the appellant towards its own objects. 5. Without prejudice to the above, on the facts and circumstances of the case and in law, the Ld. CIT(A) having contrived that the application of inco....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Amount(Rs.) FY 2009-10 Amount (Rs.) FY 2010-11 Amount(Rs.) FY 2011-12 1. Donation received towards Corpus from Thermax Ltd. 1,81,00,000 7,58,60,000 5,87,00,000 2. Income received 8,01,541 32,04,727 88,94,511 3. Expenditure 68,53,861 89,30,500 2,81,35,463 4. Excess of Exp. Over Income. 60,52,320 57,25,773 1,92,40,952 3. Ld. A.O however deviated from the consistent course of assessment and held that assessee has violated the provisions of Section 11(1)(d) of the Act as it had made applied the corpus donations to the objects of trust. Ld. AO assumed that purpose of corpus donations was defeated and amounted to going against the wishes of the corpus fund donors. It was held that the real intention of receiving such corpus donations was to avoid the ambit of Income Tax Act. 4. It was held that assessee had violated the provisions of section 11(1)(a) and 11(1)(d) and was, therefore, not entitled to the benefit of those sections. The amount of the. 5,61,83,906/- ( being the excess of amount applied by assessee to charitable purposes during the year over income which included corpus donation) did not qualify ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ds corpus. (iv) In impugned case, during the year under consideration, the appellant trust has received an amount of Rs. 10,15,00,000/- as donation from Thermax Ltd. Out of it, an amount of Rs. 78,00,000/- was received specifically for an eligible project, under section 35AC namely, Savitribai Phule English Medium School however, for remaining amount of Rs. 9,37,00,000/-Thermax Ltd Le the donor has given an instruction in general manner. The A.O has incorporated the content of the letter in assessment order, which is reproduced here as under: " Date 30th June, 2012 To Thermax Social Initiative Foundation, 4, Thermax House, Pune Mumbai Road, ~ Shivajinagar, Pune 411005. Sub : Donation Please find enclosed herewith cheque No. 223059 drawn on Citibank dated 30th June, 2012 for Rs. 200,00,000/- ( Rupees Two Crore only) being donation towards the corpus of Thermax Social Initiative Foundation. Kindly give us receipt for the same along with copy of tax exemption certificate. Thank you, For Thermax Limited. Sd/- Authorised Company.'' The content of the above letter clearly shows that no specific direction, whatsoever, has been given by the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... fall can be accumulated in a manner as provided in section 11 (2) r. w. rule 17 of IT Rules, an application has to be filed for accumulation by filing Form No. 10 to the concerned A.O, within the due date for filing the return of income for the year under consideration. The conditions are: (a) Firstly, an application has to be filed in writing to the A.O concerned in prescribed manner and specify therein the purpose for which the income is accumulated or set apart and the period for which the income is to be accumulated or set apart which in no case exceeds five years. (b) Secondly, the accumulated income has to be invested in a manner provided u/s 11(5) of I.T Act. However, in impugned case, the appellant has applied an amount of Rs. 6,90,26,039/- only toward it's charitable object during the year under consideration, which is 64% of the gross income and accordingly there is a shortfall of 21%. As the appellant has failed to comply the statutory requirements in terms of section 11 (1)(a) r.w.s 11(5) of IT Act, by not submitting Form-10 before the concerned A.O within stipulated time. Hence, the benefit of section 11 and 12 of I.T Act has correctly been de....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... directions and substituted his own view untenable view to assume that the specific direction is not clear and be deemed to be non corpus donation. 5. The view adopted by Ld. CIT(A) is contrary to the various judicial precedents laying down following propositions: (1) Nagarjuna Education Society, 46, SOT 501 (VSP) (a) Direction that donation should form part of corpus should come from the donor and not the discretion of others. (b) It does not depend on the sweet will of the donee/institution or other agencies. (c) A.O. cannot change character from corpus to voluntary. (2) Trustees of the Jadi Trust 133 ITR 494(Bom) "Donating income to another charitable trust amounts to application of income for charitable purposes. (3) Dharma Pratishthanam 11 ITD 40 (Delhi) : "There is no obligation to retain corpus forever and may be used for objects of the trust." These judgments while laying down clear propositions as mentioned above in turn rely on catena of other binding judgments mentioned in these orders. 6. Apropos Ld. CIT(A)'s observation that the corpus funds of Rs. 4,81,13,000/- was ultimately donated to other charitable institution amount to non ap....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ls available on the record. 11. It emerges from the record that the impugned donations were given by Thermax Ltd to the assessee as corpus donation, a fact which is evident from the letter mentioned above. Thermax Ltd the donor has given specific direction for corpus of the assessee trust and in our considered opinion the same cannot be interpreted in a different manner by intendment and presumptions by Authorities below. Similar methodology of Thermax Ld. Donation and their similar utilization has been accepted by the department in past years as depicted in the chart above. The reasons given by ld. CIT(A) to adopt different view is based on the misinterpretation and presumptions, which are unsustainable. 12. In our considered view, voluntary contribution of Thermax Ltd towards corpus of the trust cannot be included in the income of the assessee in clear terms of section 11(1)(d). Our view is fortified by Visakhapatnam ITAT judgment in the case of Nagarjuna Educational Society (supra.) and by Delhi ITAT, in the case of Dharma Pratishthanam (supra.) 13. In view of the above facts and circumstances, the findings of Ld. CIT(A) on this issue is hereby reversed. 14. Apropos ....