TaxTMI 
TaxTMI 
TaxTMI 
2018 (8) TMI 596
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.... 2.3 That the amount of donations paid to various charitable institutions registered under section 12A of the Act was to be disallowed as it did not according to him, represent the application of income u/s 11(1) (a) of the Act. Donations to various colleges amounting to Rs. 36,82,865 3. The CIT(A) has erred in holding that the donations of sums of money paid by issue of cheques to various government financed colleges for the advancement of education and/ or the advancement of general public utility activity cannot be treated as application of income for charitable purposes under section 11(1)(a) of the Act as according to CIT(A), the donations could not be linked to any student or any beneficiary in particular. Application of income for other charitable activities like tree plantation, distribution of prizes among students etc. aggregating to Rs. 12,59,155 4. The CIT(A) has erred in holding that the application of income towards charitable purposes of tree plantation, marathon participation, distribution of prizes among students, printing of annual reports, cannot be treated as application of income for charitable purposes under section 11(1)(a) of the Act. Amount ....
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.... report which has been incorporated at page 5 and 6 of the appellate order and also assessee's counter on such report of the AO. However, the Ld. CIT(A) again required the assessee to furnish each and every item of expenditure incurred and noted that assessee has shown following expenses under different heads: - Head of Expense Amount (Rs.) Schedule G: Donation Paid 3,51,13,499 Schedule H: Administrative & General Expenses 19,65,794 Total 3,70,79,293 But again, the bifurcation of donations was asked by the Ld. CIT (A) with regard to the grouping of expenses in Schedule G & H, which was submitted by the assessee in the following manner: - Regrouping of expenses of Schedule G Amount (Rs.) (i) Organisation having 12AA Registration 2,92,40,173 (ii) Schools 9,31,306 (iii) Colleges 36,82,865 (iv) Others 12,59,155 Total 3,51,13,499 Sub-head of expense Amount (i) Professional fee 2,24,720 (ii) Travel expense 1,49,416 (iii) Conveyance expense 5,77,652 (iv) Meal and refreshment 71,854 (v) Events 9,40,242 1,910 19,65,794 5. Ld. CIT(A) observed that in s....
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....ocam International Ltd. 1,40,000 5. Saplings purchased from 'Carbon And Energy Consultants' for tree plantation drives 1,32,026 6. Purchase of 200 mugs for distribution among winners of tree planting challenge from Vendor (i.e. mystic Charlies) 45,000 7. Participation fees in Marathon -PROCAM INTERNATIIONAL LTD. 31,200 8. Purchase of flags and banners for walk for life in Delhi from Vendor (i.e. Modern Business Systems) 26,325 9. Purchase of drawing materials (i.e. colours stationery) for a painting activity among children 18,386 10. T he Socio-Friendly Football Championship charges 16,854 11. Cost of printing posters for promoting Earth Day and Walk for life from Vendor (i.e. MKM Creatives) 15,850 12. Transport charges for volunteering activities paid to Shree Enterprises 7,289 13. Water bottles and miscellaneous expenses for Delhi & Pune scholarship students 1,148 Total 12,59,155 He held that the aforesaid expenses cannot be held to be expenses belonging to the assessee trust, because they cannot be held to have been incurred by the assessee for charitable purposes. Similarly, with regard to amount spent under the head administr....
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....92 Taxmann.309] 2. Donations in cheque i.e Mumbai Mobile Creches & Literacy India Not been demonstrated as to how the said amount has been applied for the purpose of the trust and donation of material is legally not permissible >Material has provided for the running of the trust. Documentation has been provided for. >Disallowance can be made u/s 11(3)(d) only if payment is made to another charitable Institution out of accumulated funds. No embargo on payment/application of current year's income. 3. >Donations to colleges for scholarship of students >Donations to colleges for Solar installation at colleges >Donations not linked with any particular student. >Colleges receiving donations are not registered under section 12A of the Act. Hence do not fulfil the criteria of been given to other registered organisations. >Amount spent for the development of education whether in cash or kind is a deductible expenditure >Colleges to whom donations are made have not been registered u/s 12A of the Act - it has been submitted by the Appellant vide submission dated 06 December 2016 before the CIT(A) wherein it has been clearly mentioned that the said colleges are Government aided (UGC....
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....arious organisation and colleges are not backed by any proper documentary evidences. Ld. CIT (A) went step further in analysing each and every heads of expenses so as to conclude that most of these expenditures incurred cannot be held to be spent for charitable activities at all and hence would not fall within the utilisation limit of 85% as provided in section 11(1). The summary of expenditure claimed by the assessee, amount disallowed by the AO and the Ld. CIT (A) can be tabulated in the following manner: - S. No. Item of Expense Claimed by the Appellant Disallowed by the AO Disallowed by CIT(A) 1 Organisations registered under 12A 2,92,40,173 10,99,477 85,15,743 2. Colleges 36,82,865 36,82,865 36,82,865 3. Schools 9,31,306 9,24,624 NIL 4. Others 12,59,155 12,59,155 12,59,155 5. Administrative & General Expenses 19,65,794 NIL 17,339,164 TOTAL 3,70,79,293 69,66,121 1,51,96,927 12. We have already incorporated the chart summarising the disallowances made by the Ld. CIT (A) on various grounds. On the perusal of the entire details furnished for each and every nature of expenditure incurred which has been treated to be application of inc....
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....t be reckoned as utilisation of funds for charitable purposes. We are unable to appreciate such logic, sans any legal authority to support such reasoning. Further Ld. CIT (A) has held that, since some these donations have been given to organisations which are registered u/s 12A, therefore, such an amount spent cannot be allowed in view of section 11(3) (d). In our opinion such a contention of Ld. CIT (A) that donations made in kind or in cheques to charitable organisation which are registered u/s 12A are deemed to not allowable as per section 13(3)(d) is completely misunderstanding of the said provision, because disallowance under this clause can only be of the payment made to another charitable institution out of accumulated funds and there is no embargo of payment / application of current year income. This proposition is well settled by the judgment of Hon'ble Delhi High Court in the case of DIT (E) vs. Bagri Foundation (2012) 192 taxman 309 (Delhi). 14. If assessee instead of carrying any charitable activity by itself has given funds to various organisation and institutions who are carrying out donation / relief to the poor or medical relief, in cheque or in kind, then it will ....