TaxTMI 
TaxTMI 
2019 (3) TMI 1345
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....ts purchased by the trust. 2. The Ld. CIT(A) has erred in facts and circumstances of the case while directing the AO to recomputed the income of the assessee by allowing the exemption claimed by the assessee ignoring the fact that the assessee has applied less than 85% of the receipts of the trust for charitable purpose." 4. Briefly the facts of the case are that the assessee trust is registered u/s 12AA of the Act. As per trust deed the main objects of the trust are to work for upliftment of rural area, to promote higher and continuing education, to promote working women's hostel, to run family planning centre, maternity and child welfare centres, etc. The AO on the basis of the details filed on record noted that assessee has made investment in purchase of land and flats amounting to Rs. 3,44,27,160/- and Rs. 20,25,000/-. Assessee trust has also given advance of Rs. 48,10,240/- for flat. The AO issued notice to assessee as to why the amount of Rs. 48,10,240/- should not be added to the income of the assessee, which was not invested for charitable purposes. The assessee in the written submission submitted before AO that besides the opening balance of Rs. 40,24,000/- brought forw....
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....assessee reiterated the submissions before AO. The AO, therefore, noted that assessee did not produce any evidence in support of activities which have been started to open the Educational Institute. The assessee has not produce any evidence that activities of the trust as mentioned in the deed can be done in the flats. Therefore, investment made in purchase of land, tube well, flat, etc. totaling to Rs. 2,67,51,128/- was disallowed as investment made is not for charitable purposes. The assessee made similar advance of Rs. 7,86,240/- given during AY 2011-12 for purchase of flat was also disallowed, as it was not for charitable purpose. The AO, therefore, noted that assessee has violated provisions of section 13(1)(d) of the Act and consequently the benefit of provisions of section 11(5)(x) of the Act cannot be granted. The AO computed the income of assessee at Rs. 2,22,04,300/- and treated the assessee as AOP. 6. The assessee challenged the addition before Ld. CIT(A). The written submission of the assessee is reproduced in the appellate order in which the assessee explained that there is no violation of section 13(1)(d) of the Act because section 11(5)(x) authorizes investment in i....
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....hat section 11(5)(x) authorizes investment in immovable property. The AO has not considered that investment in land and flat has been done for the purposes of charity. He has not accepted the arguments of the appellant that the investment in immovable property has been done as preliminary steps towards establishment of university. It seems that the AO was under an impression that in order to qualify for charitable purpose the trust has to spend the money here and now on charitable activities. By this logic no long term investment would be qualified as being done for charitable purpose. Clearly this is not the position of law in section 11(5)(x). The clause 5 of section 11 says "the forms and modes of investing and depositing the money referred to in clause (b) of sub section (2) shall be the following, namely;".......The sub clause (x) simply says "investment in immovable property". Thus there is no violation of section 11(5)(x) and consequently section 13(1)(d). 3.5 There is another line of argument which has been taken up by the AR. The question of applying 85% of the income will arise only when contributions received by the trust are not forming part of the corpus of the trust.....
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....Private Educational University. It is a fact that section 11(5)(x) authorizes investment in immovable property. The AO has not considered the investment in land and flat has been done for charitable purposes. He has not accepted the explanation of assessee that investment in immovable property has been done as preliminary steps towards establishment of University. The AO was under the impression that in order to qualify for charitable purpose, the trust has to spend the amount on charitable activities only. However, section 11(5)(x) of the Act clearly authorize investment in immovable property for claiming exemption u/s 11 of the Act. If the findings of the AO are accepted then no investment would be qualified u/s 11(5) of the Act. Since the investment in immovable property is permitted as per section 11(5)(x) of the Act, therefore, there was no necessity for the assessee to prove that it was done so for charitable purposes. Section 11(5) provides that accumulated amount u/s 11(2) has to be kept in specified moods of investment which include investment in immovable property. It does not provide such immovable property must be meant for any specific purposes. Therefore, there is not....
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.... with return of income and also subsequently, made investment in purchase of land to the extent of Rs. 8,71,42,582/-. Hence, the income to the extent of Rs. 7.22 crores was treated to have been applied for charitable purposes. It is well settled law that exemption under section 11(1A) for capital gains for a charitable trust has been upheld in the case of CIT vs. Aurobindo Memorial Fund Society (2001) 247 ITR 93 (Mad.) and DIT (Exemptions) vs. DLF Qutab Enclave Complex Medical Charitable Trust (2001) 248 ITR 41 (Del.) (supra). If the land at Dhokra village was not meant for charitable purposes, the assessee-society would not have got benefit of Sections 11 and 12 for all these years. We, therefore, held that the land at Village- Dhokra which was sold in A.Y. 2007-2008 was meant for educational purposes only. Copy of Form No. 10 is filed at page-146 of the paper book and copy of the resolution of assessee-society is filed at page-147 of the paper book and contention of assessee-society has been accepted by Ld. CIT(A) in A.Y. 2007-2008 above and his view have been confirmed by the Tribunal. It is also not in dispute that assessee-society purchased lands at Sadhrana, Gopalpura and Loh....
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.... in AY 2007-2008 and it was clearly noticed that Form-10 have been filed in A.Y. 2007-2008 which is applicable for accumulation of income under section 11(2) only. The findings of the Ld. CIT(A) at Section 11(3) is applicable is also not correct because income accumulated under section 11(2) was applied for educational purposes. Considering the totality of the facts and circumstances of the case noted above in the light of finding of fact recorded by the Ld. CIT(A) and Tribunal in A.Y. 2007-2008, it is clear that no addition could be made against the assesseesociety of such nature. The order of the Ld. CIT(A), therefore, cannot be sustained in law for enhancing the income of assessee-society of Rs. 6,77,16,875/- and that too by invoking Section 11(1B) and Section 11(3) of the I.T. Act, which are not applicable to the case of the assesseesociety. The decisions relied upon by the Ld. D.R. are not applicable to the facts of the case. In view of the above discussion, we set aside the Order of the Ld. CIT(A) and delete the addition of Rs. 6,77,16,875/-. Accordingly, appeal of the assessee-society is allowed." 10. Following the above order of the Tribunal, we do not find any justificat....
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....nd if according to him any income resulted, AO should have set it off against the brought forward loss. The deficit/surplus which has been shown as a loss is actually the result of expenditure/investment of capital nature such as erecting the building so that charitable activities could be conducted thereon. The capital investment of this nature has consistently being held to be application for the purpose of Income Tax Act. Hence, the same is treated as expenditure done towards charitable activities. The assessee relied upon several decisions in support of the same proposition i.e. CIT vs. St. George Forana Church 170 ITR 62, S.R.M. M.Ct.M. Tiruppani Trust vs. CIT 230 ITR 636 (SC) 13. The Ld. CIT(A), however, did not accept the contention of the assessee and noted that income of the charitable trust is not assessable under the head "Profit and Gains of the business". Section 11 provides exemption of income of charitable organization, therefore, the claim of assessee for carry forward of excess capital expenditure was dismissed. 14. Ld. Counsel for assessee submitted that the CIT(A) has failed to appreciate the judgment cited before him and thus, violated the principle of judicia....