2019 (5) TMI 1064

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.... Sons Charitable Trust ('RKSCT') constituted a violation of Section 13(3) of Income Tax Act, 1951 ('Act')?   3. The facts in brief are that the Respondent Assessee Foundation came into existence due to the change in the name of the erstwhile Ramakrishna Kulwant Rai Charitable Trust ('RKKRCT') by amending the trust deed for constituting the above trust dated 26th July 2007. The latter trust has been registered under Section 12A of the Act by an order dated 1st February 2001. 4. For the AY in question the Assessee filed its return of income on 31st October 2005 declaring NIL income. The return was picked up for scrutiny. In the assessment order passed under Section 143(3) of the Act on 16th November 2009, the Assessing Officer ('AO....

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....ust registered under Section 12A.' He refers to the explanation under Section 11(2) of the Act which reads as under: "Any amount credited or paid, out of income referred to in clause (a) or clause (b) of sub-section (1), read with the Explanation to that sub-section, which is not applied, but is accumulated or set apart, to any trust or institution registered under section 12AA or to any fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10, shall not be treated as application of income for charitable or religious purposes, either during the peri....

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....ection 11(2). We are unable to hold it as a condition on accumulation up to 15% as provided for in Section 11(1)(a) also. We are unable to find any rational classification for imposing the restriction as contained in the "explanation" to the accumulation of up to 15% also when there is no such restriction to donating the entire income of a year to another charitable trust. If the legislature intended to completely ban/discourage inter se donation between trusts, it would have changed the position as existing in law as noticed in the Division Bench judgment of this Court in Shri Ram Memorial Foundation aforesaid. The legislature did not do so. Even after the insertion of the "explanation", if a trust donates its entire income for a ....