TaxTMI 
TaxTMI 
2019 (12) TMI 490
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....how-cause was issued by the Ld. AO as to why the said expenditure will not be disallowed for charitable purposes in reply where of the assessee submitted the details with the explanation that the assessee is bound to incur expenses time to time towards the set-up and expansion of the university in terms of Provision of Sec. 25 of the Pandit Deendayal Petroleum University Act, 2007. Though, both the organisations are two separate entities, having separate PAN No., the object of these two are same towards improvement of education, training and research requirement in energy sector i.e. oil and gas sector being a charitable cause for the public at large. The relevant document including the minutes of the meeting on the policy decision of non-recurring expenditure of PDPU, the details of bills and vouchers were duly submitted before the Ld. AO. However, such explanation rendered by the assessee was not found acceptable by the Ld. AO and addition thereon was made, which was, in turn, reversed by the First Appellate Authority. Hence, the instant appeal. 3. The Ld. DR basically relied upon the order passed by the Ld. AO. It was further argued by the Ld. DR that the asset created on the....
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....ayal Pandit University Act, 2007 the appellant has been authorized to appoint the president of the university, one of the member of Board of Governors of the university and one of the members of the Finance Committee of the said the university. In order to achieve the object of education, training and research requirement of energy section i.e. oil and gas sector both the organizations are having common agenda towards it having charitable cause for people at large. The appellant has made some payment directly for construction of U. G. Hostel building and upon completion of the construction the said building has been transferred to the appellant. In fact the appellant has set up the university on the plot of land at Gandhinagar which is recognised not only in India but also across the countries and the appellant has started its expansion activities at universitie's campus which is having a full-fledged university of international standards. Moreso, Sec. 25 of the Pandit Deendayal Petroleum University Act specifies that the appellant is to make payment to the university from time to time such sums of money and in such manner as may be considered necessary for the exercise of powers a....
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....ssee. Mr. Patel, in this connection, placed reliance on the decisions of the Bombay High Court and Calcutta High Court reported in CIT v. Trustees of the Jadi Trust [1982] 133 ITR 494 and CIT v. Hindusthan Charity Trust [1983] 139 ITR 913, respectively. So far as question No. 2 is concerned, Mr. Patel submitted that it is squarely answered against the Revenue by the circular (See [1971] 79 ITR (St) 33, 41) of the Central Board of Direct Taxes and has been rightly pressed into service by the Tribunal for deciding the matter in favour of the assessee. 11. We shall deal with the aforesaid contentions of learned counsel for both parties while considering the aforesaid main two questions seriatim. Question No. 1. - Applicability of section 11(1)(a) of the Act. The relevant provisions of section 11(1)(a) read as under : "(1) Subject to the provisions of sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income - (a)income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in ....
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....-tax Officer in the prescribed manner. He also invited our attention to rule 17 of the Income-tax Rules, 1962, which prescribes a format for the notice to be given to the Income-tax officer under section 11(2). Such notice has to be in Form No. 10 and has to be delivered by the assessee to the said officer before expiry of the time allowed under sub-section (1) or sub-section (2) of section 139, whether fixed originally or on extension, for furnishing the return of income. Mr. Patel is, therefore, right when he contends that even in the hands of the donor trust, 100% of the income could have been accumulated for a maximum period of 10 years subject to the trust following the procedure laid down by the Act. If that is so, merely because, the donor trust gifted the concerned income to the donee trust which also was a religious and charitable trust, it cannot be said that the donor trust had acted contrary to the provisions of section 11(1)(a) as tried to be suggested by the learned advocate for the Revenue. 14. Mr.Soparkar, for the Revenue, next contended that even assuming that the donor trust can be said have complied with the provisions of section 11(1)(a) by making the i....
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....ssee-trust, called the Jadi trust, was to make over the net income of its trust funds by way of gift or donation to another trust called the H.C.J. Charitable Trust, so that the donee trust could utilise the net income in its hands for all or any one or more of the charitable purposes mentioned in the trust deed dated March 29, 1963, under which the H.C.J. Trust was created. The question was whether such type of utilisation of the net income of the Jadi Trust - the donor trust - could entitled the donor trust to the benefit of section 11 of the Act. The Commissioner of Income-tax contended before the Bombay High Court that the provisions of section 11 would not be satisfied in such a case. Repelling his contention and placing reliance on a decision of the Chancery Division in IRC v. Helen Slater Charitable Trust Ltd. [1980] 1 All ER 785, wherein Slade J., spoke for the Court of Chancery, the Division Bench of the Bombay High Court quoted with approval the following observation of Slade J. in the case of Helen [1980] 1 All ER 785, rendered in the context of a parallel statutory scheme reflected by section 360(1) of the Income and Corporation Taxes Act, 1970, and section 35(1) of the....
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...., a Division Bench of the Calcutta High Court consisting of Sabyasachi Mukharji J. (as he then was) and Suhas Chandra Sen J. had to consider the question whether donation given by one charitable trust to another trust would be covered by the provisions of section 4(3) of the Indian Income-tax Act, 1922, which is the forerunner of section 11 of the Income-tax Act, 1961. The Calcutta High Court, speaking through Sabyasachi Mukharji J., in terms, held that the assessee donor trust was entitled to exemption under section 4(3) of the Income-tax Act. It must, therefore, be held that when a donor trust which it itself a charitable and religious trust donates its income to another trust, the provisions of section 11(1)(a) can be said to have been met by such donor rust and the donor trust can be said to have applied its income for religious and charitable purposes, notwithstanding the fact that the donation is subjected to any conditions that the donee trust will treat the donation as towards its corpus and can only utilise the accruing income from the donated corpus for religious and charitable purposes, and that the question whether the gifted income is to be utilised by the donee trust ....
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....that it cannot be kept as corpus and its recurring income utilised for charitable purposes. In any case, so far as the donor trust is concerned, once it makes payment of the donated amount to the donee trust which is a religious and charitable trust which has to utilise the donation for its own purposes, it would be a proper application of the income for charitable and religious purposes. 19. Mr. Soparkar, for the Revenue, submitted that the aforesaid instruction will not apply to the facts of the present case as the circular no-where contemplates a donation wherein the donee rust is not allowed to spend the donated amount the whole hog for its charitable or religious purpose but has to keep it intact as corpus and has to utilise only the income thereof. It is not possible to agree with the aforesaid fine distinction sought to be drawn by the learned advocate for the Revenue in the light of the wording of instruction No. 1132. Even the last sentence of para. 2 indicates that whether in the given year, the donee trust has spent the donation or not, would be a totally irrelevant consideration. What the donor trust does is the only relevant matter. Utilisation by the donee tr....