9911796707
TMI Blog1986 (1) TMI 173X X X X Extracts X X X X X X X X Extracts X X X X ..... y the trust as donation towards corpus of the trust. The expenditure of the assessee as per its income and expenditure account during the said accounting period aggregated to Rs. 3,98,184 of which Rs. 2,79,603 represented charities and donations made by the trust. There was, thus, excess of expenditure over income to the extent of Rs. 1,19,056. The said excess was taken by the assessee to its balance sheet and after setting off against the excess the income over expenditure as per the last balance sheet aggregating to Rs. 67,164 difference, namely, Rs. 51,891 was written off against the capital fund account. 3. From the paper-book placed on record it appears that the donation received by the assessee was Rs. 2,31,918 form the following tw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve extent were spent out by the assessee and they did not from part of the corpus of the trust. Rs. 67,504 were according to the ITO utilised by the assessee for the purpose of the charitable objectives. After excluding the same the remaining amount was brought to the subject to the deduction of 25 per cent on account of accumulation. 6. Against the aforesaid order of the ITO assessee appealed to the CIT(A). It was pleaded before him by the assessee that the sum of Rs. 2,31,918 could not be regarded as income of the assessee as the said amount represented donations received by the assessee with the direction that they should form part of the corpus of the trust. The requirement of statute was found fulfilled and an such under s. 12 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Foundation dt.21st April, 1984wherein it was held that the donation to the corpus or other charitable trust amounting to application of the income under s. 11(1)(a) of the Act. Reference was also made by the assessee to the decision in the case of CIT vs. Shri Billeswara Charitable Trust (1983) 35 CTR (Mad) 136 : (1984) 145 ITR 29 (Mad), CIT vs. Trustees of Jadi Trust (1982) 133 ITR 494 (Bom) and Trustees of H. H. the Nizam s Charitable Trust (1981) 131 ITR 497 (AP) in support of the above. 9. The ld. CIT(A) confirmed the assessee s first contention namely that there was no material on record to show that the donation made to the Shri Sathya Sai Central Trust was out of the donations received by the assessee with the direction that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for charitable purpose....". In the result, the ld. CIT(A) held that the sum of Rs. 2,55,075 donated to Shri Sathya Sai Central Trust could not be regarded as application of the income of the trust for charitable purposes. 11. Against the aforesaid order of the CIT(A) both the sides have grievances. The grievance of the assessee is that the ld. CIT(A) should not have held that the donation of Rs. 2,55,075 to the corpus of the trust of shri Sathya Shi Central Trust did not amount to application of the income of the trust for the purpose of s. 11(1)(a) of the IT Act, 1961. The grievance of the Revenue on the other hands is that the ld. CIT(A) was not justified in deleting the amount of Rs. 1,19,055 made to the assessee s total income by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, if a contribution was made with a specific direction that it shall form part of the corpus of the trust, it would not be deemed to be the income derived form property held under trust wholly for charitable or religious purposes. In view of this, if it can be shown by the assessee that, a voluntary contribution has been received by it with the specific direction that it shall from part of the corpus of the trust, it could to be deemed to be the income of the assessee trust. There is no provision in s. 12 stating that, if the direction given by the donor as above is violated by the assessee trust, the exemption granted by s. 12 would be forfeited to the trust. In the present case, however, it is not necessary to take the aforesaid legal po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue s appeal has no merit and is, therefore, rejected. 13. Now coming to the assessee s appeal, we are of the opinion that it should succeed. That donations made to a charitable trust amounts to utilisation of the income of the trust for charitable purposes has been held in the various cases relied upon by the assessee, namely (1984) 145 ITR 29 (Mad) (1982) 133 ITR 494 (Bom) and (1981) 131 ITR 497 (AP). A donation made with the specific direction that it should form part of the corpus of the trust also amounts of the application of the income for charitable purposes in terms of s. 11(1)(a) and, for this, we have the authority of the decision of the Tribunal in the case of ITO vs. Sriram Memoraial Foundation referred to above. The dis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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