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TMI Blog2005 (9) TMI 513X X X X Extracts X X X X X X X X Extracts X X X X ..... olation of sections 11(5) and 13(2)( d ). 3.1 Before the Assessing Officer, it was contended that temple construction required substantial funds and the present funds were not sufficient and, therefore, the entire income of the trust was accumulated for temple construction in future years. Before the Assessing Officer the following explanation was filed : "With reference to your above mentioned letter, we have to inform you that all the donations given to the trust are given towards the construction of the temple. Though, the entire donations represents the temple donations, they have been taken to income and expenditure account and the excess income over expenditure is transferred to capital fund in the financial statements. Since the funds are insufficient, we have filed Form No. 10 for carry forward of the surplus for future application of funds. It is also mentioned in our letter dated 25-7-2002. The following are the details of investments as on 31-3-2001 : ( a )Chaitravanam Resorts (opening balance) Rs. 46,000 ( b ) M/s. Sriram Investments, by cheque dated 31-3-2001 Rs. 10,00,000 ( c ) M/s. Sriram Investments - Incentive amount r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. 3.2 As per Assessing Officer, Circular No. 387, dated 6-7-1984 is also not in support of assessee s claim. Para 36.3 of this circular clearly says : "A charitable or religious trust will also forfeit tax exemption in cases where the funds of the trust are not invested in accordance with the investment pattern laid down under the I.T. Act." 3.3 Before the learned CIT(A), the appellant raised the following contentions : "4.1 ( i ) It is the relevant income from such investments i.e., which are in contravention of provisions of section 11(5), that are ought to have been brought to tax at MMR and not the entire income of the trust. The AR placed reliance on the decision of the Gurdayal Berlia Charitable Trust v. ITO ( 34 ITD 489 ) and also circular No. 387, dated 6-7-1984 issued by the CBDT. 4.2 ( ii ) Further proviso ( iia ) to section 13(1) provides the assessee an option to rectify the mistake of investing in contravention of section 13, within a period of one year, accordingly, the assessee had withdrawn the invested amounts on 28-3-2002 which is within one year from the date of investment being 31-3-2001 and the defect having been set right, the claim of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... institution) shall be deemed to be income derived from property held under trust. In the instant case, there is no material on record to suggest that voluntary contributions were made with the direction that these will form part of the corpus. The object of the trust is to construct temple and contributions have been received for this purpose. The act of the appellant in submitting Form No. 10 also testifies that the voluntary contributions were not part of the corpus. Form No. 10 is submitted to accumulate the income and not the corpus. Hence, contributions received are income as per section 12 of the I.T. Act. Form No. 10 is submitted for accumulation of income. 5.1 Section 11(2) as existed for the relevant assessment year is as under : "11(2) Where seventy five per cent of the income referred to in clause ( a ) or clause ( b ) of sub-section (1) read with Explanation to that sub-section is not applied, or is not deemed to have been applied to charitable and religious purposes in India during the previous year but is accumulated or set apart, either in whole or in part, for application to such purposes in India, such income so accumulated or set apart shall not be include ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax exemption is liable to forfeit its exemption in case the trust invested in contravention of the investment pattern for such fund as laid down in the Act. Hence, Circular No. 387 supports the revenue s case. 5.2 The learned A.R. has relied on the judgment of the Delhi High Court in the case of DIT (Exemption) v. Agrim Charan Foundation [2002] 253 ITR 593. In this case, the companies which accepted the deposit informed the trust that they were authorised to receive the deposit from the charitable trusts. On the basis of such information, the assessee made deposit. However, when the assessee came to know that such company did not have necessary approval from Government to accept the deposits, such deposits were withdrawn. Under such fact, the Delhi High Court allowed exemption to the Trusts. In the instant case, it has not been argued that the deposits were made on the presumption that such deposits can be made as per the provisions of the I.T. Act. The perusal of the balance sheet of the Trust, show that it has been opening capital fund of more than 21 lakhs and the closing capital fund was of around Rs. 27 lakhs. The appellant-trust has made deposits of more than Rs. 31 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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