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TMI Blog2011 (2) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... Department: Sh. H.K. Lal, Sr. D.R. ORDER Per Shamim Yahya : Accountant Member This appeal by the Assessee is directed against the order of the Ld. Commissioner of Income-tax (Appeals) dated 11/6/2010 pertaining to assessment year 2007-08. 2. The issue raised is that Ld. Commissioner of Income-tax (Appeals) has erred in sustaining the order of the Assessing Officer to hold that Rs. 1,36,000 being the donation made by the assessee to other charitable institutions represented the assessee's income. 3. Assessing Officer in this case noted that on perusal of the details and information it is observed that donations amounting to Rs. 1,36,000 were paid by the assessee out of its accumulated income and not out of its current i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant was that the Explanation mentioned above is applicable for 85% and not for 15% is not correct. The Explanation talks of any amount credited or paid, out of the income referred to in clause ( a ) or clause ( b ) of sub clause(l) read with Explanation to the sub-section which is not applied, but is accumulated or set apart .. Thus, the Explanation does not make any distinction between 85% or 15%. Rather it talks about the amount which is accumulated or set apart. Therefore, as the donations have not been made out of the current year's income, the Assessing Officer was justified in treating the sum as an income. Accordingly, the appeal filed by the appellant stands dismissed." 5. Against this above order the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act cited above, we find considerable cogency in the submissions of the assessee. It is noted that during the current assessment year assessee has earned loss only and not received any donation. The donation of Rs. 1,36,000 has been paid to other charitable institution out of its earlier accumulated income to the extent permissible in those years. The payment or donation to other charitable institutions cannot result in the same becoming income of the assessee. The donations have been given as under:- Amount of donation To whom donated Rs. 1,10,000 To Indian Cancer Society with an object to enable children and their families faced with Cancer. Rs. 21,000 To Maharishi Patanjali Yoga Foundatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ictional High Court held as under (Head notes only): "It is clear from section 11(1)( a ) that the income applied for charitable purposes is not to be included in the total income for the relevant year. In CIT v. Shri Ram Memorial Foundation. The Court has held that when a donor-trust, which is 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 trust and the donor trust can be said to have applied its income for religious and charitable purposes, notwithstanding the fact that the donation is subject to a condition that the doneee trust will treat the donation as towards its corpus and can only utilize the accruing income from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r but accumulated or set apart being donated to another trust. The Explanation to section 11(2) is nothing but an additional condition attached to accumulation in excess of 15 per cent permitted under section 11(2). It cannot be held as a condition on accumulation up to 15 per cent as provided for in section 11(1)( a ) also. There is no rational classification for imposing the restriction as contained in the Explanation to the accumulation upto 15 per cent 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 Shri Ram Mem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). It also followed that even if the donations by the assessee were to be out of accumulations from previous years' and not out of surplus reserves, the same would still not be liable to be included in the total income as assessed by the Assessing Officer and the orders of the Commissioner (Appeals) and the Tribunal would still be upheld. It was nobody's case that the said accumulations were beyond the accumulation of 15 per cent permitted in section 11(1)( a ). 9. Now judging the present case on the anvil of the aforesaid jurisdictional High Court exposition, we find that there is considerable cogency in the assessee's submissions that revenue authorities have totally erred in holding the donations given by the assessee on the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X
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