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TMI Blog2012 (8) TMI 524X X X X Extracts X X X X X X X X Extracts X X X X ..... on from one charitable trust to another charitable trust constitute application of income for the charitable purposes - Decided in favor of assessee. - IT Appeal No. 5773 (Mum.) of 2011 - - - Dated:- 18-7-2012 - Dinesh Kumar Agarwal, B. Ramakotaiah, JJ. Baban D. Patil for the Appellant. Rajan R. Vora and Hemen Chandariya for the Respondent. ORDER Dinesh Kumar Agarwal, Judicial Member This appeal preferred by the Revenue is directed against the order dated 7-4-2011 passed by the ld. CIT(A)- 1, Mumbai for the assessment year 2008-09. 2. Briefly stated facts of the case are that the assessee trust is a public charitable trust established with the objects for providing relief to the poor, education, medical relief and promotion of vegetarianism, distribution of Prasad, distribution of food to the general public especially to the poor and needy people and advancement of any other objective of general public utility and in furtherance of ethical and philosophical principles of Krishna Consciousness. The assessee filed its return of income on 24-9-2008 along with audit report in Form No. 10B and audited Income and Expenditure Account, Balance Sheet declaring t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Escorts Ltd. v. Union of India [1993] 199 ITR 43/[1992] 65 Taxman 420 cannot be allowed. He further observed that the assessee has given donation to ISKCON amounting to Rs. 1,85,66,772/- and the same has been debited to the Profit and Loss Account. Since the assessee has not submitted any documentary evidences suggesting that ISKCON has a valid 80G certificate, hence the A.O. also disallowed the deduction u/s 80G of the Act. 3. On appeal, the ld. CIT(A) held that the appellant trust carrying out the business will get the benefit of exemption of section 11, so as to embargo put by the amendment in section 2(15) of the Act is vis- -vis the object of general public utility and not vis- -vis any other object without being hit by the amendment. In view of this, the provisions of section 11(4A) of the Act will be applicable to the appellant. The ld. CIT(A) after relying on the appellate order and the order of the Tribunal in Dy. DIT (E) v. Sri Sri Radha Rasbihariji Prasadam Viniyog Trust [IT Appeal No. 4214/Mum/2002 dtd. 8-5-2003] held that the preparation of vegetarian food items and selling the same mainly for pupularising the vegetarian food habits and in thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, submits that in view of the said order of the Tribunal, exemption u/s 11 of the Act be allowed to the assessee. On the disallowance of deduction u/s 80G of the Act, the ld. counsel for the assessee submits that in view of the certificate u/s 80G in the case of ISKCON appearing at page 51-52 whereby the ld. DIT(E), Mumbai has granted the certificate u/s 80G to ISKCON for the period 1-4-08 to 31-3-2011, the assessee is entitled to deduction u/s 80G of the Act. He further submits that the assessee donated its major portion of its income to ISKCON which is a public charitable trust of worldwide recognition and reputation, therefore, any donation from one trust to another trust would constitute application of income for the charitable purposes for allowing exemption u/s 11 of the Act. He, therefore, submits that the order passed by the ld. CIT(A) be upheld. 7. We have carefully considered the submissions of the rival parties and perused the material available on record. We find that the facts are not in dispute inasmuch as it is also not in dispute that the principal objects of the trust include promotion of vegetarianism and distribution of Prasad. It was submitted by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the profit motive. Besides, the assessing officer has simply ignored the main object of the appellant that is promotion of vegetarianism. The business of preparing vegetarian food items and selling the same was very much incidental to the objects of the appellant and such business can be of section 11(4A). In case the public charitable trust is engaged in a business which is incidental to its object the same will not disqualify the charitable trust from exemption u/s 11. In my opinion the preparation of vegetarian food items and selling the same was mainly for popularizing the vegetarian food habits and in this way the appellant was engaged in promoting the vegetarianism among the people, which is undoubtedly a charitable object of the appellant. The major portion of the income received by the appellant was donated to ISKCON which is a public charitable trust of worldwide recognition and reputation and any donation from one charitable trust to another constitute application of income for the charitable purposes. The ISKCON are also publishing booklets and brochures for the promotion of vegetarianism among the people. Thus the contribution of the appellant to the ISKCON also help ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is not claiming double deduction on account of depreciation as has been suggested by learned counsel for the Revenue. The income of the assessee being exempt, the assessee is only claiming that depreciation should be reduced from the income for determining the percentage of funds which have to be applied for the purposes of the trust. There is no double deduction claimed by the assessee as canvassed by the Revenue. The judgment of the hon'ble Supreme Court in Escorts Ltd. case [1993] 199 ITR 43 is distinguishable for the above reasons. It cannot be held that double benefit is given in allowing claim for depreciation for computing income for purposes of section 11. The questions proposed have, thus, to be answered against the Revenue and in favour of the assessee." 11. For the reasons as discussed above and keeping in view that the assessee is distributing Prasad and doing other charitable activities for the promotion of vegetarian food habits among the people, the assessee is entitled for the benefit of exemption u/s 11 of the Act. The order passed by the ld. CIT(A) in directing the A.O. to allow the exemption u/s 11 of the Act and to grant other consequential benefi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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