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TMI Blog2012 (11) TMI 759X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 acres and in the consolidated balance sheet the value of the land was shown at Rs. 31,87,549/-. The other societies have also own land in their respective names. During the FY 2006-07, the assessee had received donation from Sehgal Family Foundation, USA, amounting to $ 500,000 (Rs. 2,24,07,332/-), apart from Rs. 50,000/- from domestic donations. A survey u/s 133A was conducted in this case on 19/02/2009. It was noticed that out of funds collected for assessee society, which is registered u/s 12A, the activities of other 9 Arboretum which are not registered u/s 12A are also carried on and the expenditure incurred for development of lands belonging to other arboretum is booked in the a/c of the assessee society. Therefore, as the funds were diverted, a notice u/s 148 was issued as the other societies did not enjoy the benefit of section 11 and the assessee filed revised computation on 16/03/2009. The Assessing Officer while completing the assessment, denied the exemption u/s 11 & 12 of the Act, as the assessee had violated the provisions of section 13(1)(c) by diverting funds to other Arboretums and the donations collected amounting to Rs. 2,24,07,332/- was brought to tax, within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receipt was later revised as a capital receipt in the return of income filed on 16/03/2009, in response to the notice issued u/s 148 of the Act. 4. The CIT(A) held as follows: "Since the appellant has filed a revised return and also a revised computation statement, which was not acted upon by the Assessing Officer, aiming to correct the anomalies pointed out in survey proceedings, the action of the Assessing Officer per say is not correct. In the circumstances, he is directed to consider the revised return as well as revised computation statement, and then to make re computation." 5. With respect of the common management, the CIT(A) held that from the record it can be seen that only Mr & Mrs. William Frederick Durr were common with other members and hence it cannot be said that all these entities were having same management which goes to prove that the provisions of section 13(1)(c) are violated by benefiting other Arboretum in which William Frederic Durr family has substantial interest. 6. Aggrieved by the order of the CIT(A), the revenue filed appeal before us raising the following grounds of appeal: "1. The order of the ld. CIT(A) is erroneous both on facts and in law. 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rough the orders of the authorities below. The specific issue before us, provided for in the reasons for reopening, is whether the provisions of Section 13(1)(c) of the IT Act were violated in this arrangement wherein the assessee (DVA) obtained the money and applied it for the development and maintenance of forest lands held by them as well forest lands held by nine other Arboretum Societies. 10. The object for which the assessee Society (DVA) has been formed are as under: "a) To establish and develop an Arboretum and botanical garden and carry on literary and cultural activities such as setting up and maintaining a tissue culture & research laboratory, library, plant exhibition etc. b) To preserve a variety of species of native and foreign plants, especially endangered Indian species. c) To develop new programmes and methods related to selection, cultivation, breeding and propagation of species of plants adopted to the environmental conditions of the surrounding terrain. d) To contribute for environmental conservation through eco-tourism. e) To contribute for conservation and restoration of biological diversity and sustainable use of natural resources. f) To strive for wat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y as well as other nine Arboretum societies which apparently has two common management members i.e., Mr. & Mrs. William Fredrick Durr. 13. First it has to be determined whether the amount spent by the Assessee was for the objects of the Assessee Society. As extracted above, the objects of the Assessee society was for the maintenance and development of forest land. It is immaterial who holds the forest land as long as it is not for the benefit of any individual or concerns in which the managing members have substantial interest. Donation to another trust with similar objects would amount to application of income (CIT v MatriSeva Trust 242 ITR 20). It has been submitted that as per the Bye Laws of the other Arboretum societies, the members cannot derive any benefit or have right over the property of the Society on its dissolution. Hence the amount spent by the Assessee for the maintenance of Forest land should be considered as application, notwithstanding the fact that the forest lands are held by other societies. In the circumstances such expenses incurred by the Assessee Society, either by themselves or through other societies with similar objects in furtherance of the objects of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... criteria of S.13(1)(c) have been proven true in the instant case of the assessee society (DVA). We find that the other nine society's (other than the assessee DVA), were charitable societies and management members of these societies cannot be said to derive any benefit from the operation of the society - which is the development and maintenance forest lands owned by them. Except stating that the two management members of the Assessee society were also management members in the other nine societies, the AO has not brought out anything to show as to how these members will benefit by the operation of the other societies, It was stated that in the case of the other societies also the members are not entitled any income of right to any property of the society on its dissolution. This being so the other societies are no different from the assessee society and the Department has not made a case as to how the common management members would derive benefit from the monies spent by the Assessee society for maintenance of the forest lands of the other societies. 16. Therefore it would be erroneous to hold a view, especially when not supported by any facts to the contrary, that the individua ..... X X X X Extracts X X X X X X X X Extracts X X X X
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