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TMI Blog2012 (12) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... ced for Rs.4,78,0751- Officer has erred in coming to the conclusion that this is not an application of income towards its objectives. Hence to this extent the addition is deleted and the ground is partly allowed Addition on account of donation – alleged that assessee has invested donations in a manner contrary to sec.11(5) thereby violating the provisions of sec.11(5) - Held that:- Donations have been received as corpus donation towards the end of the previous year. They were invested in the manner prescribed in the subsequent month i.e. April 2005 - there is no provision which contemplates making of investment of donation within any particular period or a provision which says that absence of making investment will result in the trust losing exemption u/s.11 of the Act - these donations have been invested in the manner required in the month of April, 2005 – in favor of assessee - ITA NO.4683 & 4684/MUM/2010 - - - Dated:- 20-1-2012 - SHRI N.V.VASUDEVAN SHRI R.K.PANDA, JJ. Appellant by : Shri Shantam Bose, Respondent by : Shri Apurva R. Shah ORDER PER N.V.VASUDEVAN, J.M: ITA No.4683/M/10 is an appeal by the revenue against the order dated 18/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leted by the CIT(A) following the aforesaid decision. The revenue is in appeal against the order of the CIT(A) before the Tribunal 4. Before us ld. D.R relied on the order of the AO. We are of the view that in the light of the judicial pronouncements of the ITAT Delhi in the case of Dharma Prasthanam(supra) the addition was rightly deleted by the CIT(A). The facts of the case before the Tribunal were that the assessee-trust was a registered society and it was a charitable institution whose income was exempt under section 11. During the relevant account year, it received certain donations from abroad and claimed exemption from tax on these donations on the ground that they did not partake the character of income under the provisions of section 2(24)(iia) and also under section 12. The ITO allowed exemption in respect of donations towards the corpus of the assessee and held the balance of the donations to be taxable on the ground that such donations were received for general and running expenses of the assessee. Before the Commissioner (Appeals), the assessee produced letters obtained from the donors showing that those amounts were donated towards corpus. However, the Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubject to the provisions of sections 60 to 63 of the Act, the income derived from property held under trust, to the extent to which such income is applied to such purposes in India or any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of twenty-five per cent of the income from such property, will not be included in the total income of the person. Now the voluntary donation, which is to be treated as income within the meaning of section 2(24)(iia) by the injunction of section 12, is to be treated as income derived from the property held under trust wholly for charitable or religious purposes for the purposes of section 11 and if we apply section 11, we find that that income was spent for the purposes for which the trust is established and this is an admitted fact. Therefore, the entire contributions, though regarded as income, becomes eligible for exemption and no part of it can be said to be income which forfeited the claim of exemption. This is the clear outcome of reading of section 2(24)(iia), section 12 and section 11 together as applied to the facts of the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee had made various donations on account of medical aid, education including donations for cultural activities to the extent of Rs. 5,44,186/-. It is not in dispute that under clause (3)(a) of the Trust Deed the Trust was entitled to make donations for other societies which are engaged in promotion and advancement education, literature, arts, science and culture. According to the assessee the donations were given to institutions to meet expenses on cultural activities, cultural shows etc. and have to be considered as application of income for charitable purposes. The AO did not accept the same and he held that the donations were made to institutions which were not related with the cultural activities or for promotion and advancement of culture. A sum of Rs.5,44,186/- was accordingly added to the total income of the assessee. 8. On appeal by the assessee the CIT(A) deleted the addition made by the AO for the following reasons: 5.2 As confirmed by the Officer, the Trust deed provides for application of money towards donations to Societies and Institutions or Organizations for promotion or advancement of education, literature, arts, science of culture. While the appellant fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by the appellant as well as the findings of the Assessing Officer. I find that the Assessing Officer has not disputed that the donations were given with an intention that they are towards corpus. His only finding is that these were not invested in the manner prescribed u/s. 11(5) and hence could not be treated as exempt income. 4.5 I have perused the provisions of the Income Tax Act, 1961. Section 12(1) provides that voluntary contributions received by a Trust are deemed to be income received from the property of the trust unless they are received with a specific direction that they shall form part of the corpus of the Trust or Institution. Section 13(l)(d) provides that the benefits of tax exemption u/s 11 or section 12 shall not be available to a trust if any funds of the trust are invested or deposited in a mode other than that provided u/s 11(5) of the Act. There however appears no provision which says that for a donation to be treated as being exempt u/s 12(1), the same needs to be invested immediately in a mode prescribed by Section 11(5). However if these donations are invested in a mode other than that prescribed by section 11(5) then the trust would lose the tax ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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