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TMI Blog2016 (7) TMI 846X X X X Extracts X X X X X X X X Extracts X X X X ..... nds is not possible after 01.04.2002 as it is hit by sec.11(3) (d) of the Act. However, this is not the case herein before us. We are concerned herein about donation out of current income to another institution with religious objects cannot be considered as application of income for charitable purpose. In other words, the charitable trust cannot donate to the trust which is formed for religious purpose. - Decided against assessee - I.T.A.Nos.2270, 1222/Mds./2014, I.T.A.Nos.2714/Mds./2014 - - - Dated:- 24-6-2016 - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND Shri Duvvuru RL Reddy, JUDICIAL MEMBER For The Assessee : Shri S.Sridhar,Advocate For The Revenue : Shri P.Radhakishnan, JCIT,DR ORDER PER CHANDRA POOJARI, ACCOUNTANT MEMBER ITA Nos.2270 1222/Mds./2014 filed by the assessee ITA No.2714/Mds./2014 filed by the Revenue are directed against the different orders of the Commissioner of Income-tax (Appeals)-I, Coimbatore for the assessment years 2009-10,2010-11 2011-12 respectively. Since issues involved in all these appeals are common in nature, these appeals are clubbed together, heard together, disposed off by this common order for the sake of conven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the contribution by the assessee Trust, which is a charitable institution to a Trust which is a religious institution takes the character of religious contribution only. Since the contribution are directly hit by Section 13(1)(b) of the Income Tax Act, 1961, which debars the charitable institutions from existing for a particular religious community. Hence, the contribution to the Little Flower Monastery was disallowed. The ld.A.R had submitted the details of financial assistance given by Little Flower Monastery to various organizations. However, on verification, it is found that the Little Flower Monastery has not carried out any charitable activity as submitted by the Authorized Representative. As seen from the accounts of Little Flower Monastery, it was receiving amounts from Little Flower Educational Society and was advancing money to various provinces of the Christian Missionary. As submitted in the earlier grounds by the appellant, the Courts have held that any donation by a charitable institution to any other institution with similar objects would be an application of income. CIT(A) further observed that as seen from the details, Little Flower Monastery cannot be classifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the other hand it is engaged in advancing money to various provinces of the Christian Missionary and it is for Religious purpose. As per the provisions of the section 11(1) of the Act, the assessee is under legal obligations to apply the income to the extent of 85% for charitable purpose or religious purpose for which the Trust was established. Thereafter, this provision also enables the charitable or religious trust to accumulate or set apart only 15% of income for which the assessee shall give a notice to the AO in a prescribed manner indicating the purpose for which the income is accumulated or set apart and the period for which such income is so accumulated or set apart. Such amount has to be deposited in the manner and form as provided in section 11(5) of the Act and Explanation to section 11(2) and section 11(3) of the Act makes exception to the sec.11(2) of the Act. Explanation to section 11(2) and clause (d) of section 11(3) inserted by the Finance Act, 2002 with effect from April 1, 2003 says that income which was accumulated as provided in section 11(2) if credited or paid to another trust or institution registered under section 12AA or approved under section 10(23C) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n nature and the assessee was entitled to exemption u/s.11 of the Act. 7.2 Similar view is taken by Hon ble M.P. High Cour in the case of CIT Vs. Dawoodi Bohra Jamat reported in 317 ITR 342 wherein their Lordships held as under:- That section 13(1)(b) is attracted in the case of income of the trust for charitable purpose of a community or caste, which was not the case here. Thus, the Tribunal ightly decided the issue of applicability of section 13(1)(b) holding that since the assessee was a religious trust, the provisions of the section 13(1)(b)were not applicable because they were applicable in the case of the trust established for charitable purposes. From the above, it is evident that their Lordships of Hon ble Gujarat High Court as well as M.P.High Court have held that section 13(1)(b) would be applicable only to the trusts which is purely for charitable purpose. Even if a trust is for charitable as well as religious purpose, the section 13(1)(b) would not be applicable. Admittedly, the assessee trust is a charitable. Therefore, section 13(1)(b) would be applicable. 7.3 In this case, there is no dispute that the assessee has advanced money in this assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollows. 1. The CIT(A) went wrong in not considering the excess application of the receipts generated by the appellant while making the computation as per section 11 of the Act without assigning proper reasons and justification. 2. The CIT(A) failed to appreciate that even after rejection of the plea of contribution of ₹ 92,40,000/- as application of income, there was excess application much more than the income/revenue generated thereby vitiating the addition sustained in the impugned order completely. The assessee filed a petition for additional ground explaining the reasons for not raising the ground in earlier occasion. 9.2 We have gone through the reasons advanced by the assessee for not raising the above ground on the earlier occasion. We are convinced by the reasons advanced by the assessee and accordingly we are admitting the additional grounds by placing reliance on the judgement of Supreme Court in the case of National Thermal Power Co. Ltd. Vs. CIT reported in [1998] 229 ITR 383 (SC)wherein held that:- The view that the Tribunal is confined only to issues arising out of the appeal before the Commissioner of Income-tax (Appeals) takes too narrow a vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew of the above, the Ld.CIT(A) erred in granting the assessee the benefit of set off of the contributions to the religious trust against excess application of income thereby reducing the taxable income to nil. 4. The Ld.CIT(A) ought to have appreciated the fact that the contributions made for religious purposes could not be termed charitable by virtue of the ultimate end use of such contributions. 13. Here, the assessee has given donation of ₹ 1,20,00,000/- to M/s.Little Flower Monastery, Coimbatore and the same issue is discussed earlier in appeal No.2270/Mds./2014 by invoking the provisions of the section 13(1)(b) of the Act by the AO. However, the Ld.CIT(A) allowed the claim of assessee. Against this the Revenue is in appeal before us. 14. This issue is discussed in ITA No.2270/Mds./2014. Accordingly, this issue is covered against the assessee by our findings in para No.7.1 of this order for assessment year 2009-10.. Hence, the appeal of Revenue is allowed. 15. In the result, both the appeals of the assessee for assessment years 2009-10 2010-11 are dismissed and the appeal of Revenue for assessment year 2011-12 is allowed. Order pronounced in the ..... 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