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TMI Blog2018 (3) TMI 1035X X X X Extracts X X X X X X X X Extracts X X X X ..... nce in law (refer section 12A(1)), would render our own order as internally inconsistent, i.e., the same malady that inflicts the orders by the Revenue authorities, besides laying down a wholly unacceptable legal proposition/judicial precedent, inconsistent with the decision in U.P. Forest Corporation v. Dy. CIT (supra). We are also, we may add, conscious of the provision of s. 12A(2), which essentially seeks to extend the benefit of sections 11 and 12 to years for which registration u/s. 12AA is not available subject to the non-change of the objects of the trust during the intervening period, i.e., at the time of grant of registration and that obtaining during the relevant previous year. The same, however, would get triggered only upon grant of registration u/s. 12AA, which has admittedly not even been applied for by the assessee. The matter accordingly shall travel back to the file of the AO for adjudication afresh in accordance with law, in light of the foregoing findings/ observations. The assessee shall be allowed deduction qua any expenditure incurred, if any, including administrative expenditure, for the purposes of the running the institution or organizing its’ activitie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We observe no issue qua the same and, therefore, the bringing on record of a certified english translation was dispensed with, and the hearing in the matter proceeded with, after obtaining concurrence of the ld. Departmental Representative (DR). There are three sections under which the donations to the assessee-trust could possibly be considered for tax purposes, none of which is applicable in the instant case, as shall be presently shown, the ld. AR would continue, adverting first to section 2(24)(iia), the first of these sections, the other two being sections 28 and 56: 2. Definitions In this Act, unless the context otherwise requires,- (1)................... (24) income includes - (i) profits and gains; (ii) dividend; (iia) voluntary contributions received by a trust created wholly or partly for charitable or religious purposes or by an institution established wholly or partly for such purposes or by an association or institution referred to in clause (21) or clause (23), or by a fund or trust or institution referred to in sub-clause (iv) or sub clause (v) or by an university or other educational institution referred to in sub-clause (ii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... understood as altruistic thought and action, with a view to benefit others selflessly. It may assume different forms, as, for example, philanthropy. If providing food to people or giving shelter to travelers is not charity, as observed by the Bench during hearing, what, we wonder, is? This, in effect, stands also observed by the Amritsar Bench of the Tribunal recently per its order in Vishwayatan Yogashram v. CIT(E) (in ITA No. 428/Asr/2016, dated 13.12.2017), directing registration, similarly, to an institution providing Langar (community kitchen, where people, irrespective of caste, creed and religion prepare and partake food together, promoting the ideals of service of humanity and brotherhood); the cost of the same being met from voluntary contributions by people at large. Further, if organizing religious festivals, including arranging visit/s to a holy shrine, is not religious, what, we wonder, again, is? The assessee s receipt of ₹ 90.41 lacs by way of voluntary contributions - the balance ₹ 3.91 lacs being interest income, for the purpose of its objects, is thus income within the meaning of sec.2(24)(iia). True, the Revenue has allowed a deduction for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee qua the sum applied by it for its purposes during the year has acted inconsistently and, more importantly, not in accordance with the law; rather, contrary thereto. We use the word implicitly in-as-much as there is no finding or specific allowance of such exemption to the assessee qua the sum applied by it for its purposes during the year; with the Revenue rather clearly denying exemption u/s. 11 for want of registration u/s. 12AA. The assessee s case is equally untenable. True, the amount received by the assessee-society is held by it under trust, a legal obligation by definition, so that the same cannot ordinarily, i.e., going by the common conception of the word, be regarded as income of the recipient trust. However, the same has been regarded as so by the Act per the defining provision itself - s.2(24)(iia), reproduced above. But for the same, even as observed by the Bench during hearing, the same may not fall to be considered as income , being an amount received by one from another under an obligation to be applied for a specific purpose/s. Rather, even prior to the insertion of section 2(24)(iia)(inserted by Finance Act, 1972, w.e.f. 01.04.1973) on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he applicability of the principle of mutuality, also argued before us, again, only needs to be stated to be rejected. The assessee is a separate legal entity, i.e., distinct and apart from both its Management - managing it under a clear set of rules and regulations (copy of which was shown to us during hearing), as well as its trustees, as well as those patronizing it, contributing their time and resources for its various activities. The donations are only the voluntarily contributions referred to in sec. 2(24)(iia) as well as in s.11(1)(a), and form the trust property, to be applied for its purposes in the manner it deems fit and proper. Likewise, is the interest income arising to it. No argument/s qua ss. 28 and 56 was raised, which provisions come into play where the income becomes assessable as business income or from other sources, while the income in the instant case is derived by a charitable/religious institutions from property held under trust and, further, stands brought to tax on account of the benefit of section 11 being not applicable. Conclusion 4. The assessee, a society with charitable and religious objects, is in receipt of voluntary contributions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. [1956] 29 ITR 661 (SC))(also refer Kedarnath Jute Mfg. Co. Ltd. v. CIT [1971] 82 ITR 363 (SC)). That apart, it may be appreciated that not so holding, i.e., that the assessee is not entitled to any exemption u/s. 11 on account of non-registration u/s. 12AA, on which aspect there is no ambivalence in law (refer section 12A(1)), would render our own order as internally inconsistent, i.e., the same malady that inflicts the orders by the Revenue authorities, besides laying down a wholly unacceptable legal proposition/judicial precedent, inconsistent with the decision in U.P. Forest Corporation v. Dy. CIT (supra). We are also, we may add, conscious of the provision of s. 12A(2), which essentially seeks to extend the benefit of sections 11 and 12 to years for which registration u/s. 12AA is not available subject to the non-change of the objects of the trust during the intervening period, i.e., at the time of grant of registration and that obtaining during the relevant previous year. The same, however, would get triggered only upon grant of registration u/s. 12AA, which has admittedly not even been applied for by the assessee. We may at this stage also dwell on the powers of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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