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TMI Blog2018 (8) TMI 596X X X X Extracts X X X X X X X X Extracts X X X X ..... re on its own and cannot give donation in kind to institutions who in turn have given to the needy which otherwise are for charitable purposes? The contention of Ld. CIT (A) that donations made in kind or in cheques to charitable organisation which are registered u/s 12A are deemed to not allowable as per section 13(3)(d) is completely misunderstanding of the said provision, because disallowance under this clause can only be of the payment made to another charitable institution out of accumulated funds and there is no embargo of payment / application of current year income. All will fall within the category of advancement of general public utility and we were unable to appreciate that how these expenditures can be held to be for noncharitable purposes. Hence, we allow such expenditures as application of income for charitable purposes. Regarding administrative expenses - Held that:- these are being incurred for day to day activities for the assessee trust and running of the trust and without such expenditure no charitable trust can carry out these activities. The entire addition and disallowance made by the Ld. CIT (A) is deleted - Decided in favor of assessee. - ITA N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) has erred in holding that the expenses claimed by the Appellant to perform its charitable activities cannot be treated as application of income for charitable purposes under section 11 of the Act in the absence of connection of such expenses with the people engaged in the activities of the trust. 2. The facts in brief are that assessee is a public charitable trust which was constituted by trust deed dated 27.7.2005 with the objectives of providing; i) relief to the poor; ii) education; iii) medical relief; and iv) the advancement of any objects of general public utility. Looking to its charitable activity assessee was registered u/s 12A vide order/certificate dated 28th September, 2006. Assessee after claiming exemption u/s 11 of ₹ 3.90 crores on account of application of income of more than 85% of the gross receipt and consequently filed its return of income at NIL. Ld. AO during the course of the assessment proceedings asked the assessee to furnish complete details of application of income with documentary evidences, in response to which all the details as required were filed. AO noted that following payments or utilisation did not amount to application of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Schedule G Amount (Rs.) (i) Organisation having 12AA Registration 2,92,40,173 (ii) Schools 9,31,306 (iii) Colleges 36,82,865 (iv) Others 12,59,155 Total 3,51,13,499 Sub-head of expense Amount ( i) Professional fee 2,24,720 ( ii) Travel expense 1,49,416 ( iii) Conveyance expense 5,77,652 ( iv) Meal and refreshment 71,854 ( v) Events 9,40,242 1,910 19,65,794 5. Ld. CIT(A) observed that in so far as expenses given in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under: - S. No. Name of Parties Amount (in Rs.) 1. Purchase of water bottles bags etc. For distribution at competition among school children 3,26,702 2. Payment to vendor (i.e. Reprint) for printing annual reports on charitable activities of the Appellant 2,67,750 3. Saplings purchased from Green Carbon Energy IT Consultancy for free plantation drives 2,30,623 4. Participation in Marathon Procam International Ltd. 1,40,000 5. Saplings purchased from Carbon And Energy Consultants for tree plantation drives 1,32,026 6. Purchase of 200 mugs for distribution among winners of tree planting challenge from Vendor (i.e. mystic Charlies) 45,000 7. Participation fees in Marathon PROCAM INTERNATIIONAL LTD. 31,200 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,65,794 17,39,164 2,26,630 3,70,79,293 2,21,71,142 2,18,82,366 7. In this manner, he enhanced the income for the year under consideration at ₹ 1,12,67,634/- and held that the receipt of the assessee was ₹ 3.90 crores, out of which 85% of this amount equivalent to ₹ 3,31,50,000/- were to be applied for the Charitable purposes, but, since assessee has applied only ₹ 2,18,82,366/-, therefore, the balance amount of ₹ 1,12,67,634/- was held to be Income for the year under consideration. 8. Before us the Ld. Counsel for the assessee, Shri G C Srivastava after narrating the entire facts as culled out from the impugned order submitted that the assessee has made donations in kind and in cheques and also for scholarship of students and for other charitable activities. He summarised nature of disallowance, allegation of the Ld. CIT (A) and the contention of the assessee in the following manner: - S. No. Nature of disallowance Allegations of CIT(A) Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Other charitable activities like Marathon, Tree plantation, Distribution of prizes to students etc. Not charitable and spent for benefit of donor Charitable activities for general public utility 5. Administrative General Expenses These expenses are not connected to the persons engaged in the activities of the Trust Amount spent on the running of the trust 9. He also gave detail of donations made in kind items provided and the documentary evidences filed by the assessee before the Ld. CIT(A) and also the similar details with regard to donation in cheques and payment made to colleges and for such charitable activities of advancement of general public utility. The details of payment for administrative expenses have also been highlighted before us along with the documents furnished. Thus, he submitted that entire approach of the Ld. CIT(A) for disallowing the amount spent for charitable purpose that such kind of donation for charitable activity does not amounts to utilisation for charitable purpose is erroneous in law and on fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NIL 17,339,164 TOTAL 3,70,79,293 69,66,121 1,51,96,927 12. We have already incorporated the chart summarising the disallowances made by the Ld. CIT (A) on various grounds. On the perusal of the entire details furnished for each and every nature of expenditure incurred which has been treated to be application of income by the assessee, we find that there are various categories of donations; i) Donations in kind i.e., School bus, Laptops, Furniture, RO System, Solar water heating system, Solar street lights, Sweaters, etc.; ii) Donations in cheques, i.e., Mumbai Mobile Creches Literacy India; iii) Donations to colleges for scholarship of students and donations to colleges for Solar installation at colleges; iv) Other charitable activities like Marathon, Tree plantation, Distribution of prizes to students etc.; and v) Administrative General Expenses. Ld. CIT(A) has disallowed most of the expenditure as non-application on the ground that; firstly, donations in kind and cheques have been to institutions who are registered under section 12A, hence in v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no embargo of payment / application of current year income. This proposition is well settled by the judgment of Hon ble Delhi High Court in the case of DIT (E) vs. Bagri Foundation (2012) 192 taxman 309 (Delhi). 14. If assessee instead of carrying any charitable activity by itself has given funds to various organisation and institutions who are carrying out donation / relief to the poor or medical relief, in cheque or in kind, then it will still tantamount to incurring of expenditure for charitable purposes and hence will constitute application of income in the hands of the assessee. There is no prohibition under law that donation in kind or to institutions which are carrying charitable activities cannot be given. If a charitable organisation gives donations in kind to poor or gives scholarship or aid to the needy students to encourage the students, then it cannot be disallowed that the assessee itself has not directly carried out such charitable activities. Similarly, we find that payment made to various colleges and educational institutions the assessee has given in the form of scholarship and in the form of solar energy conservation products, etc., this again is for education ..... X X X X Extracts X X X X X X X X Extracts X X X X
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