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TMI Blog2019 (3) TMI 579X X X X Extracts X X X X X X X X Extracts X X X X ..... of the immovable property, an Auditorium, which was intended to be used for serving the objects of the said Trust, including from the rental income from it. 2. The object of the Assesse Trust, as discussed in the Assessment Order itself, as per the Trust deed dated 30th May 1987 is to provide educational assistance to the children of poor artistes; to provide medical relief to the poor artistes and others; to provide relief to aged and incapacitated artistes and others and to provide such other assistance to artistes and their families, including to provide education in the area of art, culture and such other vocational training in order to promote employment etc. 3. The Assessing Officer found that the advance amount of Rs. 52.00 lakhs given by the Assessee was an 'Investment' and could not be treated as 'application of income' towards the object of the Trust and therefore, the Assessee was not entitled to exemption to the said extent of advance given by it to the lessor for taking the leasehold rights in respect of the said immovable property. 4. In the first appeal filed by the Assessee against the order of the Assessing Officer, the learned Commissioner of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stes for whose benefit the said Trust itself was created and the Trustees had the power to invest also in the immovable property for serving the cause of artistes in the aforesaid manner, by holding various shows therein, including by way of earning rental income by giving such immovable property on which Cinema Hall or Auditorium was being constructed on hire and the rental income was also to be used for the benefit of artistes and other persons as per the objects of the Trust deed. 8. He submitted that even the investment in the immovable property is covered by the term 'application' as employed in Section 11(1)(a) of the Act, which word is of wider import and the Assessing Officer as well as the learned Income Tax Appellate Tribunal have erred in taking a narrow view of the matter and holding that the advance for purchase of the immovable property/taking of leasehold rights in that property was not 'application of income' during the year in question and thus denying exemption to the Assessee. 9. The learned counsel for the Assessee firstly relied upon the decision of Kerala High Court in the case of Commissioner of Income Tax v. St. George Forane Church, report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d) 10. Relying upon the decision of the Hon'ble Supreme Court in the case of S.RM.M.CT.M. Tiruppani Trust v. Commissioner of Income Tax, reported in (1998) 230 ITR 636 (SC), the learned counsel for the Assessee urged that every charitable or religious Trust, irrespective of whether it has filed a declaration in Form No.10 under Section 11(2) of the Act or not, for first accumulating its income and then applying the same in the specified investments under Section 11(5) of the Act, which includes an investment in the immovable property, if such income is applied for purchase of immovable property for serving the cause and objects of the said charitable Trust, cannot be denied the exemption under Section 11(1)(a) of the Act. Paragraph 6 of the said decision of the Hon'ble Supreme Court, which we find to be relevant and applicable for the controversy before us is quoted below for ready reference: "6. A mere look at section 11(1) and 11(2) is sufficient to dispel this argument. Under section 11(1), every charitable or religious trust, irrespective of whether it has filed a declaration under section 11(2) or not, is entitled to deduction of certain income from its total income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... executed an irrevocable general power of attorney in Assessee's favour. Such amount paid by the Assessee would be exempted under Section 11(1)(a) of the Act. 12. Thus, the learned counsel for the Assessee urged that the advance of Rs. 52.00 lakhs, in the present case, given by the Assessee Trust for obtaining the leasehold rights in the immovable property, which fact is not disputed by the Revenue, amounts to 'application of income' of the said Trust and was, therefore, entitled to exemption under Section 11(1)(a) of the Act. 13. On the other hand, the learned counsel for the Revenue, Mr.J.Narayanaswamy, submitted before us that the said advance by the Assessee Trust did not crystalise in any 'application of income' by the Assessee during the year itself and was in 'suspended animation' and, therefore, the said expenditure or outgo of money would not amount to 'application of income' by the Assessee during the relevant year and the Assessee admittedly did not comply with the procedure of Section 11(2)(b) of the Act for accumulation of the income by filing requisite declaration in Form No.10 for the same and did not invest the same in the prescr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... serving the cause and objects of the Trust is more committed and firm 'application' of income of the Trust. The burden, therefore, was on the Revenue to establish that the 'investment' was for the purpose, other than, for subserving the objects stipulated in the Trust deed. The Revenue, in our opinion, has utterly failed to bring on record any evidence to the contrary to the claim of exemption by Assessee on the ground that the immovable property in question was being taken on lease to create a Theatre or Auditorium, which would be used for the purpose of the group of artistes or their families or even serve the cause of general public in times of floods or to provide education to the children, etc. Unless there was evidence on record to show that the said investment of the immovable property was being used for the purpose altogether different from the objects of the Trust deed, the denial of exemption on an assumed distinction between the 'application' and 'investment' was not only too far-fetched, but beyond the scheme of Section 11 itself and the said view of the Tribunal, therefore, cannot be countenanced. (ii) The next judgment relied upon by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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