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TMI Blog2019 (3) TMI 1345X X X X Extracts X X X X X X X X Extracts X X X X ..... ovable property. It does not provide such immovable property must be meant for any specific purposes. Therefore, there is nothing wrong committed by assessee so as to violate any provisions of law. Assessee has explained that out of the addition in question as made by AO, the amount was in fact towards corpus donation. The assessee produced confirmation and bank account and relevant details to prove it was a corpus donation. Therefore, it could not be added to the income of the assessee. CIT(A) correctly directed to delete the addition. The Revenue did not challenge the deletion of addition on account of corpus donation. Therefore, findings of fact recorded by CIT(A) are confirmed. If the corpus donation is excluded nothing would survive against the assessee so as to make any addition. There is no merit in Departmental appeal. Same is accordingly dismissed. Expenditure incurred by the trust/charitable institution in earlier assessment year could be allowed to be set off against income of subsequent years by invoking section 11 - HELD THAT:- assessee rightly contended that the authorities below have failed to appreciate that income has to be computed commercially even in cases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the main objects of the trust are to work for upliftment of rural area, to promote higher and continuing education, to promote working women s hostel, to run family planning centre, maternity and child welfare centres, etc. The AO on the basis of the details filed on record noted that assessee has made investment in purchase of land and flats amounting to ₹ 3,44,27,160/- and ₹ 20,25,000/-. Assessee trust has also given advance of ₹ 48,10,240/- for flat. The AO issued notice to assessee as to why the amount of ₹ 48,10,240/- should not be added to the income of the assessee, which was not invested for charitable purposes. The assessee in the written submission submitted before AO that besides the opening balance of ₹ 40,24,000/- brought forward from the preceding year, assessee trust has further given a sum of ₹ 7,86,240/- as another installment in advance to M/s Jay Pee Greens, Greater Noida for booking a flat therein to be used for housing the Vice Chancellor of the proposed University. It was explained that trustees are mainly Doctors with established practice and have settled nursing home in Meerut and do not stay in Greater Noida, hence, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otaling to ₹ 2,67,51,128/- was disallowed as investment made is not for charitable purposes. The assessee made similar advance of ₹ 7,86,240/- given during AY 2011-12 for purchase of flat was also disallowed, as it was not for charitable purpose. The AO, therefore, noted that assessee has violated provisions of section 13(1)(d) of the Act and consequently the benefit of provisions of section 11(5)(x) of the Act cannot be granted. The AO computed the income of assessee at ₹ 2,22,04,300/- and treated the assessee as AOP. 6. The assessee challenged the addition before Ld. CIT(A). The written submission of the assessee is reproduced in the appellate order in which the assessee explained that there is no violation of section 13(1)(d) of the Act because section 11(5)(x) authorizes investment in immovable property. The assessee has made investment in immovable property as per above provision, therefore, there is no violation of provisions of law. It was also explained that assessee had received ₹ 2,25,50,000/- as corpus donation during the year and its income as per income expenditure account is only to the extent of Rs. (-) 3,07,905/-, thereby giving surplus on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO was under an impression that in order to qualify for charitable purpose the trust has to spend the money here and now on charitable activities. By this logic no long term investment would be qualified as being done for charitable purpose. Clearly this is not the position of law in section 11(5)(x). The clause 5 of section 11 says the forms and modes of investing and depositing the money referred to in clause (b) of sub section (2) shall be the following, namely; .The sub clause (x) simply says investment in immovable property . Thus there is no violation of section 11(5)(x) and consequently section 13(1)(d). 3.5 There is another line of argument which has been taken up by the AR. The question of applying 85% of the income will arise only when contributions received by the trust are not forming part of the corpus of the trust. The AR has given documentary evidence before the AO that the amount of ₹ 2,25,50,000/- which has been taken as total receipts of the trust by the AO is in fact towards corpus donation. Letter of the donor confirming this fact has been produced before the AO. In the balance sheet of the trust also ₹ 2,25,50,000/- has been shown as part o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary steps towards establishment of University. The AO was under the impression that in order to qualify for charitable purpose, the trust has to spend the amount on charitable activities only. However, section 11(5)(x) of the Act clearly authorize investment in immovable property for claiming exemption u/s 11 of the Act. If the findings of the AO are accepted then no investment would be qualified u/s 11(5) of the Act. Since the investment in immovable property is permitted as per section 11(5)(x) of the Act, therefore, there was no necessity for the assessee to prove that it was done so for charitable purposes. Section 11(5) provides that accumulated amount u/s 11(2) has to be kept in specified moods of investment which include investment in immovable property. It does not provide such immovable property must be meant for any specific purposes. Therefore, there is nothing wrong committed by assessee so as to violate any provisions of law. The identical issue was considered and decided by ITAT Delhi G Bench in the case of M/s The Scientific Educational Advancement Society (supra) in which in para 13 it was held as under: 13. We have heard the Ld. Representatives of both the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital gains for a charitable trust has been upheld in the case of CIT vs. Aurobindo Memorial Fund Society (2001) 247 ITR 93 (Mad.) and DIT (Exemptions) vs. DLF Qutab Enclave Complex Medical Charitable Trust (2001) 248 ITR 41 (Del.) (supra). If the land at Dhokra village was not meant for charitable purposes, the assessee-society would not have got benefit of Sections 11 and 12 for all these years. We, therefore, held that the land at Village- Dhokra which was sold in A.Y. 2007-2008 was meant for educational purposes only. Copy of Form No. 10 is filed at page-146 of the paper book and copy of the resolution of assessee-society is filed at page-147 of the paper book and contention of assessee-society has been accepted by Ld. CIT(A) in A.Y. 2007-2008 above and his view have been confirmed by the Tribunal. It is also not in dispute that assessee-society purchased lands at Sadhrana, Gopalpura and Lohari aggregating to ₹ 7,20,56,368/-. Therefore, short fall of ₹ 2,10,842/- is the income remaining to be applied to five years period allowed under section 11(2) which has not been expired in assessment year under appeal i.e., A.Y. 2008-2009. Therefore, this amount also ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 11(2) was applied for educational purposes. Considering the totality of the facts and circumstances of the case noted above in the light of finding of fact recorded by the Ld. CIT(A) and Tribunal in A.Y. 2007-2008, it is clear that no addition could be made against the assesseesociety of such nature. The order of the Ld. CIT(A), therefore, cannot be sustained in law for enhancing the income of assessee-society of ₹ 6,77,16,875/- and that too by invoking Section 11(1B) and Section 11(3) of the I.T. Act, which are not applicable to the case of the assesseesociety. The decisions relied upon by the Ld. D.R. are not applicable to the facts of the case. In view of the above discussion, we set aside the Order of the Ld. CIT(A) and delete the addition of ₹ 6,77,16,875/-. Accordingly, appeal of the assessee-society is allowed. 10. Following the above order of the Tribunal, we do not find any justification to interfere with the order of the Ld. CIT(A). We may also note that assessee has explained that out of the addition in question as made by AO, the amount of ₹ 2,25,50,000/- was in fact towards corpus donation. The assessee produced confirmation an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting the building so that charitable activities could be conducted thereon. The capital investment of this nature has consistently being held to be application for the purpose of Income Tax Act. Hence, the same is treated as expenditure done towards charitable activities. The assessee relied upon several decisions in support of the same proposition i.e. CIT vs. St. George Forana Church 170 ITR 62, S.R.M. M.Ct.M. Tiruppani Trust vs. CIT 230 ITR 636 (SC) 13. The Ld. CIT(A), however, did not accept the contention of the assessee and noted that income of the charitable trust is not assessable under the head Profit and Gains of the business . Section 11 provides exemption of income of charitable organization, therefore, the claim of assessee for carry forward of excess capital expenditure was dismissed. 14. Ld. Counsel for assessee submitted that the CIT(A) has failed to appreciate the judgment cited before him and thus, violated the principle of judicial discipline. The Ld. CIT(A) failed to appreciate that income has to be computed commercially even in cases covered u/s 11-13 of the Income Tax Act and resultant loss, if any, arising due to surplus application of income has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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