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TMI Blog2017 (5) TMI 1671X X X X Extracts X X X X X X X X Extracts X X X X ..... s ignoring the fact that such amount will never be applied for charitable purposes, as donation given are corpus donations and hence no satisfaction as mentioned in Instruction No. 1582 dated 19/10/1884 exist." The only issue involved in this appeal relates to treating the corpus donation amounting to Rs..1,02,00,000/- given by the assessee to Tolani Education Society as application of income towards objects of the Trust. The facts relating to this ground are during the assessment proceedings the Assessing Officer noted that the assessee has given donation to Tolani Education Society amounting to Rs. 1,02,00,000/-, which has been claimed by the assessee as application of income towards the objects of the Trust. The Assessing Officer was of the view that Tolani Education Society and the assessee are covered within the meaning of provisions of section 13(3) of the Act even though the tax audit report in Form 10B categorically mentioned that no payments were made to the persons covered u/s. 13(3) of the I T Act. However, the Assessing Officer came to the conclusion that this donation was covered u/s. 13(3) of the I T Act in view of the fact that the trustees of the assessee trust Dr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ociety is not hit by section 13 of the I.T. Act. I direct the A.O. to treat the donation of Rs. 1,02,00,000/- as application of income for charitable purposes u/s 11(1)(a)" 4. The learned AR drew our attention towards the order of this Tribunal in assessee's own case in ITA Nos.6970 & 199/Mum/2011 & ITA No. 1111/Mum/2011 for assessment year 2004-05 and contended that the issue involved is duly covered in favour of the assessee. He also on the query from the Bench submitted that the said donation has been given by the assessee out of current income. 5. The learned DR, on the other hand, relied on the order of the Assessing Officer. 6. We have heard both the parties and have carefully considered the material available on record. We noted that similar issue in respect of donation being paid by the assessee trust to Tolani Education Trust was decided by this Tribunal in favour of the assessee, vide order dated 30.09.2013 in ITA Nos.6970 & 199/Mum/2011 & ITA No. 1111/Mum/2011 for assessment year 2004-05, wherein it has been held as under: 3.3 We may next consider the add-back of the donations for Rs. 24 lacs and Rs. 36 lacs, forming part of the total sum of Rs. 60 lacs paid by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the relevant year. We may now discuss each of the three sums separately. The sum of Rs. 24 lacs is admittedly a corpus donation (also refer ledger accounts in the books of the donor and the donee - pages 24, 26 / PB 2). The law in the matter is by now well settled, so that donation by one charitable trust to another would entitle the donor fund to claim exemption qua application of income u/s. 11(1). As pointed out by the hon'ble court in Sarladevi Sarabhai Trust (No. 2) (supra), it would make no difference if the donation is toward the corpus of the donee-fund, so that it is only the income therefrom, and not the donation sum itself, that is liable to be spent for or utilized for the charitable purposes of the recipient. The word application' has a wider connotation than the word 'spent', so that an application of income of the donor trust could not be denied. Again, the corpus fund may not necessarily be invested in specified securities but could also be toward capital expenditure, which again qualifies as an application of income. The objection, thus, raised by the Revenue is not maintainable. Coming to the donations for Rs. 36 lacs; the same have been explained as: - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the expenditure incurred on administration or otherwise for generating, the revenue. The assessee's claim, therefore, though acceptable in principle, would be required to be shown with reference to its accounts. The AO shall verify the incurring of the said payment with reference to the assessee's accounts, and subject to his returning a positive finding in its' respect, we confirm the treatment of the said sum as toward application of income. We decide accordingly. No contrary decision was brought to our notice. Respectfully following the said decision, of the Tribunal, we dismiss the ground taken by the Revenue. 7. ITA No.1110/Mum/2011 In this appeal, the assessee has taken as many as five grounds of appeal, but the only issue pertains to the disallowance of claim of standard deduction on rental income @30% u/s. 24(a) of the IT Act. 8. We have heard the rival parties and gone through the material available on record. On a perusal of the Tribunal order dated 30.09.2013 in ITA Nos.6970 & 199/Mum/2011 & ITA No. 1111/Mum/2011 for assessment year 2004-05, we find that on identical issue has been decided against the assessee by observing as under: 3.2 The first issue arising i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he total income, would not enter the computation process to determine the quantum of income under the relevant head of income, each of which has its own computation provisions.' To the same effect and purport are its observationsin the case of LKP Securities Ltd.(in ITA Nos. 638 & 1093/Mum/2012 dated 17.05.2013): 14 ....... The income (and loss, which is only negative income) falling under Chapter III of the Act and, thus, exempt from the levy of the tax, would not form part of the computation of the income under Chapter IV of the Act. That in fact is a fundamental premise; the basis of sec. 14A of the Act. The Revenue's case in this regard is unexceptional, and we confirm the same.' In both the decisions, the tribunal relied on the decision in the case of Harprasad & Co. (P.) Ltd. (supra). The reliance by the ld. CIT(A) on the Circular issued by the Board (No.5P(LXX6) dated 19.06.1968), explaining the position in the matter, is also apposite. It stands explained that only the income as reflected in the accounts of the trust/institution that is to be applied or deemed to have been applied for charitable purposes, and which, therefore, has to be computed in the commercial sense. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied by us during hearing. Accordingly, the assessee's ground/s for the claim of the standard deduction u/s.24 fail. We decide accordingly. Finally, the reliance by the assessee on the decision in the case of IAC, Mumbai vs. Saurashtra Trust [2007] 106 ITD 1 (Mum) (SB) is, under the circumstances, misplaced. The said decision is, firstly, sansany reference to any precedents; nay, even without a discussion of the law in the matter. This aspect would in fact become clear in view of the questions referred to and answered by the tribunal. As a reading of its order would show (refer para 1), the same are not directly connected with the issue before us. The said decision, thus, would be of no assistance to the assessee, with we having even otherwise decided the matter following the binding precedentsin the matter, so that the decision in the case of Bank of Baroda v. H.C. Shrivastava[2002] 256 ITR 385 (Bom), advocating judicial discipline with reference to the decision by the apex court in CCE v. Dunlop India Ltd. AIR 1985 SC 330, only supports the same. The decision in the case of Al Ameen Educational Society v. DIT (Exemption) (in ITA No. 575/Bang./2011 dated 28/9/2012, also at [2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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