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TMI Blog2017 (12) TMI 1720X X X X Extracts X X X X X X X X Extracts X X X X ..... (f) To promote cultural sports, religious and charitable activities. 3. It had been granted registration u/s. 12A of the Act vide order dated 03.05.1995. The Ld. Commissioner of Income Tax, invoking his powers u/s. 12AA(3) of the Act, cancelled the registration granted u/s. 12A holding the activities of the assessee society as not being genuine and not being carried out in accordance with the objects of the trust for the following reasons: (i) It was involved primarily in the business activity of trading in mutual funds and its main object, therefore, was not carrying out any charitable activity. (ii) It had spent only a meagre portion of its total receipts for charitable purpose in financial years 2007-08 to F.Y 2009-10. (iii) That the only application of its income was giving donations to other purported charitable institutions which as per the Ld. Commissioner of Income Tax could not be treated as application of its income in terms of section 11(1)(a) of the Act. (iv) The purpose for which salary was paid by the assessee society did not appear to be genuine. 4. The basis for arriving at the above conclusions by the Ld. Commissioner of Income Tax was the financial dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction No. 1132 dt. 05-01-78. The Ld. counsel for assessee drew our attention to the institutions to which donation was given as reproduced in the order of the Ld. Commissioner of Income Tax at pages 3 to 5 as under: F. Y. 2007-08 Sr. No. Name of the Institution Amount 1 Inner Wheel Club for support of one child 15000 2 Iskcon Chandigarh for religious activities 7100 3 Lions Club Chandigarh for five eye operations 12500 4 Maharshi Patanjali Vigya Mandir Samiti, Allahabad, for sponsorship fee for two 12360 5 Oxfam Trust India for poor children education 6800 6 Pannalal & Darshanlal at Guptkashi 36335 7 PHD Rural Development Board/Foundation 100000 8 Rajasthan Parishad towards advertisement and 25000 9 Society of Rehabilitation of Mentally 100000 10. Pannalal and Darshanlal at Guptkashi 36335 Total 315095 F. Y. 2008-09 Sr. No. Name of the Institution Amount 1 ASF India 100000 2 Chinmaya Tapovan for one student admission in govt. polytechnic college 10145 3 Hyderabad Children Aid Society 1000 4 Inner Wheel Club for support of one child 15000 5 Lalit Kala Akademi for scholarship to one budding artist for one year 25000 6 L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by the assessee society in three financial years i.e. from financial year 2007-08 to financial year 2009-10 was giving donations to other institutions. The Ld. DR pointed out that the assessee had not even demonstrated whether donations given to these institutions had been found to have been utilized for the purpose for which it had been given, nor had it been demonstrated that the institutions to whom donations had been given were charitable institutions registered u/s. 12A of the Act. The Ld. DR stated that for the aforesaid reasons, donation given by the assessee society could not be treated as application of income. The Ld. DR further referring to the financial data stated that major portion of its income was subsumed in short term and long term losses incurred by the assessee on account of trading in mutual funds and other securities which was a clear pointer to the fact that the assessee society was primarily involved in its business activity of investing mutual funds and securities and its main object definitely was not a charitable in nature. The Ld. DR for the aforesaid reasons supported the order of the Ld. Commissioner of Income Tax cancelling the registration granted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncial figures of the past three years as reproduced above, is not disputed. It is also an admitted fact that the activity of giving donations was included as part of its stated objects in the trust deed by way of amendment to the trust deed made on 09.01.2000 i.e. subsequent to the grant of registration u/s. 12A of the Act on 03-05-95, meaning thereby that the activity of giving donations was not considered while granting registration u/s. 12A of the Act. It is also an admitted fact that subsequent to the amendment made, no fresh registration u/s. 12A had been sought by the assessee. Clearly, therefore, the act of the assessee society in applying/utilizating its income solely by way of giving donations to other institutions was not in consonance with its approved objects. Moreover, we find no merit in the contention of the Ld. counsel for assessee that the donations made by it tantamounted to utilization/application of its income as per the provisions of section 11(1)(a) of the Act. Undoubtedly, as per the Instruction issued by the CBDT No.1132 dated 5.1.1978 and in view of various decisions of the Hon'ble High Courts, donations to other charitable trusts is to be treated as ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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