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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 its income. In view of the above, we agree with the Ld. Commissioner of Income Tax that the assessee is indulging in the activity of giving donations to other institutions which is not in consonance with the approved objects of the assessee society. We, therefore, uphold the action of the Ld. Commissioner of Income Tax in cancelling the registration granted u/s. 12A of the Act by invoking the provisions of section 12AA(3) of the Act. - Decided against assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... ing donation 3,16,023 i Total Receipts from dividend interest 19,57,904 ii Short term capital loss 3,06,372 iii Long term capital loss 2,00,158 iv Other misc. expenses 82,240 v Excess of income over expenditure 10,53,111 5. During the course of hearing before us, the Ld. counsel for assessee challenged the cancellation of registration raising the following contentions: (a) That the investment and trading in funds was part of its stated activities mentioned in the trust deed and considering which it had been granted registration u/s. 12A vide order dated 3.5.1995. Our attention was drawn to clause-6 of the trust deed in support of the above contention which is reproduced hereunder: "6. The trustee shall invest the money hereby entrusted to them or any accretions thereto in such securities, shares, business they may deem fit and the trustees shall be at liberty to buy shares or invest the amount in such manner or change from one to another as they may deem fit and in accordance with the provisions of the law for the objects of the trust." (b) That giving donation to other charitable institutions was to be considered application of income as per sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ash Foundation 10000 8 Lions Club Chandigarh Central towards donation of 50 blankets for the project 5000 9 Voluntary Organization Hamari Kakslia 5000 10 Lion Club for sponsoring tree plantation at Chandigarh 44150 11 57 field regiment for celebration its Honour title day 25000 Total 3,16,023 (c) It was stated that salary was paid to Ms. Neeru Suri who was working in the assessee society as Accountant and managing all account work and correspondence and was qualified as a Bachelor of Arts and Master of Arts in Political science. Copy of the receipts issued on account of salary paid was filed by at Paper Book page Nos. 32 to 55. It was stated that the salary paid was genuine. The Ld. counsel for assessee on the basis of above, stated that there was no discrepancy as such to hold the activities of the assessee society as not being genuine or not in consonance with its stated objects and thus the cancellation of registration u/s. 12AA(3) of the Act was unjustified and unwarranted. 6. The Ld. DR, on the other hand, referring to the financial data, as reflected in its audited financial statements and reproduced in the earlier part of our order, pointed out that the on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o this, the Ld. counsel for assessee answered in negative. The Ld. counsel for assessee was thereafter asked as to why when its objects of giving donations was not considered for the purpose of grant of registration u/s. 12A and when clearly this was the only activity in which the assessee society was indulging in the past three years, it should not be held that the activities of the assessee society were not in consonance and as per its stated objects and hence not genuinely carrying out charitable activities. The Ld. counsel for assessee in response to the same submitted that in any case even without inclusion of the activity of giving donations in the objects of the assessee society, the act of giving donations tantamounted to application of funds as per section 11(1)(a) of the Act as accepted by the Revenue also vide the CBDT Circular No. 1132 issued on 05.01.1978 which stated so in unambiguous terms. 9. We have heard the rival contentions and having gone through the order of the Ld. Commissioner of Income Tax we find no reason to interfere with the same. The fact that the assessee society has been applying its income solely by way of giving donations to other institutions, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onor trust will not lose exemption under s. 11 of the IT Act, 1961, merely because the donee trust did not spent the donation during the year of receipt itself. The above position may kindly be brought to the notice of all officers working in your charge. The Hon'ble Gujarat High Court has held so in the case of CIT v. Sarla Devi Sarabhai Trust (No. 2) [1988] 172 ITR 698 and has been reiterated by the Hon'ble Allahbad High Court in the case of CIT v. J.K. Charitable Trust [1992] 196 ITR 31. The underlying ratio emerging is that utilization of income by others is also to be treated as application provided it is utilized for charitable purposes only, which is ensured if given to another charitable trust or in case given to others, the utilization for charitable purposes by the donee should be ensured by the assessee. 10. The facts in the present case however we find do not meet up to the above requirement. The assessee admittedly has given donations to various organizations as reproduced in earlier part of out order. When asked to show during proceedings before the Ld. Commissioner of Income Tax as to how they were actually utilized by the donee societies/institutions, no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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