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TMI Blog2021 (12) TMI 1068X X X X Extracts X X X X X X X X Extracts X X X X ..... or selection of prize winners, event management expenses incurred for Infosys Prize ceremony, travelling and conveyance expenses, memento and souvenir expenses, professional charges and service tax thereon, employee benefits and other expenses. These expenses were incurred in connection with the Infosys Prize ceremony held during the year. During the previous year 2015-16 relevant to AY 2016-17, the Infosys Prize was announced on 16.11.2015 and the awards ceremony was held at New Delhi on 13.2.2016. Thus, there is no merit in the contention of the Ld.AO that the expenditure was held towards the routine activities of the trust and hence the same cannot be considered as utilised from the amounts accumulated u/s 11(2) towards a specific activity. The application of income for charitable purpose includes any expenditure incurred directly or indirectly in connection with the objects of the Trust. To treat only direct expenditure incurred as application for objects of the Trust would be too narrow a view. In the present case, the sole objective of the Trust is the running of Infosys Prize annual award to honor outstanding achievements to scholars / scientists. There is no other object ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y purpose for the incorporation of the provisions of Sec. 11(2) if the same is allowed for general purpose of the Trust. 4.2 The Learned CIT(A) failed to appreciate the fact that the prepondence of a condition u/s. 11(2), in case of under-utilization of income as per the provisions of Sec. 11(1)(a) and the absence of a corresponding provision in Sec. 10(23C). 4.3 The Learned CIT(A) erred in failing to appreciate that in respect of an Institution governed u/s. 10(23C)(iv), 10(23C)(v), 10(23C)(vi), 10(23C)(via), the objects are solitary and hence the shortfall in application of income is automatically accumulated without undergoing the rigors of procedure laid down in Sec. 11(2) and Rule 17(2). On the contrary, in respect of a charitable Institution governed under the provisions of Sec. 11 12, the objects are not isolated or lone but multifarious in nature. Therefore, one of the objects has to be identified for the purposes of accumulation and amount would have been spent for that purpose only 5.1 The Learned CIT(A) failed to take into consideration the significance of the provisions of Sec. 11(3A) wherein general purpose accumulation and spending cannot be all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Prof. Jonardon Ganeri 6,500,000 Humanities 3 Prof. Mahan 6,500,000 Mathematical Science 4 Prof. G Ravindra Kumar 6,500,000 Physical Science 5 Prof Umesh Waghmare 6,500,000 Computer Science 6 Dr. Srinath Raghavan 6,500,000 Social Science Total 3,90,00,000 2.3 The Ld.AO observed that gross income as per Income and expenditure account for the year amounted to ₹ 11,96,49,077. Total expenditure as per Income and expenditure account for the year amounted to ₹ 9,21,43,622. Break up of the said expenditure as per the Income and expenditure account was as under. Expenditure Prize money 39,000,000 Honorarium to jury ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m of expenditure was prize money awarded amounting to ₹ 3,90,00,000. The difference between the total expenditure (i.e ₹ 9,21,43,622) and the prize money of ₹ 3.9 crores amounted to ₹ 5,31,43,622. This was also incurred and applied towards the objects of the Trust. The Ld.AO also held that the expenses amounting to ₹ 5,31,43,622 are routine expenses incurred for the day to day activities of the Trust. It was held that expenses incurred towards the routine activities of the trust and hence the same cannot be considered as utilised from the amounts accumulated u/s 11(2) towards a specific activity. 3. Aggrieved by the order of the Ld.AO, assessee filed appeal before the Ld.CIT(A). 3.1 The Ld.CIT(A) was of the opinion that as Ld.AO admitted that accumulation is for the objects of the trust, it cannot be restricted to prize money alone . The Ld.CIT(A) opined that all other expenditure are connected to the main activity. He thus deleted the disallowance made by assessee. The Ld.CIT(A) held as under. 4.1 The grounds, submissions and contentions of the assessee are carefully considered. The assessee is a charitable trust engaged in chari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prize money but all other expenditure connected to the main activity. As seen from the income and expenditure statement, the expenses include the following items: Expenditure Amount (Rs.) Prize Money 3,90,00.000 Honorarium to jury 1,77,03,295 Event management expenses 39,18,646 Travelling and conveyance 87,00,040 Memento and souvenir expenses 16,07,553 Service tax payment 21,51,945 Professional charges 1,42,64,792 Employee benefits 40.81,787 Conference expenses - Other expenses 7,15,564 Total 9,21,43,622 As seen from above expenses other than prize money are connected and incidental to the main activity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO that the expenditure of ₹ 5,31,43,622 was held towards the routine activities of the trust and hence the same cannot be considered as utilised from the amounts accumulated u/s 11(2) towards a specific activity. 4.2.3 The application of income for charitable purpose includes any expenditure incurred directly or indirectly in connection with the objects of the Trust. To treat only direct expenditure incurred as application for objects of the Trust would be too narrow a view. In the present case, the sole objective of the Trust is the running of Infosys Prize annual award to honor outstanding achievements to scholars / scientists. There is no other objectives for which the Trust carried on its activities. Thus, the entire expenditure incurred during the year amounting to ₹ 9,59,92,570 was towards the purpose of carrying on the aforesaid charitable activity. 4.2.4 Ld.AR placed reliance on the order passed by the coordinate bench of the Tribunal for A.Y. 2012-13 placed at pages 138 to 153 of the paper book. For the AY 2012-13, total receipts of the assessee amounted to ₹ 9,28,05,186. After reducing 15% accumulation u/s 11(1)(a), amount required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as accumulation of AY 2011-12 or the income of AY 2012-13 is not possible. We therefore direct the AO to accept the claim of the Assessee as made by the Assessee. We note that the ratio of the ITAT, Bangalore bench in assessee s own case for the AY 2012-13 is squarely applicable to the year under consideration as the facts remain same and there is no change as compared to earlier year. For the year under consideration, the income of the current year and income accumulated u/s 11(2) are parked in deposits and SB account with scheduled banks which are permitted as per section 11(5). The maturity proceeds are again reinvested in deposits. Thus, the identity of monies as current year's income and income accumulated u/s 11(2) is not possible. Consequently, the expenditure of ₹ 5,31,43,622 incurred towards the objectives of the Trust should be treated as application of income out of earlier years accumulation of income as declared by the assessee. We are of the opinion that when the expenditure of ₹ 5,31,43,622 can be treated as application of amount from current year's income, there is no reason as to why the same should not be treated as spent ou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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