9911796707
TMI Blog1982 (6) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... es and carry out such other object as may be necessary for the promotion of export of gems and jewellery. There is no dispute that the assessee-company is company whose income is applicable only to charitable purposes as defined in s.2(15) of the I.T. Act, 1961. The assessee-company receives grants in-aid from the Govt. of India. Some of the conditions on which these grants-in-aid are given are as follows : (i) The funds should be kept with the State Bank of India ; the total expenditure should not be more than the expenditure approved by the Central Govt. for each project; separate accounts should be kept for code and non-code projects and the accounts were to be audited by chartered accountants approved by the Government. (ii) Any a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he surplus under s. 11(1)(a) of the Act for each of the two years under consideration. The Department filed appeals for these years before the Income-tax Appellate Tribunal and the Department's case was that the grants-in-aid could not be considered as voluntary contribution for the purpose of s. 12(1) of the Act having regard to the fact that the grants were made subject to conditions referred to earlier. The Tribunal confirmed the view of the AAC that the amounts given by the Government were voluntary contributions and were not in the nature of any price paid for any benefit or privilege nor they were for any consideration. The conditions imposed by the Government, according to the Tribunal, did not change the nature of the payment whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utions with sufficient funds to carry on their charitable activities. The institutions or associations to which the grant is made have no right to ask for the grant. It is solely within the discretion of the Government to make grants to institutions of a charitable nature. The Government does not expect any return for the grants given by it to such institutions. There is nothing which is required to be done by these institutions for the Government, which can be considered as consideration for the grant. To borrow the language of the Lord President, in Society of Writers to Her Majesty's Signet v. IRC [1886] 2 TC 257, 272 (C. Sess), who was considering the meaning of the words " voluntarily contributed ", in the context of an exemption for p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from liability." It is difficult to see how any of the conditions attached to the grant affects, in the instant case, the voluntary nature of the contribution. The conditions referred to above and relied upon by the learned counsel for the Revenue are merely intended to see that the amounts are properly utilised. These conditions did not, therefore, detract from the voluntary nature of the grant. Mr. Joshi has relied on a decision in IRC v. National Book League [1958] 34 ITR 461 (CA). The National Book League was a company limited by guarantee and was a body established for charitable purposes only. But it had its headquarters in London. The League provided limited club facilities for its members. In December, 1951, the League resolv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would continue to have the advantage of membership at lower subscription rate than other persons and that they would be immune from the possibility of increase of subscription rates during the whole period of the covenant. It is obvious, therefore, that the amounts inquestion in that case were consideration for those privileges and that is how the sums paid were not held entitled to exemption. The conditions in the instant case, as already pointed out, are merely to see that the funds are properly applied and accounted for. There is no element of any consideration anywhere for the grant. It is clear, therefore, that the finding recorded by the AAC and the Tribunal that the grants-in-aid were voluntary contributions was clearly justified ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
