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TMI Blog2023 (12) TMI 932X X X X Extracts X X X X X X X X Extracts X X X X ..... has also submitted the letter for the purpose of donation on dated 06.01.2014. The fund was donated by founder member of the trust. The source is well explained. There is no deviation in activities of trust as per the stated main object. Expenses were incurred for charitable activities. The delay in project was due to stuck up of construction as per order of Hon ble Jurisdictional High Court. In our considered view, there is no violation of section 11(1)(d) r.w.s. 11(1). We find that there is no valid reason to interfere in the impugned appeal order. Therefore, the ground nos. 1, 2 3 of the revenue are dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... d added back the expenditure amount to Rs. 76,01,540/- with total income. The ld. AO had rejected the benefit of Sec 11(1)(d) related to corpus fund the amount was utilised for repayment of loan but not for construction of hospitals. The ld. AO fully relied on that the donor had not made any specific direction for repayment of loan. During the impugned assessment year, the construction is under process and amount was allocated for boundary wall. Although the activities of the assessee-trust was running with the help of GBH American Hospitals (in short 'GBH'). The ld. AO had made grievance that the assessee is contravening Section 13(3) as Dr. Kirti Kumar Jain founder of the assessee trust was also the managing director of GBH. As per the ld. AO there is violation of proviso of section 13(1)(c)(3) of the Act. The confirmation of the donor was filed by the assessee during the assessment proceeding. But this corpus fund was duly rejected by invoking sections 11 and 11(1)(d). Accordingly, for the violation of section 11(1)(d), the foreign contribution amount to Rs. 7,43,95,029/- was added back with the total income of the assessee. Aggrieved assessee filed an appeal before the ld. CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed false reports under the FCRA stating that foreign donation was used for construction of Hospital (d) At the time of obtaining FCRA approval for receipt of foreign donation Dr. Kirti Kumar Jain (who is also Founder of Kirti Jain Family Foundation Inc. also settlers / Trustee of Padamati Institute for Medical Education and Science Trust) was aware of the fact that the assessee had already acquired land from UIT on 04 08 2010 for construction of hospital building. On the basis of these documents assessee sought permission from FCRA for the purpose of construction of hospital / clinic and which was approved by the FCRA Authority. But, very interestingly, after three four month from the approval from FCRA. Dr Kirti Kumar Jain changed his opinion and made declaration of utilization of fund by amendment the purpose as 'repayment of loan1 as per his declaration letter dated 06.01.2014, which seems to be a contradictory from the approval letter of the FCRA Authority.. Section 11(1)(d) excludes from the basket of income u/s 11(1) "income in the form of voluntary contributions made with a specific direction that they will form part of corpus of the trust or institution", ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,029/- as income of the assessee trust." 7. The ld. AR further argued and placed that the land was allotted by UIT. The Foreign Contribution Regulation Act (in short 'FCRA') is required to accept the foreign fund. Due delay in approval in FCRA the foreign donation is hanged up. The assessee-trust under compulsion had taken loan from bank for payment to UIT for purchasing land. Further, the litigation was started and the construction was stuck up as per order of the Hon'ble Rajasthan High Court. The trust was registered on 28.03.2007 and registered u/s 12AA of the Act on dated 06.11.2007. Hence, the entire process of construction of building was delayed due to the matter was in litigation before the Hon'ble Rajasthan High Court. When the Hon'ble High Court released the stay, the development of construction was resumed. The funds of Dr. Kriti Kumar Jain, amount of Rs. 7,43,95,029/- was ready to disburse.The delay was happened in due process of FCRA. The donor Dr. Jain also agreed in FCRA to donate 20 crore in coming two years to assessee. Due to delay in process for approval in FCRA, the assessee trust has taken loan for payment to UIT for purchasing land and the said amount was du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted in his reply that 'it is not necessary that the charitable activities should be at a large scale in the initial period of the trust. Whatever, income from contribution/interest or corpus raised by the Trust are being fully applied for charitable activities and the assessee has rightly claimed these expenditures u/s I 1 of the Act'. Absolutely, it is not necessary that the charitable activities should be at a large scale in the initial period of the trust. But this logic is not to be effective in the assessee's case since the trust had constituted on 28.03,2007 (almost 9 years back), and during this vast period, the trust had just purchased a land from UIT on 4,8.2010 under the settled guidelines / rules for establishing a Health Multiplex/construction of medical hospital, but till the end of the assessment proceedings, the land is kept totally vacant without making any improvement / construction except construction of a small boundary wall in the front side of the land (as envisaged from spot inquiry). Whatever reason remained there for not construction of hospital/clinic, but the intention of legislature to provide scheme of exemption of tax on income of the soci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is evident that the donor had given specific corpus fund to avoid the true receipts. Moreover, the foreign funds / contribution as received was used for repayment of loan whereas the funds was to be used for repayment of loan whereas the funds was to be used exclusively for construction of medical hospital." denied benefit of section 11(1)(d) and treated the donation of Rs 7 43,80.029/- as income of the assessee trust." 10. We heard the rival submission and considered the documents available in the record. The foreign donation was received amount of Rs. 7,43,95,029/- is a corpus donation and within the meaning of section 11(1)(d). The fund was duly delayed for delay in approval from FCRA, where it is mentioned that the funds is for "construction/running of hospital/dispensary and clinic". The assessee had utilized this donation for repayment of loan which is not at all violation section 11(1)(d) and duly covered with consent of the donor. Further the donor agreed to donate amount to Rs. 20 crores to the assessee in next two years for carrying out the activities of the assessee trust in Udaipur. The donor, Dr. Kirti Jain has also submitted the letter for the purpose of dona ..... X X X X Extracts X X X X X X X X Extracts X X X X
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