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TMI Blog2024 (4) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act, donations given out of accumulated funds u/s. 11(2) of the Act of earlier previous years are not allowable as application of income for charitable or religious purposes and the same shall be deemed to be income of the assessee of the previous year 2016- 17, therefore, AO failed to examine this issue, which should have been done during the assessment u/s. 143(3) of the Act and accordingly assessment order exhibits lack of proper inquiry / verification by the AO, which was required to be carried out in the instant case. As a result thereof, Ld. CIT(E) has rightly held that the assessment order to be erroneous in so far as it is prejudicial to the interest of the revenue as per provisions of section 263 of the Act and accordingly, the same was set aside u/s. 263 of the Act to the file of the AO for making a donovo assessment after proper examination of the issue involved and due verification wherever required by way of affording reasonable opportunity of being heard to the Assessee Trust and pass a speaking and well reasoned order. Hence, the order of Ld. CIT (Exemption) in our considered opinion, does not require any interference on our part, hence, we uphold the same and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) during F.Ys 2011-12, 2012-13 2014-15, the assessee utilized Rs. 65,00,001/- as donation to two other trusts, which shall not be treated as application of income as per explanation to section 11(2), r.w.s. 11(3) of the Act. During the year under consideration, as per the details of amount accumulated/set apart within meaning of section 11(2) declared in Schedule I of ITR 7 for AY 2017-18, amounts of Rs. 6,84,319/-, Rs. 48,70,094/- Rs. 9,45,588/- totalling to Rs. 65,00,001/- accumulated / set apart within the meaning of section 11(2) during F.Y(s). 2011-12, 2012-13, 2013-14 respectively has been utilized / applied as donation to two other trusts. Amount of Rs. 10,00,000/- was given to Shree Raghunath Balika Vidyalaya Rs. 55,00,000/- was given to Hindu College, Delhi. Both are NGOs registered u/s. 80G. On perusal of Schedule-I (Details of amount accumulated / set apart within the meaning of section 11(2) of ITR filed for AY 2017-18, it was revealed that all the above amounts have been accumulated for the purpose of For Setting up an old age home/educational institution. The assessee was given an opportunity of hearing on 22.3.2022 vide show cause letter dated 16.3.2022 and reply w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount accumulated / set apart with the assessee trust within the meaning of section 11(2) of the I.T. Act has been paid / donated to Shri Raghunath Balika Vidyalaya and Hindu College during the relevant previous year, such application of funds by the assessee is clear violation of explanation to section 11(2) of the Act read with section 11(3) of the Act. He further submitted that the amount of Rs. 55 lacs and Rs. 10 lacs were paid by the assessee to the accounts of Hindu College and Shree Raghunath Balika Vidyalaya and it is not a case, where assessee was getting concerned buildings constructed on its own. Because the contracts for the said worked were also awarded by respective college/Vidyalaya only and payment to contractors were also made by Hindu College and Shree Raghunath Balika Vidyalaya only. It was the further contention that the aforesaid amount paid by the assessee cannot be considered in the nature of reimbursement for some charitable work either contrary to claim of the assessee in this regard as any reimbursement happens on actual basis. In case of reimbursement, a party carries out close monitoring, have greater control and has the right to inquire into expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in law as well as on the facts of the case by declaring the assessment order dated 26.12.2019 passed under section 143(3) of the Act, for the AY 2017-18 as erroneous whereas the order was passed after making inquiry on the issue and after having examined the replies of the assessee with due application of mind by the AO. He further submitted that the donation money was given to the donee and the money was paid to the respective trust only after ascertainment that the same is spent by these trusts for constructions/erections of buildings at their premises through their respective contractors. Thus the money was not given to the trust as donation but was paid for constructions of desired building blocks towards attainment of main object of the trust for which it has been created. Hence, after verifying the details provided by the assessee, the returned income declared as NIL was rightly accepted by the AO, which does not need any interference. 4.3 It transpired from records, that as per Explanation to Section 11(2) of the Act, any amount credited or paid, out of income referred to in clause (a) or clause (b) of sub-section (1), read with the Explanation to that sub-section, which is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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