Appeal details
Counselvise Citation
[2017] 128 COUNSELVISE.COM (IT) 6673 (ITAT-RAJKOT)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 11 month(s) 22 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
16-03-2017
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
DB
Next Hearing Date
09-02-2017
Assessment Year
2010-2011
Appeal Filed On
25-03-2015
Judgement Text
, IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT [CONDUCTED THROUGH E COURT AT AHMEDABAD] BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ ITA.NO.107/RJT/2015 WITH CO 36/RJT/2015 ITO (E)I, WARD - 1. RAJKOT VS SMT.LAXMIBEN J. SHETHIA PUBLIC CHARITABLE TRUST LAXMI VILLA 14, BHAKTINAGAR SOCIETY RAJKOT. PAN : AAATL 0878 M / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI YOGESH PANDE, CIT-DR ASSESSEE BY : SHRI D.M. RINDANI, AR / DATE OF HEARING : 09/02/2017 / DATE OF PRONOUNCEMENT: 16 /03/2017 / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST OR DER OF THE LD.CIT(A)-3, RAJKOT DATED 5.1.2015 FOR ASSTT.YEAR 2 010-11. ON RECEIPT OF NOTICE ON THE REVENUES APPEAL, THE ASSESSEE HAS FI LED CROSS-OBJECTION BEARING NO.36/RJT/2015. 2. AT THE TIME OF HEARING, THE ASSESSEE HAS NOT PRE SSED ITS CO FOR ADJUDICATION, HENCE, IT IS DISMISSED. ITA NO.107/RJT/2015 WITH CO 2 3. THOUGH THE REVENUE HAS TAKEN THREE GROUNDS OF AP PEAL, BUT ITS GRIEVANCE REVOLVES AROUND A SINGLE ISSUE VIZ. THE L D.CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALLOWING ASSESSEES CLAIM OF RS.55 LAKHS AS DONATION. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CHARITABLE TRUST DERIVING INCOME FROM PROPERTY HELD UNDER THE TRUST, BY WAY O F DONATIONS AND INTEREST ON INVESTMENT. IT HAS FILED ITS RETURN OF INCOME O N15.9.2010 DECLARING TOTAL INCOME AT NIL. THE CASE OF THE ASSESSEE WAS SELECT ED FOR SCRUTINY ASSESSMENT AND NOTICE UNDER SECTION 143(2) OF THE INCOME TAX A CT DATED 28.9.2011 WAS ISSUED AND SERVED UPON THE ASSESSEE. ON SCRUTINY O F THE ACCOUNTS, IT REVEALED TO THE AO THAT THE ASSESSEE-TRUST HAD SHOWN GROSS R ECEIPT OF RS.89,23,738/- IN WHICH A SUM OF RS.55 LAKHS WAS SHOWN AS TRANSFER FR OM CORPUS FUND. THIS SUM OF RS.55.00 LAKHS WAS DONATED TO ANOTHER CHARIT ABLE TRUST I.E. M/S.J.V. SETHIA PUBLIC CHARITABLE TRUST, RAJKOT. THE STAND O F THE ASSESSEE WAS THAT THIS SUM WAS WITHDRAWN OUT OF CORPUS FUND AND IT WAS GIV EN TO ANOTHER CHARITABLE TRUST, WHICH IS ENJOYING BENEFIT UNDER SECTION 12AA OF THE ACT. THUS, IT COULD NOT BE TREATED AS INCOME. THE AO SOMEHOW HARBOURED A BELIEF THAT IT WAS WITHDRAWN FROM ACCUMULATED FUNDS, AND THEREFORE, I T COULD NOT BE CONSIDERED AS AN APPLICATION OF INCOME FOR AVAILING BENEFIT UN DER SECTION 11(1) OF THE INCOME TAX ACT. ACCORDINGLY, THE LD.AO HAS DENIED BENEFIT OF SECTION 11 AND ASSESSED IT AS INCOME OF THE ASSESSEE. AN ADDITION OF RS.55 LAKHS WAS MADE TO THE TOTAL INCOME OF THE ASSESSEE. 5. ON APPEAL, THE ASSESSEE HAS REITERATED ITS CONTE NTIONS AS WERE RAISED BEFORE THE AO. THE LD.CIT(A) HAS MADE A LUCID ENUN CIATION OF LAW AND FACTS ON THE SUBJECT AND THEREAFTER DELETED THE ADDITION. ELABORATE DISCUSSION MADE BY THE LD.CIT(A) ON THIS ISSUE IS WORTH TO NOTE. I T READS AS UNDER: ITA NO.107/RJT/2015 WITH CO 3 5.3 I HAVE CAREFULLY CONSIDERED THE CONTENTION OF THE APPELLANT AND THE ORDER PASSED BY THE A.O. THE TWO VERY BASIC FAC TS THAT ARE PIVOTAL TO THE CASE ARC THAT, RS.55 LAKHS WERE WITHDRAWN FROM THE CORPUS FUND BY THE TRUST AND THE SAME WERE DONATED TO ANOTHER CHAR ITABLE TRUST IN THE SAME YEAR. IN ORDER TO DECIDE THE APPEAL, IT WOULD BE APPROPRIATE TO FORMULATE CERTAIN QUESTIONS ON THIS ISSUE AND TRY T O ANSWER THEM. THE QUESTIONS ARE, IN MY OPINION, AS UNDER:- Q-I. WHETHER THE AMOUNT OF RS.55 LAKHS WITHDRAWN FR OM THE CORPUS FUND PARTAKES THE CHARACTER OF INCOME OR NOT IN THE HANDS OF THE TRUST ? Q-2. IF YES, WHETHER THE DONATION TO ANOTHER CHARIT ABLE TRUST CAN BE SAID TO BE APPLICATION OF INCOME BY THE CHARITABLE TRUST ? Q-3. HAS THE TRUST APPLIED 85% OF ITS INCOME FOR CH ARITABLE PURPOSES OR NOT AND IF NOT, WHETHER THE UNAPPLIED AMOUNT HAS BE EN PROPERLY ACCUMULATED AS PER THE PROVISIONS OF THE ACT? 5.4 THE FIRST ISSUE IS WHETHER THE AMOUNT OF RS.55 LAKHS WITHDRAWN THE CORPUS FOND PARTAKES THE CHARACTER OF INCOME OR NOT. THE INCOME OF THE TRUST WHICH IS TO BE APPLIED FOR CHARITABLE (PURPOSES HAS BEEN DEFINED IN S.11(1), SUB-SECTION (A) TO (D) AS UNDER - . S.11L)(A) - INCOME DERIVED FROM PROPERTY HELD UNDER THE TRUST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES, TO THE EXTENT TO WHICH SUCH INCOME IS APPLIED LO SUCH PURPOSES IN INDIA AND WHE RE ANY SUCH INCOME IS ACCUMULATED OR SET APART FOR APPLICATION TO SUCH PU RPOSES IN INDIA, TO THE EXTENT TO WHICH THE INCOME SO ACCUMULATED OR SET AP ART IS NOT IN EXCESS OF 15% OF THE INCOME FROM SUCH PROPERTY. S.11(1)(B) NOT APPLICABLE S. 11(1 )(C)- NOT APPLICABLE S.11(L)(D) - INCOME IN THE FORM OF VOLUNTARY CONTRI BUTIONS MADE WITH A SPECIFIC DIRECTION THAT THEY SHALL FORM PART OF THE CORPUS OF THE TRUST OR INSTITUTION. 5.5 THUS, THE INCOME DERIVED FROM-PROPERTY AND INCO ME IN THE FORM OF VOLUNTARY CONTRIBUTIONS FORMING PART OF THE CORP US OF THE TRUST ARE TO BE CONSIDERED FOR EXEMPTION U/S.11. THE FIRST QU ESTION WHICH REQUIRES TO BE CONSIDERED IS WHETHER THE CORPUS DON ATION HAS TO REMAIN A PERMANENT PART OF THE TRUST FUND OR NOT, S ECONDLY, WHETHER TRUSTEES ARE COMPETENT TO GIVE DONATIONS FROM THE C ORPUS FUND OR NOT. ITA NO.107/RJT/2015 WITH CO 4 IN THE CASE OF ITO VS. ABHILASH KUMARI PUBLIC CHARI TABLE TRUST 28 TTJ 523, THE HON'BLE ITAT DELHI-C BENCH IN ITS DECI SION HAS HELD THAT THE CONTENTION OF THE REVENUE THAT THE CORPUS DONATION HAS TO REMAIN A PERMANENT PART OF THE TRUST FUND AND CANNO T BE APPLIED TOWARDS THE OBJECTS OF THE TRUST IS NOT ACCEPTABLE. VOLUNTARY CONTRIBUTIONS WITH A SPECIFIC DIRECTION THAT THEY W ILL GO TO THE CORPUS OF THE TRUST WILL BE EXEMPT U/S.11. IN OTHER WORDS, VOLUNTARY CONTRIBUTIONS RECEIVED WITHOUT ANY SUCH SPECIFIC DIRECTION SHALL HAVE TO BE SPENT ON CHARITABLE OBJECTS TO THE EXTENT OF 85% . THERE WILL BE NO SUCH STIPULATION AS REGARDS THE VOLUNTARY CONTRIBUTIONS F OR CORPUS. IN THE PRESENT CASE, THE APPELLANT HAS WITHDRAWN RS.55 LAKH S FROM THE CORPUS FUND. THE APPELLANT HAS FILED THE DECISION TAKEN BY THE TRUSTEES AFTER FOLLOWING THE PROCEDURE FOR THE SAME AS PER THE TRU ST DEED. HOWEVER, WHATEVER MONEY HAS BEEN SPECIFICALLY SENT TO THE CO RPUS, CANNOT BE MADE TO CHANGE ITS CHARACTER. THE MOMENT THE TRUST WITHD RAWS THE SAME FROM THE CORPUS FUND, THE AMOUNT GOES OUT OF THE AMBIT O F S.11(1)(D), I.E. IT NO LONGER REMAINS THE CORPUS FUND AND THUS NOT EXEMPT U/S.11(1)(D). IN OTHER WORDS, THE MOMENT THE APPELLANT HAS WITHDRAWN THE M ONEY FROM THE CORPUS FUND, IT IMMEDIATELY PARTAKES THE CHARACTER OF INCOME IN THE HANDS OF THE TRUST. I AM NOT CONCERNED AS TO WHETHER THE WITHDRAWAL FROM THE CORPUS IS AS PER THE PROVISIONS OF THE TRUST LAW OR NOT OR WHETHER THE TRUSTEES WERE COMPETENT TO WITHDRAW THE SAME OR NOT . THIS IS BECAUSE THE MOMENT THE AMOUNT IS WITHDRAWN FROM THE CORPUS FUND , IT COMES IN THE AMBIT OF S.11(1)(A) AND NOT S.11(1)(D). THUS THE FI RST FINDING IS THAT RS.55 LAKHS WITHDRAWN BY THE TRUST FROM THE CORPUS FUND A RE NOTHING BUT INCOME OF THE TRUST. SECONDLY, WITHDRAWAL FROM THE CORPUS FUND MERELY LENDS A CHARACTER OF INCOME TO THIS AMOUNT AND DOES NOT LEA D TO ANY VIOLATION OF S.11 / S.13 TAKING THE TRUST OUT OF THE AMBIT OF TH E EXEMPTION. 5.6 ONCE IT IS HELD THAT THE AMOUNT WITHDRAWN FROM THE CORPUS FUND PARTAKES THE CHARACTER OF INCOME, THE NEXT QUESTION REQUIRED TO BE ANSWERED IS WHETHER DONATION OF SUCH AMOUNT TO ANOT HER CHARITABLE TRUST IS APPLICATION OF INCOME OR NOT. EXPLANATION TO S. 1 1 STATES THAT ANY AMOUNT CREDITED OR PAID, OUT OF INCOME REFERRED TO IN CLAUSE (A) / (B) OF SUB-SECTION (I) WHICH IS NOT APPLIED BUT ACCUMULATE D OR SET APART, TO ANY OTHER TRUST OR INSTITUTION REGISTERED U/S.12AA SHALL NOT BE TREATED AS APPLICATION OF INCOME FOR CHARITABLE OR RELIGIOUS PURPOSES CITHER DURING THE PERIOD OF ACCUMULATION OR THEREAFTER. WHATEVER AMOUNT HAS BEEN ACCUMULATED OR SET APART BY THE TRUST IS THE AMOUNT WHICH IS UTILISED FOR CHARITABLE OR RELIGIOUS PURPOSES DURING THE YEAR. D ONATION OUT OF SUCH ACCUMULATED INCOME TO ANOTHER TRUST DOCS NOT AMOUNT TO APPLICATION OF INCOME. HOWEVER, IT AUTOMATICALLY MEANS THAT DONATI ON TO ANOTHER CHARITABLE TRUST DURING THE YEAR THE INCOME IS GENERATED CAN B E HELD TO BE APPLICATION OF ITA NO.107/RJT/2015 WITH CO 5 INCOME. THIS IS BECAUSE THE INCOME GENERATED DURING THE YEAR IS NEITHER ACCUMULATED NOR SET APART. THE ACCUMULATION OR SETT ING APART COMES INTO PLAY ONLY AFTER THE YEAR IS OVER. THE DONATION GIVE N OUT OF CURRENT YEAR'S INCOME TO ANOTHER TRUST REGISTERED U/S.UAA THUS PAR TAKES THE CHARACTER OF APPLICATION OF INCOME. IN THE CASE OF CIT VS. SARLA DEVI SARABHAI TRUST 172 ITR 698, THE HON'BLE GUJARAT HIGH COURT HAS HELD AS UNDER:- 'IF THE ASSESSEE-TRUST IS A TRUST WHICH HOLDS ] PROPERTIES WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES, INCOME DERIVED FR OM SUCH PROPERTIES IN THE HANDS OF THE TRUST WOULD BE ALLOWED TO BE EXCLU DED FROM THE TOTAL INCOME OF THE PREVIOUS YEAR IF IT IS SHOWN THAT SUC H INCOME IS APPLIED BY THE SAID TRUST FOR CHARITABLE OR RELIGIOUS PURPOSES IN INDIA. THE MAIN QUESTION WHICH HAD TO BE CONSIDERED IN THE INSTANT CASE WAS AS TO WHETHER THE ASSESSEE-TRUST DURING THE RELEVANT YEAR APPLIED ITS INCOME FOR CHARITABLE OR RELIGIOUS PURPOSES OR NOT. WHAT THE A SSESSEE DID WAS THAT IT DONATED THE CONCERNED INCOME TO ANOTHER TRUST WHICH WAS ADMITTEDLY A CHARITABLE AND RELIGIOUS' TRUST DULY REGISTERED UND ER THE BOMBAY PUBLIC TRUST ACT. THE WORD 'APPLICATION' IS NOT DEFINED BY THE ACT. THE DICTIONARY MEANING OF THE TERM 'APPLY' AS GIVEN IN CHAMBERS TW ENTIETH CENTURY DICTIONARY AMONGST OTHER IS 'TO PUT TO USE'. IT COU LD NOT BE GAINSAID THAT THE ASSESSEE HAD MADE USE OF ITS INCOME FOR THE PUR POSE OF MAKING IT AVAILABLE TO ANOTHER TRUST, OBJECTS OF WHICH WERE A LSO OF CHARITABLE OR RELIGIOUS NATURE. CONSEQUENTLY, IT COULD NOT BE SAI D THAT THE ASSESSEE-TRUST HAD NOT COMPLIED WITH THE PROVISIONS OF SECTION II WHEN IT MADE THE DONATION OF INCOME IN FAVOUR OF THE DONEE-TRUST WHI CH WAS ALSO A RELIGIOUS AND CHARITABLE TRUST. ' 5.7 THE APPELLANT HAS MADE A DONATION OF RS.55 LAKH S TO ANOTHER CHARITABLE TRUST, NAMELY M/S. J. V. SETHIA PUBLIC CH ARITABLE TRUST, RAJKOT. THE APPELLANT HAS SUBMITTED A COPY OF THE REGISTRA TION U/S.12AA IN CASE OF M/S. J. V. SETHIA PUBLIC CHARITABLE TRUST TO WHOM THE DONATION WAS GIVEN. THUS, THE OF RS.55 LAKHS GIVEN TO ANOTHER CHARITABLE TRUST IS HELD TO BE APPLICATION OF INCOME FOR THE PURPOSE OF S.1 1. 5.8 THE THIRD QUESTION IS WHETHER THE TRUST HAS APP LIED ITS INCOME TOWARDS CHARITABLE PURPOSES TO THE EXTENT OF 85% OR NOT. FRO M THE COPY OF AUDITED ACCOUNTS FILED BY THE APPELLANT, THE INCOME OF THE APPELLANT FROM PROPERTY HELD UNDER THE TRUST WAS RS.27, 1 3,74 1 /-. IF RS.55 LAKHS IS ADDED TO THIS, THE INCOME BECOMES RS.79,57,233/-. THE AMOUNT APPLIE D TOWARDS OBJECTS FOR CHARITABLE PURPOSES IS RS. 34,23, 73 8/-. ADDIN G RS.55 LAKHS TO THE SAME, THE INCOME APPLIED TOWARDS OBJECTS OF THE TRU ST IS RS.89,23,738/-. THIS IS MORE THAN THE INCOME OF THE TRUST AND THUS DEFINITELY MORE THAN 85% OF THE INCOME. HENCE, THERE IS NO QUESTION OF A NY DISALLOWANCE ON THIS ACCOUNT. ITA NO.107/RJT/2015 WITH CO 6 6.0 TO SUM UP, IT IS HELD THAT THE WITHDRAWAL OF RS. 55 LAKHS FROM THE CORPUS FUND IS INCOME OF THE TRUST FOR THE YEAR, TH E DONATION TO ANOTHER CHARITABLE TRUST DURING THE YEAR AMOUNTS TO APPLICA TION OF INCOME AND THE INCOME APPLIED FOR CHARITABLE PURPOSES IS MORE THAN THE INCOME OF THE TRUST. THERE IS NO CASE FOR DISALLOWANCE OR ADDITIO N AS PROPOSED BY THE A.O. THE SAME IS DIRECTED TO BE DELETED. THESE GROUN DS OF APPEAL ARE PARTLY ALLOWED. 6. BEFORE US, THE LD.DR RELIED UPON ORDER OF THE AO . HE FURTHER OBSERVED THAT TRUST WAS HIT BY EXPLANATION TO SECTION 11(2) OF THE ACT, BECAUSE IT IS TO BE INFERRED THAT THE SAID DONATION WAS GIVEN OUT OF ACCUMULATED FUNDS OF THE TRUST, HENCE, IT CANNOT CLAIM DEDUCTION AS APPLICAT ION OF INCOME. 7. ON THE OTHER HAND, THE LD.COUNSEL FOR THE ASSESS EE HAS RELIED UPON ORDER OF THE LD.CIT(A). HE EXPLAINED THE ISSUE WITH HELP OF AN EXAMPLE. COPY OF THE BOARD CIRCULAR NO.8 DATED 27.8.2002 WAS ALSO RE FERRED DURING THE COURSE OF HEARING. THE LD.COUNSEL FOR THE ASSESSEE FURTHE R CONTENDED THAT THE LD.CIT(A) HAS RELIED UPON THE ORDER OF THE ITAT, DE LHI BENCH IN THE CASE OF ITO VS. ABHILASH KUMAR PUBLIC CHARITABLE TRUST, 28 TTJ 523 AND ALSO ON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE C ASE OF CIT VS. SARLADEVI SARABHAI TRUST, 172 ITR 698. THE LD.COUNSEL FOR TH E ASSESSEE HAS PLACED ON RECORD COPY OF ITAT, DELHI BENCH DECISION CITED SUP RA. 8. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. BEFORE EMBARKING UPON AN INQUIRY ON THE FACTS OF PRESENT CASE, WE WOULD LIKE TO TAKE COGNIZANCE OF BOARD CIRCULAR NO. 8 DATED 27.8.2002. IT READS AS UNDER: RESTRICTION ON THE APPLICATION OF ACCUMULATED INCO ME OF THE CHARITABLE OR RELIGIOUS TRUSTS. 21.1 THROUGH THE FINANCE ACT, 2002, AN EXPLANATION HAS BEEN INSERTED BELOW SUB-SECTION (2) OF SECTION 11 SO AS TO PROVID E THAT ANY AMOUNT PAID OR CREDITED OUT OF INCOME FROM PROPERTY HELD U NDER TRUST REFERRED ITA NO.107/RJT/2015 WITH CO 7 TO IN CLAUSE (A) OR CLAUSE (B) OF SUB SECTION (1), READ WITH THE EXPLANATION TO THAT SUB-SECTION, WHICH IS NOT A PPLIED, BUT IS ACCUMULATED OR SET APART, TO ANY TRUST OR INSTITUTI ON REGISTERED UNDER SECTION 12AA OR TO ANY FUND OR INSTITUTION OR TRUST OR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OT HER MEDICAL INSTITUTION REFERRED TO IN SUB CLAUSE (IV) OR SUB CLAUSE (V) OR SUB CLAUSE (VI) OR SUB CLAUSE (VIA) OF CLAUSE (23C) OF SECTION 10, EIT HER DURING THE PERIOD OF ACCUMULATION OR THEREAFTER, SHALL NOT BE TREATED AS APPLICATION OF INCOME FOR CHARITABLE OR RELIGIOUS PURPOSES. THUS, PAYMENT TO OTHER TRUSTS AND INSTITUTIONS OUT OF INCOME FROM PROPERTY HELD UNDER TRUST IN THE YEAR OF RECEIPT WILL CONTINUE TO BE TREATED AS APPLICATION OF INCOME. HOWEVER, ANY SUCH PAYMENT OUT OF THE ACCUMULATED IN COME SHALL NOT BE TREATED AS APPLICATION OF INCOME AND WILL BE TAX ED ACCORDINGLY. 21.2 THROUGH THE FINANCE ACT, 2002, A NEW CLAUSE (D ) HAS ALSO BEEN INSERTED IN SUB-SECTION (3) OF SECTION 11 SO AS TO PROVIDE THAT IF ANY INCOME REFERRED TO IN SUB SECTION (2) OF THE SAID S ECTION, IS PAID OR CREDITED TO ANY TRUST OR INSTITUTION REGISTERED UND ER SECTION 12AA OR TO ANY FUND OR INSTITUTION OR TRUST OR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER MEDICAL INSTIT UTION REFERRED TO IN SUB CLAUSE (IV) OR (V) OR (VI) OR (VIA) OF CLAUSE ( 23C) OF SECTION 10, SUCH PAYMENT OR CREDIT SHALL BE DEEMED TO BE THE INCOME OF THE PERSON MAKING SUCH PAYMENT OR CREDIT, OF THE PREVIOUS YEAR IN WHICH SUCH PAYMENT OR CREDIT IS MADE. 21.3 A PROVISO IN SUB SECTION (3A) HAS ALSO BEEN IN SERTED SO AS TO PROVIDE THAT THE ASSESSING OFFICER SHALL NOT ALLOW APPLICATION OF ACCUMULATED INCOME BY WAY OF PAYMENT OR CREDIT MADE FOR THE PURPOSES REFERRED TO IN CLAUSE (D) OF SUB SECTION ( 3) OF SECTION 11. THIS TAKES AWAY THE DISCRETION OF THE ASSESSING OFFICER PROVIDED IN SUB SECTION (3A) TO ALLOW THE TRUSTS TO APPLY THE A CCUMULATED INCOME FOR PAYMENT OR CREDIT TO OTHER CHARITABLE OR RELIGI OUS TRUSTS AND INSTITUTIONS. 21.4 THESE AMENDMENTS WILL TAKE EFFECT FROM 1ST APR IL, 2003 AND WILL, ACCORDINGLY, APPLY IN RELATION TO THE ASSESSMENT YE AR 2003 2004 AND SUBSEQUENT YEARS. [SECTION 7] CONDITION OF PUBLICATION OF ACCOUNTS BY RELIGIOUS A ND CHARITABLE TRUSTS IN A LOCAL NEWSPAPER HAS BEEN DISPENSED WITH . ITA NO.107/RJT/2015 WITH CO 8 22.1 UNDER THE EXISTING PROVISION CONTAINED IN CLAU SE (C) OF SECTION 12A, THE EXEMPTION UNDER SECTIONS 11 AND 12 IS NOT AVAILABLE TO A TRUST OR INSTITUTION, HAVING TOTAL INCOME EXCEEDING ONE C RORE RUPEES (BEFORE GIVING EFFECT TO THE PROVISIONS OF SECTIONS 11 AND 12), UNLESS SUCH TRUST OR INSTITUTION PUBLISHES ITS ACCOUNTS IN A LOCAL NE WSPAPER, BEFORE THE DUE DATE OF FURNISHING THE RETURN OF INCOME AND ALSO FU RNISHES A COPY OF SUCH NEWSPAPER ALONG WITH THE RETURN OF INCOME. WE WOULD FURTHER LIKE TO NOTE THE ILLUSTRATION GIV EN BY THE LD.COUNSEL FOR THE ASSESSEE, WHICH READS AS UNDER: ILLUSTRATION ONLY (AMOUNT IN RS.) GROSS INCOME OF A TRUST 1000 LESS: CORPUS CONTRIBUTION (SEC.11(1)(D)) 200 800 LESS: INCOME APPLIED/PAID ACTUALLY, SAY (SEC. 11(1)(A) EARLIER PART) 400 400 LESS: INCOME ACCUMULATED, NOT APPLIED, NOT EXCEEDING 15% OF INCOME (15% OF 800) 120 280 LESS: UNSPENT INCOME FURTHER ACCUMULATED AS PERMITTED VIDE EXPL. (2)(B) TO SEC. 11(1) AS PER OPTION EXERCISED IN PRESCRIBED MANNER IN RULE 17, FORM NO.10 SAY 180 BALANCE INCOME OF TRUST 100 9. A BARE PERUSAL OF THE CIRCULAR WOULD INDICATE TH AT BY VIRTUE OF AMENDMENT CARRIED OUT DURING THE FINANCE ACT, 2002, A RESTRICTION HAS BEEN PUT FOR CONSTRUING THE APPLICATION OF INCOME IF DON ATION TO ANY FUND OR INSTITUTION OR TRUST WHO WAS ENJOYING THE BENEFIT U NDER SECTION 12AA OR SUB- ITA NO.107/RJT/2015 WITH CO 9 CLAUSE (IV) OR (V) OR (VI) OR SUB-CLAUSE (VIA) OF C LAUSE (23C) OF SECTION 10, IF SUCH DONATION WAS GIVEN OUT OF ACCUMULATED FUNDS CA RVED OUT BY THE ASSESSEE IN EARLIER YEARS. IF DONATION IS BEING GIVEN, OUT OF INCOME FROM PROPERTY HELD UNDER THE TRUST IN THE YEAR OF RECEIPT, THEN THAT W ILL BE CONSIDERED AS APPLICATION OF INCOME. SIMILARLY, THE LD.COUNSEL F OR THE ASSESSEE HAS EXPLAINED THAT IF THE DONATION IS BEING GIVEN FROM THE AMOUNT OF RS.180/- WHICH WAS KEPT ASIDE FOR ACCUMULATION PURPOSE, THEN , THE ASSESSEE WILL NOT BE ENTITLED TO CLAIM SUCH DONATION AS APPLICATION OF I NCOME. BUT IF IT WAS WITHDRAWN FROM THE CORPUS CONTRIBUTION, IT WILL BE TREATED AS INCOME OF THE ASSESSEE FOR THE CURRENT YEAR, AND IF THE DONATION WAS GIVEN OUT OF SUCH INCOME, THEN IT IS TO BE TREATED AS APPLICATION OF INCOME. WE FIND THAT THE LD.CIT(A) HAS MADE REFERENCE TO SECTION 11(1)(D) AN D THEREAFTER ARRIVED A CONCLUSION THAT THE ASSESSEE HAS NOT WITHDRAWN THIS AMOUNT OUT OF ACCUMULATED FUNDS, RATHER IT WAS WITHDRAWN FROM THE CORPUS FUND, AND THE MOMENT IT WAS WITHDRAWN, IT WILL BE TREATED AS INCO ME OF THE ASSESSEE FOR THE CURRENT YEAR. THE BOARD HAS ALSO EXPLAINED THIS IN THE ABOVE CIRCULAR. THE LD.CIT(A) HAS RIGHTLY CONSTRUED THE PROVISIONS OF L AW AND APPRECIATED THE FACTS IN RIGHT PERSPECTIVE WHILE DELETING THE ADDIT ION. WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LD.CIT(A). IT IS CONFIRM ED. ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE REVENUE AS WEL L AS CO OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 16 TH MARCH, 2017 AT AHMEDABAD. SD/- SD/- ( PRADIP KUMAR KEDIA ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 16/03/2017
