Shambhala Charitable Trust, Darjeeling V. I.T.O Wd - 2,Darjeeling., Darjeeling

ITA 1541/KOL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83042 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2014
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 27-05-2013
• Court: TRIBUNAL
• Department Lawyers: A P ROY
• Assessee Lawyers: D S DAMLE
• Keywords: Gift; Charitable institution; Valuation report; Benefit of exemption; Revenue expenditure; Capital expenditure
• Section: 12A; 147; 11

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE , /AND , ! ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI SHAMIM YAHYA, AM] ' / I.T.A NO.1540 TO 1542/KOL/2013 #$ %&/ ASSESSMENT YEARS: 2007-08 TO 2009-10 SHAMBHALA CHARTIABLE TRUST VS. ITO, WARD-2 DARJEELING BOKAR, NGEDHON, CHOEKHOR LING DEOSI DHARI, P.O. MIRIK, DIST. DARJEELING (PAN: AAAAS 4619Q) (() /APPELLANT ) (*+()/ RESPONDENT ) DATE OF HEARING: 03.07.2014 DATE OF PRONOUNCEMENT: 05.08.2014 FOR THE APPELLANT: SHRI D. S. DAMLE, AR FOR THE RESPONDENT: SHRI A. P. ROY, DR / ORDER PER SHRI MAHAVIR SINGH, JM : THESE THREE APPEALS BY ASSESSEE ARE ARISING OUT OF SEPARATE ORDERS OF CIT(A)-SILIGURI IN APPEAL NO. 139-137/CIT(A)/SLG/2011-12 DATED 20.03.2 013. ASSESSMENTS WERE FRAMED BY ACIT, RANGE-3, SILIGURI U/S. 143(3)/147 OF THE INCO ME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEARS 2007-08 TO 2009-10 VIDE HIS SEPARATE ORDERS DATED 27.12.2011. 2. THE FIRST ISSUE IN THIS APPEAL OF THE ASSESSEE T RUST IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE ACTION OF THE AO REOPENING THE ASSES SMENT U/S. 147 OF THE ACT. THIS ISSUE WAS RAISED BY THE ASSESSEE IN ALL THE THREE YEARS AND T HE GROUNDS RAISED ARE IDENTICALLY WORDED. HENCE, WE ARE REPRODUCING THE GROUNDS AS RAISED IN ITA NO. 1540/K/2013 FOR AY 2007-08, WHICH READ AS UNDER: 1) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE CIT(A) ERRED IN UPHOLDING THE VALIDITY OF THE PROCEEDINGS AND THE O RDER OF ASSESSMENT U/S. 147 OF THE ACT EVEN THOUGH THE CONDITIONS PRECEDENT FOR VALID INIT IATION OF RE-ASSESSMENT PROCEEDINGS WERE NOT FULFILLED. 2) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ORDER OF THE ASSESSMENT U/S. 147/143(3) DESERVES TO BE QUASHED AS THE PROCE EDING U/S 147 WERE AB INITIO VOID BECAUSE NO INCOME CHARGEABLE TO TAX HAD ESCAPED ASS ESSMENT. 2 ITA NO.1540-42/K/2013 SHAMBHALA CHARTIABLE TRUST AYS 2007-08 TO 2009-1 0 3. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SHRI D. S. DAMLE FAIRLY STATED THAT HE HAS INSTRUCTIONS FROM THE ASSESSEE TRUST NOT TO PRESS T HESE GROUNDS IN ALL THESE THREE YEARS. LD. SR. DR HAS NOT OBJECTED TO THE WITHDRAWAL OF THESE GROU NDS. HENCE, WE DISMISS THE SAME AS WITHDRAWN. 4. THE SECOND ISSUE, ON MERITS, AGAINST THE ORDER O F CIT(A) CONFIRMING THE ACTION OF AO IS AS REGARDS TO DENYING THE EXEMPTION U/S. 11 OF THE ACT EVEN THOUGH THE ASSESSEE IS A CHARITABLE TRUST AND FULFILLED ALL THE CONDITIONS FOR CLAIMING EXEMPTIONS UNDER THIS SECTION. THIS ISSUE WAS RAISED BY THE ASSESSEE IN ALL THE THREE YEARS AND T HE GROUNDS RAISED ARE IDENTICALLY WORDED. HENCE, WE ARE REPRODUCING THE GROUNDS AS RAISED IN ITA NO. 1540/K/2013 FOR AY 2007-08, WHICH READ AS UNDER: 3) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, AND WITHOUT PREJUDICE TO THE PROCEEDING GROUND THE AO WAS UNJUSTIFIED IN LAW IN DENYING THE BENEFIT OF EXEMPTION U/S 11 OF THE IT ACT; EVEN THOUGH THE APPELLANT WHICH WAS A CHARITABLE TRUST HAD FULFILLED ALL THE CONDITIONS FOR CLAIMING THE EXEMPTION U/S 11 OF THE IT ACT. 4) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE CIT(A) WAS UNJUSTIFIED IN UPHOLDING THE AOS ORDER DENYING THE EXEMPTION U/ 1 1 OF THE ACT WITHOUT APPRECIATING THE FACT THAT THE AO HAD DENIED THE CLAIM OF EXEMPTION ON ENTIRELY EXTRANEOUS REASONS AND FACTS AND / OR IGNORING THE JURISDICTIONAL FACTS THAT THE APPELLANT HAD APPLIED ITS INCOME FOR CHARITABLE PURPOSES. 5) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, AND WITHOUT PREJUDICE TO THE PRECEDING GROUND THE AUTHORITIES BELOW WERE UNJUSTI FIED IN LAW AND ON FACTS IN DENYING THE EXEMPTION U/S 11 ON THE ALLEGED GROUND THAT THE ASS ESSEE HAD APPLIED ITS INCOME FOR CONSTRUCTION OF A BUDDHIST TEMPLE IGNORING THE PROV ISIONS OF LAW WHICH PERMITTED THE ASSESSEE TO CLAIM EXEMPTION U/S 11 OF THE ACT EVEN IF THE INCOME WAS APPLIED FOR RELIGIOUS PURPOSES. 6) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE AUTHORITIES BELOW WERE UNJUSTIFIED IN LAW IN DENYING THE EXEMPTION U/S 11 IGNORING AND /OR OVERLOOKING THE FACT THAT THE APPELLANT HAD APPLIED ITS INCOME ON CONSTRUCTIO N OF A BUILDING WHICH WAS TO HOUSE AN INSTITUTE FOR HIGHER BUDDHIST STUDY AND RESEARCH AN D IN THAT VIEW OF THE FACT THE EXEMPTION U/S 11 WAS FULLY PERMISSIBLE. 7) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE AUTHORITIES BELOW ALSO FAILED TO APPRECIATE THAT MAJOR PART OF THE DONATIO NS WHICH THE APPELLANT RECEIVED DURING THE YEAR WERE IN THE NATURE OF CORPUS DONATIONS, ACCOUN TED THROUGH THE INCOME AND EXPENDITURE ACCOUNT AND IN THAT VIEW OF THE MATTER THE AO ERRED IN ASSESSING THE CORPUS DONATIONS AS INCOME OF THE APPELLANT. 8) FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE AO BE DIRECTED TO ALLOW THE EXEMPTION U/S. 11 OF THE ACT; HOLDING THAT THE APPE LLANT HAD WHOLLY APPLIED ITS INCOME FOR CHARITABLE/RELIGIOUS PURPOSES. 3 ITA NO.1540-42/K/2013 SHAMBHALA CHARTIABLE TRUST AYS 2007-08 TO 2009-1 0 5. BRIEF FACTS ARE THAT THE ASSESSEE TRUST CAME INT O EXISTENCE BY A DECLARATION OF TRUST DEED DATED 10.07.1998, A PUBLIC CHARITABLE TRUST, UNDER THE NAME AND STYLE OF SHAMBHALA CHARITABLE TRUST, BY VEN. BOKAR TULKU RINPOCHE, WHO IS DESCRIB ED IN THE DECLARATION OF DEED OF TRUST TO BE THE SETTLOR. LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO PART III OF THE DECLARATION OF THIS TRUST DEED, WHEREIN THE OBJECTS OF THE TRUST ARE SE T OUT. THE COPY OF THIS TRUST DEED IS ENCLOSED IN ASSESSEES PAPER BOOK PAGES 1 TO 9. OBJECT CLAUSES OF THE TRUST DEED CLEARLY REVEAL THAT THE OBJECT FOR WHICH THE TRUST WAS ESTABLISHED IS CHARI TABLE IN NATURE. ASSESSEE DRAWN OUR ATTENTION TO PAGE 10 OF ASSESSEES PAPER BOOK WHEREBY THE REG ISTRATION CERTIFICATE ISSUED BY CIT, WB-1, VIDE NO. ASSMT./3563/CT/8E/21/88-89 DATED 17/23.1.9 0 U/S./ 12A OF THE ACT IS ENCLOSED. ACCORDING TO LD. COUNSEL FOR THE ASSESSEE, THIS REG ISTRATION GRANTED U/S. 12A OF THE ACT IS VALID AS ON THE DATE AND STILL IN FORCE. LD. SR. DR HAS NOT OBJECTED TO THE SAME. LD. COUNSEL FOR THE ASSESSEE BROUGHT TO OUR NOTICE THAT DESPITE THESE T HREE ASSESSMENT ORDERS PASSED BY AO, THE DEPARTMENT HAS NOT WITHDRAWN OR REVOKED THE REGISTR ATION GRANTED U/S. 12A OF THE ACT TO THE ASSESSEE TRUST. ACCORDING TO LD. COUNSEL, THE AO H IMSELF ALLOWED THE EXEMPTION U/S. 11 OF THE ACT ON BEING SATISFIED THAT THE ASSESSEE TRUST HAS APPLIED THE INCOME FOR CHARITABLE PURPOSES EXCEPT WITH REGARD TO INCOME WHICH WAS APPLIED FOR THE PURPOSES OTHER THAN FOR CONSTRUCTION OF THE BUILDING. THE AO IN ASSESSMENT ORDERS FOR ALL T HESE THREE YEARS DENIED BENEFIT OF EXEMPTION U/S. 11 OF THE ACT, ONLY TO THE EXTENT, IN EACH OF THE THREE YEARS, THE ASSESSEE UTILISED ITS INCOME FOR CONSTRUCTION OF A BUILDING, WHICH IN HIS OPINIO N WAS A TEMPLE. THE AO FOUND THAT THE TRUST HAS TAKEN PERMISSION FOR CONSTRUCTION OF BUDDHA TEM PLE AT CHAKLA BASTI FROM PRADHAN DAM DIN GRAM PANCHAYAT. ACCORDING TO AO, THERE IS NO OB JECT LIKE CONSTRUCTION OF TEMPLE IN THE OBJECTS OF THE TRUST AND HENCE HE REQUIRED THE ASSE SSEE TRUST TO EXPLAIN AS TO WHY EXEMPTION CLAIMED U/S. 11 OF THE ACT BE NOT DISALLOWED. THE A SSESSEE TRUST REPLIED THAT IT HAS PARTIALLY CONSTRUCTED AN INSTITUTION FOR HIGHER BUDDHIST STUD IES AND RESEARCH AT CHAKLA BASTI, SHELLY HUT, DAM DIN, WHICH IS COVERED BY THE OBJECTS OF THE TRU ST AS PER CLAUSE 3 OF THE TRUST DEED. THE AO WAS NOT CONVINCED BY THE REPLY OF THE ASSESSEE AND HE DISALLOWED THE EXEMPTION CLAIMED U/S. 11 OF THE ACT FOR AN AMOUNT OF RS.50,25,127/- BY OBSER VING AS UNDER: THE ASSESSEE IS SILENT ON THE ISSUE OF SEEKING PE RMISSION FOR CONSTRUCTION OF BUDDHA TEMPLE, WHICH HAS NOT BEEN MENTIONED IN THE OBJECTS OF THE TRUST. THE ASSESSEE HAS BOOKED THE EXPENSES UNDER THE HEAD HIGHER BUDDHIST STUDIES AND RESEARCH CENTRE BUT PERMISSION HAS BEEN TAKEN FOR CONSTRUCTION OF BUDDH A TEMPLE. FURTHER, A CHARITABLE TRUST SHOULD HAVE SPECIFIC OBJECTS. WHERE THE OBJE CTS ARE TOO WIDE, THE TRUST MAY NOT QUALIFY FOR EXEMPTION. SIMILARLY, WHERE THERE ARE SEVERAL OBJECTS OF A TRUST, SOME OF WHICH ARE CHARITABLE AND SOME NON-CHARITABLE AND TH E TRUSTEES ARE PERMITTED TO APPLY ITS INCOME TO ANY OF THE OBJECTS IN THEIR DISCRETION, E XEMPTION U/S. 11 OF THE INCOME TAX ACT, 1961 WILL NOT BE AVAILABLE. IN VIEW OF THIS, THE E XEMPTION U/S. 11 OF THE INCOME TAX ACT 4 ITA NO.1540-42/K/2013 SHAMBHALA CHARTIABLE TRUST AYS 2007-08 TO 2009-1 0 WAS CLAIMED AT RS.50,25,127/- IS DISALLOWED AND THE SAME IS . APPLIED FOR CHARITABLE PURPOSE. 6. AGGRIEVED, AGAINST DENIAL OF EXEMPTION U/S 11 OF THE ACT QUA APPLICATION OF INCOME TO THE CHARITABLE PURPOSE I.E. FOR CONSTRUCT ION OF TRUST BUILDING, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO CONFIRMED THE A CTION OF THE AO BY OBSERVING AS UNDER: I HAVE CAREFULLY EXAMINED AND CONSIDERED THE SUBMI SSIONS OF THE ASSESSEE AND ALSO PERUSED THE ASSESSMENT ORDER. I HAVE ALSO PERUSED T HE REMAND REPORTS SUBMITTED BY THE LD AO. ON PERUSAL IT IS FOUND THAT THE ASSESSEE ON ITS OWN APPLIED VIDE LETTER DATED 19.05.2006 FOR ISSUANCE OF NOC FROM THE PRADHAN OF THE DAMDIM GRAM PANCHAYAT FOR CONSTRUCTION OF BUDDHA TEMPLE AT CHAKLA BUSTY. THE DETAILS OF LAND TO BE TAKEN UNDER CONSTRUCTION ALONG WITH THE PROPOSED BUDDHA TEMPLE WERE ENCLOSED WITH THE APPLICATION DATED 19.04.2006 OF THE ASSESSEE WHICH WAS RECEIVED BY THE DAMDIM GRAM PANCHAYAT ON 22.05.2006. THE PRADHAN OF THE DAMDIM GRAM PANCHAYA T ISSUED ACCORDINGLY NOC DATED 27.05.2006 FOR CONSTRUCTION OF BUDDHA TEMPLE. THIS NOC DATED 27.05.2006 OF THE DAMDIM GRAM PANCHAYAT REFERS TO ESTABLISHMENT OF BE AUTIFUL TEMPLE SUBJECT TO SUPERVISION OF AUTHORIZED ENGINEERING AGENCY. SUBSE QUENTLY, ANOTHER NOC DATED 27.07.2006 WAS ISSUED BY THE MEMBERS OF THE DAMDIM GRAM PANCHAYAT, DAMDIM TO THE ASSESSEE FOR CONSTRUCTION OF BUDDHA TEMPLE AT CHAKL A BUSTY. IN BOTH THE NOCS THE DAMDIM GRAM PANCHAYAT WISHED SUCCESSFUL COMPLETION OF THE TEMPLES EARLY AS POSSIBLE. THESE DOCUMENTS CLEARLY REVEAL THE FACT OF CONSTRUC TION OF BUDDHA TEMPLE BY THE ASSESSEE AT CHAKLA BUSTY. HOWEVER, PERUSAL OF THE A UDITED ACCOUNTS FOR THE FY 2006-07 REVEALS THAT THE ASSESSEE HAD SHOWN EXPENDITURE INC URRED ON CONSTRUCTION OF BUILDING TO THE TUNE OF RS.50,25,127.32 AS EXPENDITURE ON CONST RUCTION OF HIGHER STUDIES AND RESEARCH CENTRE. AS A RESULT OF INVESTIGATION CONDU CTED BY THE DEPARTMENT IT WAS DISCOVERED THAT ALTHOUGH THE ASSESSEE WAS ENGAGED I N CONSTRUCTION OF BUDDHA TEMPLE AT CHAKLA BUSTY AND HAD INCURRED EXPENDITURE ON ITS CO NSTRUCTION BUT CLAIMED EXEMPTION U/S 11 OF THE ACT CONSIDERING SUCH EXPENDITURE AS EXPEN DITURE INCURRED ON CONSTRUCTION OF BUILDING MEANT FOR HIGHER STUDIES AND RESEARCH CENT RE BY WAY OF APPLICATION OF INCOME. THE CONTENTION OF THE ASSESSEE IN THE WRITTEN SUBMI SSION DATED 19.09.2012 THAT THE LD AO WAS MISCONCEIVED BY THE NOC GIVEN BY THE PRADHAN OF THE DAMDIM GRAM PANCHAYAT FOR CONSTRUCTION OF BUDDHA TEMPLE IS NOT TRUE. THE CONT ENTION OF THE ASSESSEE THAT THE PANCHAYAT PEOPLE COULD NOT DIFFERENTIATE BETWEEN IN STITUTE FOR HIGHER BUDDHIST STUDIES AND RESEARCH CENTRE AND BUDDHA TEMPLE AND THEREFORE , THE ISSUANCE OF THE NOC MENTIONING BUDDHA TEMPLE THERE IN CASUAL MANNER IS FAR FROM TRUTH AND TOTALLY BASELESS. WHEN THE ASSESSEE REQUESTED FOR ISSUANCE OF NOC FOR CONSTRUCTION OF BUDDHA TEMPLE FROM THE DAMDIM GRAM PANCHAYAT IT EXACTLY GOT SO FR OM THEM. HAD THE ASSESSEE REQUESTED FOR NOC FOR CONSTRUCTION OF INSTITUTE FOR HIGHER BUDDHIST STUDIES AND RESEARCH CENTRE FROM THE DAMDIM GRAM PANCHAYAT IT WOULD HAVE GOT THE SAME FOR THAT SPECIFIC PURPOSE FROM THEM. HAD THE ASSESSEE REQUESTED FOR N OC FOR CONSTRUCTION OF INSTITUTE FOR HIGHER BUDDHIST STUDIES AND RESEARCH CENTRE FROM TH E DAMDIM GRAM PANCHAYAT IT WOULD HAVE GOT THE SAME FOR THAT SPECIFIC PURPOSE F ROM THEM. THE ASSESSEE CANNOT BLAME THE DAMDIM GRAM PANCHAYAT FOR ISSUING NOC WRONGLY A ND IN A CASUAL MANNER FOR CONSTRUCTION OF BUDDHA TEMPLE IN PLACE OF INSTITUTE FOR HIGHER BUDDHIST STUDIES AND RESEARCH CENTRE. WITH REGARD TO THE REVISED NOC DAT ED 21.02.2012 BY THE PRADHAN OF THE DAMDIM GRAM PANCHAYAT IN SUPERSESSION OF THE EA RLIER NOCS IT IS CLEAR THAT THIS NOC WAS ISSUED AT THE REQUEST OF THE ASSESSEE. THE ASSESSEE POINTED OUT VIDE APPLICATION DATED 21.02.2012 ADDRESSED TO THE PRADHAN OF THE DA MDIM GRAM PANCHAYAT THAT THE EARLIER NOCS DATED 27.05.2006 WERE ISSUED FOR THE C ONSTRUCTION OF BUDDHA TEMPLE 5 ITA NO.1540-42/K/2013 SHAMBHALA CHARTIABLE TRUST AYS 2007-08 TO 2009-1 0 INSTEAD OF OBAR CHHIMEYLING INSTITUTE FOR HIGHER BU DDHIST STUDIES AND RESEARCH. IT WAS FURTHER CONTENDED IN THE SAID APPLICATION THAT THES E NOCS HAVE CAUSED OBJECTION FROM CERTAIN GOVERNMENT DEPARTMENTS AND THEREFORE, A FRE SH NOC MAY BE ISSUED AS PER THE APPLICATION DATED 28.05.2006. THE PRADHAN OF THE DA MDIM GRAM PANCHAYAT ISSUED NOC DATED 21.02.2012 ON THE BASIS OF THE APPLICATION DA TED 21..02.2012 FOR CONSTRUCTION OF OBAR CHHIMEYLING INSTITUTE FOR HIGHER BUDDHIST STUD IES AND RESEARCH IN SUPERSESSION OF THE EARLIER NOCS DATED 27.05.2006 AND 27.07.2006. I NTERESTINGLY THIS NOC DOES NOT REFER TO ANY APPLICATION DATED 28.05.2006 MADE BY THE ASS ESSEE TO THE DAMDIM GRAM PANCHAYAT. IT IS CRYSTAL CLEAR THAT THE ASSESSEE HA S OBTAINED NOC DATED 21.02.2012 SUBSEQUENT TO PASSING OF ASSESSMENT ORDER DATED 27. 12.2011. IT IS NOT CLEAR WHY THE ASSESSEE DID NOT RAISE THE ISSUE THAT IT HAD SUBMIT TED APPLICATION DATED 28.05.2006 TO THE DAMDIM GRAM PANCHAYAT FOR SOME NOC FOR CONSTRUCTION OF OBAR CHHIMEYLING INSTITUTE FOR HIGHER BUDDHIST STUDIES AND RESEARCH. THIS EVID ENCE SUBMITTED BY THE ASSESSEE IN COURSE OF APPELLATE PROCEEDINGS WHICH WAS NOT IN EX ISTENCE TILL THE FINALIZATION OF ASSESSMENT HAS BEEN COLLECTED BY THE ASSESSEE IN TH E POST ASSESSMENT STAGE OBVIOUSLY EMPHASIZE THAT THE BUILDING UNDER CONSTRUCTION WAS MEANT FOR OBAR CHHIMEYLING INSTITUTE FOR HIGHER BUDDHIST STUDIES AND RESEARCH AND NOT FOR BUDDHA TEMPLE. IN THIS CONNECTION IT IS VERY IMPORTANT TO NOTE THAT THE IS SUANCE OF NOC BY THE GRAM PANCHAYAT FOR CONSTRUCTION OF BUILDING FOR A PARTICULAR PURPO SE IS ALWAYS AT THE BEHEST OF THE ASSESSEE WHO MAKES APPLICATION TO THE PANCHAYAT FOR THE SAME. IF SOMEONE WANTS TO MAKE A TEMPLE AND AS THE NOC THE PANCHAYAT GRANTS THE SA ME AFTER CONSIDERING THE PREVALENT RULES AND REGULATIONS. IF NOC IS ASKED FOR CONSTRUC TION OF SOME EDUCATIONAL INSTITUTION THE PANCHAYAT GRANTS THE SAME AGAIN IN ACCORDANCE W ITH THE PREVALENT RULES AND REGULATIONS. THEREFORE, ISSUANCE OF NOC DOES NOT CO NCLUSIVELY CERTIFY THE REAL INTENTION BEHIND THE CONSTRUCTION. A BUILDING UNDER CONSTRUCT ION FOR WHICH NOC WAS OBTAINED FOR THE PURPOSE OF CONSTRUCTION OF TEMPLE, IN THE CHANG ED CIRCUMSTANCES AND IN THE EVENT OF APPREHENSION OF DETECTION OF VIOLATION OF LAWS OF T HE LAND, MIGHT BE SUBSEQUENTLY USED FOR SOME OTHER PURPOSE BY OBTAINING ANOTHER NOC. KEEPIN G IN VIEW THE ABOVE FACTS, THE ASSESSEE CANNOT TAKE SHELTER IN THE SUBSEQUENT ISSU ANCE OF NOC DATED 21.02.2012 AS THE REAL PURPOSE OF CONSTRUCTION OF BUDDHA TEMPLE AT CH AKLA BUSTY HAS ALREADY BEEN FOUND OUT IN COURSE OF INVESTIGATION IN THE ASSESSEES AP PLICATION DATED 19.05.2006 ADDRESSED TO THE PRADHAN OF THE DAMDIM GRAM PANCHAYAT. THE NOC D ATED 21.02.2012 CANNOT BE OF HELP TO THE ASSESSEE AS IT IS PROVED BEYOND DOUBT B Y THE DOCUMENTARY EVIDENCES GATHERED/COLLECTED IN COURSE OF ASSESSMENT PROCEEDI NGS THAT THE ASSESSEE WAS ENGAGED IN THE CONSTRUCTION OF BUDDHA TEMPLE AT CHAKLA BUSTY. THE CONTENTION OF THE ASSESSEE IN THE WRITTEN SUBMI SSION DATED 19.09.2012 THAT THE REPORT OF THE CHARTERED ENGINEER PROVES THAT THE CONSTRUCT ION AS NOT FOR TEMPLE BUT FOR INSTITUTE FOR HIGHER BUDDHIST STUDIES AND RESEARCH CENTRE IS DEVOID OF MERIT AND SUBSTANCE AS THE REPORT OF THE CHARTERED ENGINEER IS IN CONNECTION W ITH VALUATION OF COMPLETED CONSTRUCTION OF BUILDING. THE ASSESSEE HAS CONTENDE D THAT THE REPORT OF THE CHARTERED ENGINEER REFERS TO INSTITUTES BUILDING CONSISTING OF CLASSROOMS AND HOSTEL. THE ASSESSEE HAS ALSO STATED THAT THE PLACE EARMARKED FOR PRAYER IS NECESSARY FOR BUDDHIST STUDIES AND RESEARCH CENTRE AS THE SAME IS USED FOR MEDITATION. HOWEVER, IT IS ESSENTIAL TO NOTE THAT THE CHARTERED ENGINEER IS NOT COMPETENT TO CERTIFY WHETHER THE BUILDING BEING CONSTRUCTED WAS TO BE USED FOR THE PURPOSE OF TEMPL E OR EDUCATIONAL INSTITUTION. WHEN THE SERVICES OF THE CHARTERED ENGINEER WERE COMMISSIONE D BY THE ASSESSEE, THE CHARTERED ENGINEER WAS BOUND TO VALUE DIFFERENT PARTS OF THE BUILDING AS PER THE DESCRIPTION PROVIDED BY THE ASSESSEE. IF A CERTAIN PART OF THE BUILDING WAS REFERRED TO CLASSROOM OR HOSTEL BY THE ASSESSEE IN COURSE OF VALUATION, NATU RALLY THE CHARTERED ENGINEER GAVE THE SAME DESCRIPTION AS PROVIDED TO HIM. THEREFORE THE REPORT OF THE CHARTERED ENGINEER FOR VALUATION OF COMPLETED CONSTRUCTION OF BUILDING CAN NOT BE CONSIDERED AS RELIABLE AND ACCEPTABLE EVIDENCE OF CONSTRUCTION OF BUILDING FOR EDUCATIONAL INSTITUTION. 6 ITA NO.1540-42/K/2013 SHAMBHALA CHARTIABLE TRUST AYS 2007-08 TO 2009-1 0 IN COURSE OF APPELLATE PROCEEDINGS THE ASSESSEE DID NOT PRODUCE ANY DOCUMENTARY EVIDENCE WHICH COULD HAVE CONVINCINGLY PROVED THE C ONSTRUCTION OF BUILDING FOR ESTABLISHMENT OF OBAR CHHIMEYLING INSTITUTE FOR HIG HER BUDDHIST STUDIES AND RESEARCH. THE ASSESSEE DID NOT PROVIDE ANY INFORMATION RELATI NG TO THE INSTITUTE E.G. A) WHETHER THE INSTITUTE IS REGISTERED/PROPOSED TO THE REGISTERED WITH ANY GOVERNMENT AGENCY OR AFFILIATED/PROPOSED TO BE AFFILIATED WITH ANY NATIONAL/INTERNATIONAL UNIVERSITY/ASSOCIATION/INSTITUTION? B) WHAT ARE THE ONGOING OR PROPOSED COURSES/STUDIES/RE SEARCH IN THE INSTITUTE? C) WHAT IS THE ADMINISTRATIVE AND FACULTY9 STRUCTURE O F THE INSTITUTE? D) HOW MANY STUDENTS ARE ENROLLED IN THE INSTITUTE AND WHAT COURSES/RESEARCH ACTIVITIES ARE THEY PURSUING? E) WHAT IS THE FEE STRUCTURE FOR MEETING THE ADMINISTR ATIVE EXPENSES FOR RUNNING THE INSTITUTE? F) WHAT IS THE SALARY STRUCTURE FOR THE ADMINISTRATIVE PERSONNEL AND FACULTY? G) ADMINISTRATIVE AND ACADEMIC RECORDS/DOCUMENTATION. H) SYSTEM FOLLOWED FOR ENROLMENT/ADMISSION OF STUDENTS . IN THE ABSENCE OF SUCH VITAL INFORMATION THE CLAIM OF THE ASSESSEE THAT CLASSES FOR TEACHING THE STUDENTS ARE GOING ON IN THE COMPLETED PART OF THE BUILDING IS FOUND TO BE UNSUBSTANTIATED AND UNRELIABLE. IN COURSE OF APPELLATE PROCEEDINGS THE ASSESSEE SUB MITTED A COPY OF DEED AND INSTRUMENT OF TRUST DATED 10.07.1988 IN WHICH THE OBJECTS OF T HE TRUST ARE CLEARLY MENTIONED. ON PERUSAL IT IS FOUND THAT CONSTRUCTION OF BUDDHA TEM PLE DOES NOT FIND PLACE IN THE OBJECTS OF TRUST. THE OBJECT OF THE TRUST UNDER CLAUSE NO.3 OF THE DEED OF TRUST DATED 10.07.1988 IS REPRODUCED HEREUNDER: TO ESTABLISH LIBRARIES, READING ROOMS, ARCHIVES, M USEUMS, AND TRANSLATION BUREAUS: IN COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE SU BMITTED THAT THE TRUST HAS PARTIALLY CONSTRUCTED INSTITUTE OF HIGHER BUDDHIST STUDIES AN D RESEARCH AT CHAKLA BUSTY WHICH IS COVERED BY THE OBJECTS OF THE TRUST UNDER CLAUSE NO .3 OF THE DEED OF TRUST DATED 10.07.1988. WHEN IT HAS ALREADY BEEN FOUND THAT THE ASSESSEE IS ENGAGED IN THE CONSTRUCTION OF BUDDHA TEMPLE AND THE CONSTRUCTION OF BUDDHA TEMPLE DOES NOT FIND PLACE IN THE OBJECTS OF TRUST THE CONTENTION OF THE ASSESSEE THAT THE CONSTRUCTION OF THE BUILDING IS COVERED BY THE OBJECTS OF THE TRUST UND ER CLAUSE NO.3 OF THE DEED OF TRUST DATED 10.07.1988 IS NOT AT ALL ACCEPTABLE AND THERE FORE, REJECTED. IN THE CASE OF KIRTICHAND TARAWATI CHARITABLE TRUST VS. DIT (EXEMP TION) & ORS (DEL) 232 ITR 11 WHERE OBJECTS OF THE TRUST WERE CHARITABLE BUT ENQU IRY REVEALED THAT TRUST WAS ENGAGED MAINLY IN THE CONSTRUCTION OF TEMPLE WHICH IS NOT A CHARITABLE ACTIVITY, DENIAL OF REGISTRATION OF THE TRUST WAS UPHELD. ON PERUSAL OF THE OBJECTS OF THE TRUST I AGREE WITH THE LD. AO AS RECORDED IN THE ASSESSMENT ORDER THAT A CHARITABLE TRUST SHOULD HAV E SPECIFIC OBJECTS AND WHERE THE OBJECTS ARE TOO WIDE, THE TRUST MAY NOT QUALIFY FOR EXEMPTION. SIMILARLY, WHERE THERE ARE SEVERAL OBJECTS OF A TRUST, SOME OF WHICH ARE CHARI TABLE AND SOME NON-CHARITABLE AND THE TRUSTEES ARE PERMITTED TO APPLY ITS INCOME TO ANY O F THE OBJECTS IN THEIR DISCRETION, EXEMPTION U/S 11 OF THE IT ACT, 1961 WILL NOT BE AV AILABLE. IN THE FOLLOWING CASES WHERE THERE WERE CHARITABLE AND NON CHARITABLE OBJECTS AN D TRUSTEES CAN APPLY INCOME TO ANY OF THESE OBJECTS IT WAS HELD THAT THE TRUSTS WERE NOT ELIGIBLE FOR EXEMPTION U/S 11 OF THE ACT: 7 ITA NO.1540-42/K/2013 SHAMBHALA CHARTIABLE TRUST AYS 2007-08 TO 2009-1 0 DAULAT RAM PUBLIC TRUST VS. CIT (DEL 244 ITR 514 YOGIRAJ CHARITY TRUST V. CIT (SC) 103 ITR 777 FURTHER AS STATED BY THE LD AO IN HIS REMAND REPORT DATED 16.10.2012 IT IS TRUE THAT THE TRUSTEES HAVE TO UTILIZE THE FUNDS AS PER THE OBJEC TS IN THE DEED OF TRUST. THE TERMS OF THE CONSTITUTION ARE BINDING ON THE TRUSTEES OR THE MEM BERS OF AN ASSOCIATION. ANY DEPARTURE EITHER BY THE TRUSTEES OR THE MEMBERS FROM THE RULE S WOULD BE A BREACH OF TRUST. THUS, THE INCOME FROM THE PROPERTY HELD UNDER TRUST APPLIED N OT ON OBJECTS OF THE TRUST WILL NOT BE ELIGIBLE FOR ANY EXEMPTION UNDER THE PROVISIONS OF SECTION 11 OF THE ACT. IN THE CASES OF SAURASHTRA EDUCATION FOUNDATION VS. CIT (GUJ) 273 ITR 139 AND BIHAR INSTITUTE OF MINING & MINE SURVEYING VS. CIT (PAT) 208 TR 608 WHERE CHARITABLE TRUSTS WERE CARRYING ON EDUCATIONAL ACTIVITIES BUT NOT CON DUCTING ANY COURSE IN FORMAL EDUCATION AND NOT AFFILIATED TO/REGISTERED BY ANY A UTHORITY IT WAS THAT THE TRUSTS ARE NOT ELIGIBLE FOR EXEMPTION U/S 10(22) OF THE ACT. IN TH E INSTANT CASE THE ASSESSEE HAS NOT BEEN ABLE TO PROVE THAT IT IS CARRYING ON EDUCATIONAL AC TIVITIES FOR AVAILING OF EXEMPTION U/S 11 OF THE ACT LEAVE ASIDE CONDUCTING ANY COURSE IN FOR MAL EDUCATION AND GETTING AFFILIATED TO/REGISTERED BY ANY AUTHORITY. IN VIEW OF THE FACTS STATED ABOVE I HOLD THAT THE L D AO WAS JUSTIFIED IN NOT GRANTING EXEMPTION OF RS.50,25,127/- U/S OF THE IT ACT, 1961 TREATING THE EXPENDITURE INCURRED ON CONSTRUCTION OF BUDDHA TEMPLE AS NOT APPLIED FOR CH ARITABLE PURPOSES AS PER THE OBJECTS OF THE TRUST. THE DISALLOWANCE OF EXEMPTION OF RS.5 0,25,127/- U/S 11 OF THE IT ACT, 1961 MADE BY THE LD AO IS CONFIRMED. AGGRIEVED, ASSESSEE CAME IN APPEAL BEFORE US. BEF ORE US, LD. COUNSEL FOR THE ASSESSEE SHRI D. S. DAMLE REITERATED THE SAME SUBMISSIONS AS MADE BE FORE CIT(A) AS WELL AS BEFORE AO. 7. FROM THE FACTS OF THE CASE, WE FIND THAT THE SET TLOR OF THE ASSESSEE TRUST HIMSELF WAS A BUDDHIST SCHOLAR HAVING VAST KNOWLEDGE AND UNDERSTA NDING OF TEACHINGS OF LORD BUDDHA. SINCE INCEPTION, ASSESSEE TRUST WAS PERUSING ACTIVI TIES CONNECTED OR ASSOCIATED WITH PREACHING, SPREADING AND DISSEMINATING THE IDEAS, IDEALS AND T HE TEACHINGS OF LORD BUDDHA. THE SETTLOR OF THE ASSESSEE TRUST CONSIDERED THE NEED FOR SPREADIN G THE IDEAS AND TEACHINGS OF LORD BUDDHA AND TO ACHIEVE THESE OBJECTIVES ESTABLISHED THE TRU ST AND IN TURN DECIDED TO SET UP AN INSTITUTION FOR HIGHER BUDDHIST LEARNING AT CHAKLA BASTI, P.O. MIRIK IN THE DISTRICT OF DARJEELING, WEST BENGAL. THE PLACES OF BUDDHIST STUDIES ARE POPULARL Y KNOWN AS MONASTERIES. IN THE ORDINARY SENSE THE PLACES WHERE BUDDHIST DISCOURSES ARE HELD ARE REGARDED TO BE RELIGIOUS PLACES. THE ASSESSEE TRUST CONSTRUCTED A BUILDING AT CHAKLA BAS TI WITH THE SOLE OBJECTIVE OF HOUSING AN INSTITUTE FOR HIGHER LEARNING OF BUDDHIST STUDIES A ND RESEARCH WHICH INCLUDES ONE TEMPLE FOR WORSHIPING OF LORD BUDDHA. THE AO FOUND THAT THE A SSESSEE APPLIED ITS INCOME ON CONSTRUCTION OF TEMPLE BASED ON TWO DOCUMENTS I.E. ONE APPLICATION DATED 9.05.2006 MADE BY THE TRUSTEE OF THE ASSESSEE TRUST BEFORE GRAM PANCH AYAT DAMDIN AND SECOND, A NO OBJECTION 8 ITA NO.1540-42/K/2013 SHAMBHALA CHARTIABLE TRUST AYS 2007-08 TO 2009-1 0 CERTIFICATE ISSUED BY DAMDIN GRAM PANCHAYAT DATED 2 7.05.2006. ADMITTEDLY, IN BOTH THE DOCUMENTS REFERENCE WAS FOR CONSTRUCTION OF A TEMPL E FOR BUDDHIST LEARNING. BUT AS PER VALUATION REPORT SUBMITTED BY A CHARTERED ENGINEER SHRI S. K. SIKDER, WHICH FORMS PART OF ASSESSEES PAPER BOOK PAGES 112 TO 115 BY WHICH THE VALUER HAS ESTIMATED THE COST OF FOUR STORIED INSTITUTE BUILDING THEN UNDER CONSTRUCTION AT CHAKLA BASTI, AREA CONSTRUCTED IN THREE FINANCIAL YEARS WAS AS UNDER: (I) F.Y 2006-07 12,694 SFT. (II) F.Y 2007-08 44,391 SFT (III) FY 2008-09 42,129 SFT. 8. ADMITTEDLY, CONSTRUCTION OF THE BUILDING WAS STA RTED AFTER MAY, 2006, WHICH HOUSED AN INSTITUTION OF HIGHER BUDDHIST STUDIES INCLUDING A TEMPLE. THE REVENUES ENTIRE BASE FOR DISALLOWING THE EXEMPTION U/S. 11 OF THE ACT WAS ON LY ON ONE FACT THAT THE BUILDING CONSTRUCTED WAS A TEMPLE. THE SAID FINDING WAS RECORDED ON THE BASIS THAT THE NATURE OF BUILDING COULD NOT HAVE BEEN ANY DIFFERENT FROM THE ONE DESCRIBED IN T HE INITIAL APPLICATION. THIS BUILDING GOT CONSTRUCTED PARTIALLY TILL FEBRUARY, 2009 AND WAS B EING USED AS INSTITUTE FOR BUDDHA STUDIES. THE BUILDING WAS DESIGNED AND CONSTRUCTED IN SUCH A MANNER THAT THE SAME HOUSES A FACILITY FOR CONDUCTING STUDIES BY THE STUDENTS LEARNING BUDDHIS T STUDIES. THE HEADING OF THE VALUATION REPORT DESCRIBES THE BUILDING CONSTRUCTED BY ASSESS EE TRUST AS UNDER: FOUR STORIED INSTITUTE BUILDING AND THREE STORIED H OSTEL BUILDING CONSTRUCTION. THE VALUATION REPORT FURTHER STATES THE TOTAL AREA OF THE INSTITUTE BUILDING IS AT 84,522 SFT. AND OF HOSTEL BUILDING AT 14,691 SFT. AS PER VALUATION RE PORT, THE AREA WHICH THE ASSESSEE TRUST CONSTRUCTED AT THE PLINTH LEVEL AND AT THE BASEMENT LEVEL CONSISTS OF 12 CLASS ROOMS, 2 VERANDAHS, 1 STORE ROOM AND 1 ELECTRIC ROOM. ANOTHE R AREA OF 1 ST FLOOR AND 2 ND FLOOR WAS CLASSIFIED AS INSTITUTE BUILDING CONSISTS OF 26 ROO MS, 3 TOILETS, 2 KITCHEN AND 1 TARA TEMPLE. IT IS CERTIFIED BY THE VALUER THAT THE TEMPLE ON THE 1 ST FLOOR OCCUPIES ONLY 3032 SFT. IN TERM OF PERCENTAGE TEMPLE AREA COMPRISED IN THE BUILDINGS C ONSTRUCTED BY THE ASSESSEE WAS BARELY 3.05% OF THE TOTAL AREA CONSTRUCTED. THE EMPIRICAL DATA AS AVAILABLE IN THE VALUERS REPORT PROVES THAT THE BUILDING CONSTRUCTED BY THE ASSESSE E TRUST IS PRACTICALLY AN INSTITUTE OF HIGHER LEARNING OF BUDDHIST STUDIES, WHICH INCLUDES A SMAL L TEMPLE. IT IS ALSO A FACT THAT THE REPORT OF THE CHARTERED ENGINEER FOR VALUING THE PROPERTY WAS A REPORT BY AN INDEPENDENT EXPERT WHO HAD CARRIED OUT PHYSICAL INSPECTION OF THE BUILDING. T HIS VALUATION REPORT HAS BEEN ACCEPTED BOTH BY THE AO AS WELL AS CIT(A) IN THEIR RESPECTIVE ORD ERS WITH REFERENCE TO THE FACTS AND FIGURES DISCUSSED AND CERTIFIED IN THE SAME VALUATION REPOR T IN ALL THESE THREE ASSESSMENT YEARS AND 9 ITA NO.1540-42/K/2013 SHAMBHALA CHARTIABLE TRUST AYS 2007-08 TO 2009-1 0 MADE ADDITIONS ON THE BASIS OF THE SAME. BUT WHAT IS MOST PERTINENT AND RELEVANT TO BE TAKEN NOTE OF IN THIS REGARD IS THAT IN THE COURSE OF ASS ESSMENT FOR ALL THESE THREE YEARS NEITHER THE AO NOR THE CIT(A) HAS CARRIED OUT, NEITHER HIMSELF NOR THROUGH AUTHORISED PERSON, ANY PHYSICAL INSPECTION OF THE BUILDING FOR ASCERTAINING THE TRU E NATURE OF THE INSTITUTE. SINCE THE ISSUE IN DISPUTE WAS FOR THE DETERMINATION OF TRUE AND CORRE CT CHARACTER AND NATURE OF THE BUILDING. THE MOST APPROPRIATE COURSE WHICH THE AO OUGHT TO HAVE ADOPTED WAS TO CONDUCT SPOT ENQUIRIES EITHER HIMSELF OR THROUGH ANY OF THE DESIGNATED AUT HORISED PERSON. ONE MORE MATERIAL FACT WAS THAT THE CONTROVERSY OF ALL THE THREE YEARS IS THE NATURE AND CHARACTER OF THE BUILDING WAS PURELY RAISED BY THE AO ON ACCOUNT OF NOC GRANTED BY DAMDI N GRAM PANCHAYAT BUT NOT CONSIDERED ANOTHER APPLICATION MADE BY ASSESSEE BEFORE THE AUT HORITIES IN FEBRUARY, 212 AND THE RELEVANT NOC ISSUED BY DAMDIN GRAM PANCHAYAT LETTER DATED 21 .12.2012 FOR CONSTRUCTION OF INSTITUTE BUILDING. THE AOS COMMENT IN THE REMAND REPORT CAL LED FOR BY CIT(A) READS AS UNDER: AS THE APPELLANT HAS SUBMITTED A REVISED NOC DATED 21.02.2012 FROM THE PRADHAN OF THE DAMDIM GRAM PANCHAYAT IN SUPERSESSION OF THE EARLIE R NOC DATED 27.05.2006. THE REVISED NOC APPEARS TO HAVE BEEN GIVEN FOR THE INSTITUTE FO R HIGHER BUDDHIST STUDIES & RESEARCH. THEREFORE, AT THIS JUNCTURE, IT IS NOT POSSIBLE FOR THE UNDERSIGNED TO STATE SPECIFICALLY WHICH NOC IS RELEVANT FOR THE ASSESSMENT YEARS INVOLVED I N APPEAL NO. 139, 138 & 137/CIT(A)/SLG/2011-12 AS THE JURISDICTIONAL DECISI ON LIES WITH THE LD. CIT(A), SILIGURI IN THE MATTER. 9. IT IS ALSO A FACT THAT THE AO MADE DETAILED ENQU IRIES AND CONDUCTED HEARINGS ON SEVERAL DATES AND MADE DETAILED NOTING IN THE ORDER SHEET E NTRIES. ONE MORE FACT BROUGHT TO OUR NOTICE BY THE ASSESSEE THAT IN AY 2010-11 AND 2011-12, THE AO ALLOWED THE CLAIM FOR EXEMPTION ON BEING SATISFIED THAT THE ASSESSEE TRUST APPLIED ITS INCOME FOR CHARITABLE AND RELIGIOUS PURPOSES. THE ASSESSEE OPERATED, MANAGED AND RUN THE INSTITUT ION OF BUDDHIST LEARNING FROM THE SAID PREMISES DURING FY 2009-10 RELEVANT AY 2010-11 AND FY 2010-11 RELEVANT AY 2011-12 AND EXPENSES INCURRED ON OPERATING AND RUNNING OF THE S AID INSTITUTE WAS ACCOUNTED FOR IN THE AUDITED BOOKS OF ACCOUNT OF THE ASSESSEE TRUST FOR THESE TWO YEARS, WHICH WERE ALLOWED BY THE AO U/S. 11 OF THE ACT. WHETHER IN THE ABOVE FACTS A ND CIRCUMSTANCES OF THE CASE, THE DENIAL OF EXEMPTION U/S. 11 OF THE ACT TO THE ASSESSEE TRUST IS SUPPORTED BY LEGAL PROVISION OF SECTION 11 OF THE ACT OR NOT, IS NOW TO BE EXAMINED. THE PROV ISION OF SECTION 11 OF THE ACT PERMITS A TRUST REGISTERED U/S. 12A OF THE ACT TO CLAIM EXEMPTION I N RESPECT OF INCOME DERIVED FROM ASSETS HELD IN TRUST, IF 85% OF ITS INCOME FOR THE RELEVANT FY RELEVANT TO THE ASSESSMENT YEAR IN QUESTION IS APPLIED FOR RELIGIOUS OR CHARITABLE PURPOSES. IN R ESPECT TO THE APPLICATION OF INCOME FOR CHARITABLE AND RELIGIOUS PURPOSES, IT IS NOT MATERI AL AS TO WHETHER THE AMOUNT IS APPLIED FOR CAPITAL EXPENDITURE OR REVENUE EXPENDITURE. THE ON LY CONDITION FOR CLAIMING THE EXEMPTION IS 10 ITA NO.1540-42/K/2013 SHAMBHALA CHARTIABLE TRUST AYS 2007-08 TO 2009-1 0 THAT THE EXPENDITURE MUST BE INCURRED EITHER FOR CH ARITABLE PURPOSES OR RELIGIOUS PURPOSES. IT MEANS THAT THE ASSETS ACQUIRED BY THE ASSESSEE TRUS T OUT OF THE CAPITAL OUTLAY MUST BE WITH THE OBJECTS OF CHARITABLE OR RELIGIOUS PURPOSES AND IN SUCH CIRCUMSTANCES, EVEN THE CONSTRUCTION OF TEMPLE OR CONSTRUCTION OF INSTITUTE FOR HIGHER BUDD HIST STUDIES AND RESEARCH, IF ACCEPTED, AT ITS ON FACE VALUE, EVEN THEN THE AO COULD NOT HAVE DENI ED EXEMPTION U/S. 11 OF THE ACT BECAUSE SUCH AN APPLICATION OF INCOME FOR CONSTRUCTION OF T EMPLE AS WELL AS INSTITUTE FOR BUDDHIST HIGHER STUDIES AMOUNTED TO APPLICATION OF INCOME FO R CHARITABLE PURPOSES AS WELL AS RELIGIOUS PURPOSES. EVEN FOR THE SAKE OF ARGUMENT, THE BUILD ING WHICH THE ASSESSEE CONSTRUCTED WAS A TEMPLE EVEN THEN THE AO COULD NOT HAVE DENIED EXEMP TION U/S. 11 OF THE ACT BECAUSE EXEMPTION U/S. 11 IS PERMISSIBLE TO RELIGIOUS AS WE LL AS CHARITABLE TRUST. IN THIS REGARD NOW WE WILL DISCUSS THE CASE LAW CITED BY THE LD. COUNSEL FOR THE ASSESSEE. 10. THE CASE LAW CITED BY LD. COUNSEL FOR THE ASSES SEE IN THE CASE OF CIT (ADDL.) VS. A. A. BIBIJIWALA TRUST (1975) 100 ITR 516 (GUJ), WHEREIN HONBLE GUJARAT HIGH COURT HAS CONSIDERED THE WORDS WHOLLY FOR RELIGIOUS OR CHARI TABLE PURPOSES SHOWS THAT THE INCOME FROM TRUST PROPERTY WOULD BE EXEMPT ONLY IF THE OBJECTS OF THE TRUST ARE OF CHARITABLE OR RELIGIOUS PURPOSE. WHERE THE TRUST IS PARTLY RELIGIOUS AND P ARTLY CHARITABLE, SO LONG AS NO PART OF THE INCOME OR CORPUS CAN BE UTILISED FOR A PURPOSE WHIC H IS NOT EITHER CHARITABLE OR RELIGIOUS THERE IS NO DOUBT THAT THE EXEMPTION U/S. 11 OF THE ACT WILL BE AVAILABLE TO THE ASSESSEE TRUST. HONBLE HIGH COURT HAS ELABORATED THE ISSUE AS UNDER: ACCORDING TO MR. JUSTICE MARTEN, THESE PURPOSES WE RE ALL CHARITABLE AND, AT THE END OF PAGE 1102, HE OBSERVED : 'ASSUMING, HOWEVER, FOR THE SAKE OF ARGUMENT THAT T HE ITEMS OF DAWAT EXPENDITURE PUT FORWARD FOR THE DEFENDANTS ARE CORRECT, THE QUESTION STILL REMAINS WHETHER THEY ARE NOT ALL CHARITABLE. IN MY OPINION THEY ARE CHARITABLE. THE FUNDS ARE HELD BY A RELIGIOUS HEAD FOR THE BENEFIT OF THE COMMUNITY AS A WHOLE. THE PARTICULAR APPLICATIONS O F THIS FUND AS SHOWN IN THOSE ITEMS ARE TO MY MIND CONSISTENT WITH THE CENTRAL OBJECT OF THE F UND. THE SELECTION OF INDIVIDUAL OBJECTS OF RELIEF DOES NOT NECESSARILY NEGATIVE A CHARITY. HE POINTED OUT THAT THE PURPOSES IN THE CASE BEFORE HIM, AS ALSO IN THE CASE BEFORE US, ARE NOT MERELY RELIGIOUS OR PIOUS PURPOSES IN GENERAL. THEY MUST ALSO BE FOR THE BENEFIT OF THE DAWOODI BOHRA COMMUNITY. IN THAT PARTICULAR CASE MR. JUSTIC E MARTEN POINTED OUT THAT BEING GIFTS AT A SHRINE, THEY WERE ALREADY CONSECRATED TO GOD, AND P RESUMABLY MUST BE USED FOR RELIGIOUS OR PIOUS PURPOSES. SIMILARLY, IN THE CASE BEFORE US AL SO, THE PROPERTY IS SETTLED UPON WAKF, THAT IS, FOR PURPOSES WHICH ARE CONSIDERED TO BE RELIGIOUS, PIOUS OR CHARITABLE ACCORDING TO THE NOTIONS OF MEMBERS OF THE DAWOODI BOHRA COMMUNITY AND FURT HER THE INCOME IN THE CORPUS OF THESE PROPERTIES SETTLED UPON TRUST MUST BE USED FOR DAWA T PURPOSES, THAT IS, FOR THE BENEFIT OF THE DAWOODI BOHRA COMMUNITY. THOUGH THE WORDS OF CLAUS ES 6, 7 AND 8 ARE VERY WIDE IN TERMS, IN FACT, THAT APPARENTLY WIDE DISCRETION OF THE MULLA JI SAHEB IS BOUND DOWN BY THE TWO FACTORS, 11 ITA NO.1540-42/K/2013 SHAMBHALA CHARTIABLE TRUST AYS 2007-08 TO 2009-1 0 NAMELY, THAT THIS IS A WAKF, A DEDICATION BY A MUS SALMAN OF PROPERTY FOR PURPOSES WHICH, ACCORDING TO THE NOTION OF MUSSALMANS, ARE PIOUS, R ELIGIOUS OR CHARITABLE, AND, SECONDLY, IT MUST BE USED FOR DAWAT PURPOSES, THAT IS, FOR PURPO SES WHICH GO TO BENEFIT THE DAWOODI BOHRA COMMUNITY. WITH THESE TWO LIMITATIONS OPERATING ON HIM, EVEN THE APPARENTLY WIDE DISCRETION CONFERRED UPON THE MULLAJI SAHEB AS DAI-UL-MUTLAK FOR THE TIME BEING IS CONFINED WITHIN THE FOUR CORNERS OF THESE TWO OVERRIDING FACTORS AND IN VIEW OF THESE TWO OVERRIDING FACTORS IT MUST BE HELD THAT THE PROPERTIES IN QUESTION SETTLED BY THE TWO DEEDS OF JANUARY 12, 1937, WERE SETTLED UPON TRUST FOR CHARITABLE OR RELIGIOUS OBJ ECTS AND WERE, THEREFORE, ENTITLED TO EXEMPTION UNDER SECTION 11(1)(A) OF THE ACT OF 1961. WE MUST MAKE IT CLEAR THAT THE REAL CONTROVERSY BETWEEN THE PARTIES IS REGARDING EXEMPTION UNDER SE CTION 11(1)(A) AND NOT WHETHER THE TRUSTS ARE WHOLLY RELIGIOUS OR WHOLLY CHARITABLE. EVEN IF THE TRUSTS ARE PARTLY RELIGIOUS AND PARTLY CHARITABLE, SO LONG AS NO PART OF THE INCOME OR CO RPUS CAN BE UTILISED FOR A PURPOSE WHICH IS NOT EITHER CHARITABLE OR RELIGIOUS, THERE IS NO DOU BT THAT THE EXEMPTION UNDER SECTION 11(1)(A) WILL BE AVAILABLE TO THE ASSESSEE. IN THE INSTANT CASE WE FIND THAT, IN SPITE OF THE APPARENTLY WIDE LANGUAGE OF THE CLAUSES OF THE DEED OF TRUST, IN F ACT READING THE TRUST DEED AS A WHOLE, IT TRANSPIRES, TRANSPIRES, PARTICULARLY IN THE LIGHT O F THE DECISION OF THE BOMBAY HIGH COURT IN ADVOCATE-GENERAL OF BOMBAY V. YUSUFALLY (1), THAT T HE APPARENTLY WIDE DISCRETION HAS TO BE EXERCISED WITHIN THE FOUR CORNERS OF THE WAKF AND F OR DAWAT PURPOSES. WHAT ARE DAWAT PURPOSES, HAVE BEEN DESCRIBED BY MARTEN J., AT PAG E 1102, IN ADVOCATE-GENERAL OF BOMBAY V. YUSUFALLY (1) AND, IN OUR OPINION, IT IS ONLY WITH IN THE FOUR CORNERS OF DAWAT PURPOSES AS RECOGNISED BY THE DAWOODI BOHRA COMMUNITY THAT THE MULLAJI SAHEB CAN USE THE CORPUS OR THE INCOME OF THIS FUND. UNDER THESE CIRCUMSTANCES, IN OUR OPINION, THE TRIB UNAL WAS RIGHT IN COMING TO THE CONCLUSION THAT THE ASSESSEE IS ENTITLED TO EXEMPTION UNDER SE CTION 11(1)(A) OF THE ACT. WE, THEREFORE, ANSWER THE QUESTION REFERRED TO US AS FOLLOWS: ' ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE TRUSTS ARE ENTITLED TO EXEMPTION UNDER SECTION 11(1)(A) OF THE INCOME-TAX ACT, 1961. ' WE, ACCORDINGLY, ANSWER THE QUESTION IN FAVOUR OF T HE ASSESSEE. THE COMMISSIONER WILL PAY THE COSTS OF THIS REFERENCE TO THE ASSESSEE. 11. ANOTHER CASE LAW CITED BY LD. COUNSEL FOR THE A SSESSEE OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. RAJNEESH FOUNDATION (2006) 2 80 ITR 553(BOM), WHEREIN HONBLE BOMBAY HIGH COURT HAS CONSIDERED THE CASE LAW OF HO NBLE SUPREME COURT IN THE CASE OF CST VS. SAI PUBLICATION FUND (2002) 258 ITR 70 (SC) AND ALSO CIT VS. AHMEDABAD RAN CASTE ASSOCIATION (1983) 140 ITR 1 (SC) AND ALSO SOLE T RUSTEE, LOKA SHIKSHANA TRUST VS. CIT (1975) 101 ITR 234 (SC) AND DISCUSSED THE ISSUE AS UNDER: 15. AS DEFINED BY SECTION 2(15), CHARITABLE PURPOSE IN CLUDES RELIEF OF POOR, EDUCATION, MEDICAL RELIEFS AND ADVANCEMENTS OF ANY OTHER OBJEC T OF GENERAL PUBLIC UTILITY. ADMITTEDLY, THE RESPONDENT DOES NOT CLAIM TO PROVIDE RELIEF TO THE POOR, EDUCATION OR MEDICAL RELIEF. IT CLAIMS THAT THE OBJECTS AND ACTIVITIES OF THE TRUST ARE FOR THE ADVANCEMENT OF OTHER OBJECTS OF THE GENERAL PUBLIC UTILITY LIKE ATTAINMENT OF PH YSICAL, MENTAL AND SPIRITUAL HEALTH AND, THUS, REALISATION OF SELF-CONSCIOUSNESS. 16. WORDS ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY HAVE BEEN SUBJECT OF DISCUSSION AND ADJUDICATION IN SEVERAL CASES. IN CIT V. AHMEDABAD RANA CASTE 12 ITA NO.1540-42/K/2013 SHAMBHALA CHARTIABLE TRUST AYS 2007-08 TO 2009-1 0 ASSOCIATION [1973] 88 ITR 354 (GUJ.). THE TRUST WAS CONSTITUTED TO MANAGE MOVABLE AND IMMOVABLE PROPERTIES OF THE RANA COMMUNITY OF THE C ITY AT AHMEDABAD TO SPREAD EDUCATION, TO RENDER MEDICAL ASSISTANCE TO THE COMM UNITY TO DO ACTS WHICH WOULD BE USEFUL TO THE COMMUNITY AND TO DO ALL ACTS WHICH PROMOTE U NITY AND BROTHERHOOD AMONG THE MEMBERS OF THE COMMUNITY AND BRING ABOUT COMPLETE D EVELOPMENT OF ALL ASPECTS OF LIFE OF MALE AND FEMALE MEMBERS OF THE COMMUNITY. MANAGEMEN T WAS TO BE CARRIED AS PROFITABLE AS POSSIBLE IN THE INTEREST OF THE COMMUNITY AND TO PROVIDE FOR CERTAIN HAVANS, BHANDARO, ETC. AFTER HAVING CONSIDERED DIFFERENCE IN ENGLISH AND INDIAN LAW ON THE SUBJECT AS WELL AS THE OBJECTS OF THE SAID TRUST, GUJARAT HIGH COUR T OBSERVED AS FOLLOWS: . . . SUB-CLAUSE (5) OF CLAUSE 3 CONSISTS OF TWO P ARTS. THE FIRST PART SETS OUT THE OBJECT OF DOING ACTS WHICH WOULD PROMOTE UNITY AND BROTHERHOO D AMONGST THE MEMBERS OF THE COMMUNITY. NOW THERE CAN BE NO DOUBT THAT IF THERE IS STRIFE AND DISHARMONY AMONGST THE MEMBERS OF A COMMUNITY, THAT WOULD SERIOUSLY AFFECT THE HAPPINESS AND WELL-BEING OF THE COMMUNITY. THE COMMUNITY CAN FLOURISH AS A COMMUNIT Y ONLY IF ITS MEMBERS ARE LIVING IN PEACE AND HARMONY WITH ONE ANOTHER AND THERE IS A D EEP AND ABIDING SENSE OF UNITY AND FRATERNITY AMONGST THEM. THAT ALONE CAN SECURE TO T HEM THE BENEFIT OF A HEALTHY COMMUNAL LIFE. IT IS, THEREFORE, CLEAR THAT A PURPOSE CALCUL ATED TO PROMOTE UNITY AND BROTHERHOOD AMONGST THE MEMBERS OF A COMMUNITY WOULD NORMALLY B E A PURPOSE BENEFICIAL TO THE COMMUNITY AND THE PURPOSE SET OUT IN THE FIRST PART OF SUB-CLAUSE (5) OF CLAUSE 3 MUST BE HELD TO BE WITHIN THE STATUTORY DEFINITION. TURNING TO THE SECOND PART OF SUB-CLAUSE (5) OF CLAUSE 3, THE PURPOSE THERE SET OUT IS TO DO ALL AC TS WHICH BRING ABOUT COMPLETE DEVELOPMENT OF ALL ASPECTS OF LIFE OF THE MALE AND FEMALE MEMBERS OF THE COMMUNITY. IT IS DIFFICULT TO SEE HOW, HAVING REGARD TO MODERN CONCE PTS AND IDEAS, COMPLETE DEVELOPMENT OF ALL ASPECTS OF LIFE OF EACH MEMBER OF THE COMMUN ITY CAN BE REGARDED AS ANYTHING OTHER THAN AN OBJECT OF GENERAL PUBLIC UTILITY. IT IS AXI OMATIC TO SAY THAT A COMPLETE INTEGRATED DEVELOPMENT OF EVERY MEMBER OF THE COMMUNITY WOULD CERTAINLY BE BENEFICIAL TO THE COMMUNITY. THE COMMUNITY IS AFTER ALL NOTHING BUT A CONGLOMERATION OF THE MEMBERS AND A PURPOSE WHICH IS CALCULATED TO BRING ABOUT COMPLE TE DEVELOPMENT OF ALL ASPECTS OF LIFE OF EVERY MEMBER OF THE COMMUNITY WOULD CERTAINLY BE OF IMMENSE BENEFIT TO THE COMMUNITY. . . . WITH THESE OBSERVATIONS, GUJARAT HIGH COURT UP HELD THE DECISION OF THE APPELLATE TRIBUNAL GRANTING EXEMPTION TO THE TRUST UNDER SECT ION 11(1)(A). THE APPEAL AGAINST THIS JUDGMENT WAS ALSO DISMISSED BY THE SUPREME COURT IN CIT V. AHMEDABAD RANA CASTE ASSOCIATION [1983] 140 ITR 1. 17. IN ADDL. CIT V. SURAT ART SILK CLOTH MFRS. ASSOCIA TION [1980] 121 ITR 1 1 (SC), THE OBJECTS OF THE ASSOCIATION WERE (A) TO PROMOTE COM MERCE AND TRADE IN ART SILK YARN, RAW SILK, COTTON YARN, ART SILK CLOTH, SILK CLOTH AND C OTTON CLOTH; (B) TO CARRY ON ALL AND ANY OF THE BUSINESS OF ART SILK YARN, RAW SILK, COTTON YAR N, AS WELL AS ART SILK CLOTH, SILK CLOTH AND COTTON CLOTH, BELONGING TO AND ON BEHALF OF ITS MEM BERS; (C) TO OBTAIN IMPORT LICENCES FOR IMPORT OF ART SILK YARN, RAW SILK, COTTON YARN, AND OTHER RAW MATERIALS AS WELL AS ACCESSORIES REQUIRED BY ITS MEMBERS FOR THE MANUFAC TURE OF ART SILK, SILK AND COTTON FABRICS; (D) TO OBTAIN EXPORT LICENCES AND EXPORT C LOTH MANUFACTURED BY THE MEMBERS; (E) TO BUY AND SELL AND DEAL IN ALL KINDS OF CLOTH AND OTHER GOODS AND FABRICS BELONGING TO AND ON BEHALF OF THE MEMBERS;... (N) TO DO ALL OTHER LA WFUL THINGS AS ARE INCIDENTAL OR CONDUCIVE TO THE ATTAINMENT OF THE ABOVE OBJECTS. THE INCOME AND PROPERTY OF THE ASSOCIATION WERE LIABLE TO BE APPLIED SOLELY AND EX CLUSIVELY FOR THE PROMOTION AND THE OBJECTS SET OUT IN THE MEMORANDUM AND NO PART OF SU CH INCOME OR PROPERTY COULD BE DISTRIBUTED AMONG THE MEMBERS. IT IS MATERIAL TO NO TE THAT BEFORE THE AMENDMENT OF FINANCE ACT, 1983 W.E.F. 1-4-1984, THE DEFINITION O F CHARITABLE PURPOSE WAS THUS : 2.(15) CHARITABLE PURPOSE INCLUDES RELIEF OF THE POOR, EDUCATION, MEDICAL RELIEF, AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC U TILITY NOT INVOLVING THE CARRYING ON OF ANY ACTIVITY FOR PROFIT. [EMPHASIS SUPPLIED] (P. 3 6) 13 ITA NO.1540-42/K/2013 SHAMBHALA CHARTIABLE TRUST AYS 2007-08 TO 2009-1 0 WORDS NOT INVOLVING CARRYING ON OF ANY ACTIVITY FO R PROFIT WERE OMITTED W.E.F. 1-4-1984. WITH REFERENCE TO THESE WORDS, THEIR LORDSHIPS OF T HE SUPREME COURT INSURAT ART SILK CLOTH MFRS. ASSOCIATIONS CASE (SUPRA) OBSERVED AS FOLLOWS : . . .THE TEST WHICH HAS, THEREFORE, NOW TO BE APPL IED IS WHETHER THE PREDOMINANT OBJECT OF THE ACTIVITY INVOLVED IN CARRYING OUT THE OBJECT OF GENERAL PUBLIC UTILITY IS TO SUBSERVE THE CHARITABLE PURPOSE OR TO EARN PROFIT. WHERE PROFIT- MAKING IS THE PREDOMINANT OBJECT OF THE ACTIVITY, THE PURPOSE, THOUGH AN OBJECT OF GENERAL PUBLIC UTILITY, WOULD CEASE TO BE A CHARITABLE PURPOSE. BUT WHERE THE PREDOMINANT OBJEC T OF THE ACTIVITY IS TO CARRY OUT THE CHARITABLE PURPOSE AND NOT TO EARN PROFIT, IT WOULD NOT LOSE ITS CHARACTER OF A CHARITABLE PURPOSE MERELY BECAUSE SOME PROFIT ARISES FROM THE ACTIVITY. THE EXCLUSIONARY CLAUSE DOES NOT REQUIRE THAT THE ACTIVITY MUST BE CARRIED ON IN SUCH A MANNER THAT IT DOES NOT RESULT IN ANY PROFIT. IT WOULD INDEED BE DIFFICULT FOR PERSON S IN CHARGE OF A TRUST OR INSTITUTION TO SO CARRY ON THE ACTIVITY THAT THE EXPENDITURE BALANCES THE INCOME AND THERE IS NO RESULTING PROFIT. THAT WOULD NOT ONLY BE DIFFICULT OF PRACTIC AL REALISATION BUT WOULD ALSO REFLECT UNSOUND PRINCIPLE OF MANAGEMENT. WE, THEREFORE, AGR EE WITH BEG., J. WHEN HE SAID IN SOLE TRUSTEE, LOKA SIKHSANA TRUSTS CASE [1975] 101 ITR 234, 256 (SC) THAT : IF THE PROFITS MUST NECESSARILY FEED A CHARITABLE PURPOSE UNDER THE TERMS OF THE TRUST, THE MERE FACT THAT THE ACTIVITIES OF THE TRUST YIELD PR OFIT WILL NOT ALTER THE CHARITABLE CHARACTER OF THE TRUST. THE TEST NOW IS, MORE CLEARLY THAN IN THE PAST, THE GENUINENESS OF THE PURPOSE TESTED BY THE OBLIGATION CREATED TO SPEND THE MONEY EXCLUSIVELY OR ESSENTIALLY ON CHARITY. THE LEARNED JUDGE ALSO ADDED THAT THE RESTRICTIVE C ONDITION THAT THE PURPOSE SHOULD NOT INVOLVE THE CARRYING ON OF ANY ACTIVITY FOR PROFIT WOULD BE SATISFIED IFPROFIT-MAKING IS NOT THE REAL OBJECT. WE WHOLLY ENDORSE THESE OBSERVATI ONS. [EMPHASIS SUPPLIED] (P. 25) THEIR LORDSHIPS FURTHER OBSERVED AS FOLLOWS : THE APPLICATION OF THIS TEST MAY BE ILLUSTRATED BY TAKING A SIMPLE EXAMPLE. SUPPOSE THE GANDHI PEACE FOUNDATION WHICH HAS BEEN ESTABLISHED FOR PROPAGATION OF GANDHIAN THOUGHT AND PHILOSOPHY WHICH WOULD ADMITTEDLY BE AN OBJECT OF GENERAL PUBLIC UTILITY, UNDERTAKES PUBLICATION OF A MONTHLY JOURNAL FOR THE PURPOSE OF CARRYING OUT THIS CHARITABLE OBJECT AND CHARGES A SMALL PRICE WHICH IS MORE THAN THE COST OF THE PUBLICATION AND LEAVES A LITTLE PROFIT, WOULD IT DEPRIVE THE GANDHI PEACE FOUNDATION OF ITS CHARITABLE CHARACTER? THE PRICING OF THE MONTHLY JOURNAL WOULD UNDOUBTEDL Y BE MADE IN SUCH A MANNER THAT IT LEAVES SOME PROFIT FOR THE GANDHI PEACE FOUNDATION, AS, INDEED, WOULD BE DONE BY ANY PRUDENT AND WISE MANAGEMENT, BUT THAT CANNOT HAVE T HE EFFECT OF POLLUTING THE CHARITABLE CHARACTER OF THE PURPOSE, BECAUSE THE PREDOMINANT O BJECT OF THE ACTIVITY OF PUBLICATION OF THE MONTHLY JOURNAL WOULD BE TO CARRY OUT THE CHARI TABLE PURPOSE BY PROPAGATING GANDHIAN THOUGHT AND PHILOSOPHY AND NOT TO MAKE PRO FIT OR, IN OTHER WORDS, PROFIT-MAKING WOULD NOT BE THE DRIVING FORCE BEHIND THIS ACTIVITY . . . . (P. 26) THEIR LORDSHIPS DISMISSED THE APPEAL OF REVENUE AGA INST THE ORDER OF THE APPELLATE TRIBUNAL GRANTING EXEMPTION FROM INCOME-TAX TO THE RESPONDENTS. 18. IT IS MATERIAL TO NOTE THAT AFTER THE AMENDMENT WI TH EFFECT FROM 1-4-1984, EVEN THE WORDS NOT INVOLVING CARRYING ON OF ANY ACTIVITY FO R PROFIT ARE OMITTED. THEREFORE, EVEN IF SOME ACTIVITY OF THE TRUST IS FOR PROFIT BUT THE PR EDOMINANT PURPOSE OF THE TRUST IS CHARITABLE, IT DOES NOT LOSE ITS CHARACTER, MERELY BECAUSE IT IS MAKING SOME PROFIT. MR. INAMDAR, RIGHTLY CONTENDED THAT THE EXEMPTION FROM INCOME-TAX GRANTED UNDER SECTION 11 ITSELF STIPULATES THAT THE TRUST MAY MAKE SOME INCO ME BY ITS ACTIVITY; HOWEVER, THE LEGISLATURE WANTED TO EXEMPT SUCH INCOME FROM INCOM E-TAX IF IT IS BEING USED FOR CHARITABLE PURPOSES. 14 ITA NO.1540-42/K/2013 SHAMBHALA CHARTIABLE TRUST AYS 2007-08 TO 2009-1 0 12. FROM THE ABOVE CASE LAW OF HONBLE BOMBAY HIGH COURT IN THE CASE OF RAJNEESH FOUNDATION (SUPRA) THE MEANING OF WORDS ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY HAS BEEN SUBJECT OF DISCUSSION AND ADJUDICA TION. HONBLE HIGH COURT HAS DISCUSSED THE DEFINITION OF CHARTABLE PURPOSE U/S.2(15) OF THE AC T INCLUDES THE WORDS ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY AND ADMITTED LY IN THE PRESENT CASE THE OBJECTS CLAIMS THE ACTIVITIES OF THE TRUST ARE FOR THE ADVANCEMENT OF OBJECTS LIKE THE TEACHINGS OF BUDDHA TO SPREAD AND FOR THAT PURPOSE THE ASSESSEE HAS CLAIMED APPLI CATION OF INCOME TOWARDS CONSTRUCTION OF STUDY AND RESEARCH CENTRE FOR HIGHER BUDDHIST STUDY INCLUDING CONSTRUCTION OF BUDDHIST TEMPLE. SINCE INCEPTION THE ASSESSEE TRUST IS PURSUING THE ACTIVITIES CONNECTED OR ASSOCIATED WITH PREACHING, SPREADING AND DISSEMINATING THE IDEAS, I DEALS AND THE TEACHINGS OF LORD BUDDHA. CONSIDERING THE NEED FOR SPREADING THE IDEAS AND TE ACHINGS OF LORD BUDDHA TO THE PERSONS OF EVERY WALK OF LIFE AND INSTITUTION FOR HIGHER BUDDH IST LEARNING WAS SET UP. IN THE EYES OF THE ORDINARY FOLKS, THE PLACES WHERE THE BUDDHIST DISCO URSES ARE HELD ARE REGARDED AS TO BE RELIGIOUS PLACES. SIDE BY SIDE, THE ASSESSEE TRUST ALSO CONS TRUCTED A SMALL TEMPLE AND IN PERCENTAGE TERMS THE TEMPLE AREA COMPRISED IN THE BUILDING CONSTRUCT ED WAS BARELY 3.05% OF THE TOTAL AREA. IT IS ALSO A TEMPLE AND ASSESSEE TRUST IS PERFORMING RELI GIOUS FUNCTIONS AND IT IS ESTABLISHED FOR CHARITABLE PURPOSES. THE PRESENT TRUST WAS FOR TH E HIGHER BUDDHIST STUDY AND RESEARCH CENTRE TO PROPAGATE THE BUDDHA THOUGHT AND PHILOSOPHY WHICH W OULD ADMITTEDLY BE AN OBJECT OF GENERAL PUBLIC UTILITY. BE IT A CONSTRUCTION OF TEMPLE WHI CH IS A RELIGIOUS ACTIVITY OR CONSTRUCTION OF INSTITUTE FOR HIGHER BUDDHIST LEARNING WHICH IS FOR THE OBJECT OF GENERAL PUBLIC UTILITY, BOTH QUALIFIES FOR EXEMPTION UNDER SECTION 11 OF THE ACT . IN VIEW OF THE ABOVE FACTS AND CASE LAWS OF HONBLE SUPREME COURT AND VARIOUS HIGH COURTS, WE A LLOW EXEMPTION U/S. 11 OF THE ACT TO THE ASSESSEE TRUST AND REVERSE THE ORDERS OF THE LOWER AUTHORITIES. 13. IN THE RESULT, APPEALS OF ASSESSEE ARE ALLOWED. 14. ORDER IS PRONOUNCED IN THE OPEN COURT ON 05.08. 2014. SD/- SD/- , ! , (SHAMIM YAHYA ) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 05 TH AUGUST, 2014 ,- #./ 0 JD.(SR.P.S.) 15 ITA NO.1540-42/K/2013 SHAMBHALA CHARTIABLE TRUST AYS 2007-08 TO 2009-1 0 1 *2 3 2%4- COPY OF THE ORDER FORWARDED TO: 1 . () / APPELLANT SHAMBHALA CHARITABLE TRUST, BOKAR, NGED HON, CHOEKHOR LING, DEOSI DHARI, P.O.MERIK, DIST. DARJEE LING 2 *+() / RESPONDENT ITO, WARD-2, DARJEELING 3 . # ( )/ THE CIT(A), KOLKATA 4. 5. # / CIT KOLKATA 2:; *# / DR, KOLKATA BENCHES, KOLKATA +2 */ TRUE COPY, #