ACIT, Nashik V. Shri RAM ASHRAM TRUST, Nashik

ITA 1559/PUN/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1057 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 11-07-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 05-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K RASTOGI
• Keywords: Capital asset; Gift; Charitable institution; Cost of acquisition; Assessment record
• Section: 143(3); 2(14); 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE PUNE BENCH A , PUNE , . . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI R.K. PANDA, AM . / ITA NO S . 1 558 & 1 559 /PN/20 1 3 / ASSESSMENT YEAR S : 200 8 - 0 9 & 20 1 0 - 1 1 THE ASST. COMMISSIONER OF INCOME TAX, THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 3(1), DHULE . / APPELLANT VS. SHREE RAM ASHRAM TRUST, 1 ST FLOOR, THE PRESIDENCY, OLD AGRA ROAD, NEAR KA LIKA MANDIR, NASHIK 422002 . / RESPONDENT PAN: AACTS4223K PAN: AACTS4223K / APPELLANT BY : S HRI S.K. RASTOGI, CIT / RESPOND ENT BY : SHRI SANKET JOSHI / DATE OF HEARING : 11 .0 7 .201 6 / DATE OF PRONOUNCEMENT: 26 . 0 8 .201 6 / ORDER / ORDER PER SUSHMA CHOWLA, JM: BOTH THE APPEAL S FILED BY THE REVENUE ARE AGAINST SEPARATE ORDER S OF CIT (A) - I , NASHIK , BOTH DATED 1 4 . 0 5 .201 3 RELATING TO ASSESSMENT YEAR S 200 8 - 0 9 AND 20 1 0 - 1 1 AGA INST THE RESPECTIVE ORDERS PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) . ITA NO S. 1 558 & 1 559 /PN/201 3 SHRI RAM ASHRAM TRUST 2 2. BOTH THE APPEALS RELATING TO THE SAME ASSESSEE ON IDENTICAL ISSUE S WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED OR DER FOR THE SAKE OF CONVENIENCE. HOWEVER, REFERENCE IS BEING MADE TO THE FACTS IN ITA NO.1 558 /PN/201 3 TO ADJUDICATE THE ISSUE. 3 . THE REVENUE IN ITA NO. 1 558 /PN/201 3 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. WHETHER ON THE FACTS AND IN THE CIRCUMS TANCES OF THE CASE, THE LD.CIT(A) - I, NASHIK WAS JUSTIFIED TO HELD THAT THE TRUST IS ELIGIBLE FOR DEDUCTION U/S 11(1A) OF THE INCOME TAX ACT, 1961 IN RESPECT OF CAPITAL GAIN ON SALE OF LAND. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) - I, NASHIK IS JUSTIFIED TO HOLD THAT THE DONATION MADE TO THE OTHER TRUST IS IN ACCORDANCE WITH THE TRUST DEED. 3. THE APPELLANT PRAYS THE ORDER OF THE ASSESSING OFFICER MAY BE RESTORED. 4. THE APPELLANT PRAYS TO ADDUCE SUCH FURTHER EVIDENCE TO SUBSTANTIATE HIS CASE. 4. THE GRIEVANCE OF THE REVENUE VIDE PRESENT GROUNDS OF APPEAL IS AGAINST THE 4. THE GRIEVANCE OF THE REVENUE VIDE PRESENT GROUNDS OF APPEAL IS AGAINST THE ORDER OF CIT(A) IN HOLDING THAT THE TRUST WAS ELIGIBLE FOR DEDUCTION UNDER SECTION 11(1A) OF THE ACT IN RESPECT OF CAPITAL GAINS ARISING ON SALE OF LAND AND ALSO IN HOLDING THAT THE DONATION MADE TO OTHER TRUST WAS IN ACCORDANCE WITH THE TRUST DEED . 5. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE HAD FURNISHED RETURN OF INCOME ON 26.07.2010 OUT OF TIME WHICH WAS TO BE FILED ON OR BEFORE 31.07.2008 . A S PER PROVISIONS OF SECTION 139(1) OF THE ACT , THE RETURN OF INCOME FILED BY THE ASSESSEE WAS HELD TO BE NON - EST . THE ASSESSING OFFICER NOTED THAT AS PER PROVISIONS OF SECTION 139(4A) OF THE ACT, IT WAS MANDATORY UPON THE TRUST TO HAVE FILED ITS RETURN OF INCOME WITHIN THE TIME ALLOWED UNDER SECTION 139 OF THE ACT. ON GOING THROUGH THE ASSESSMENT RECORDS AND THE FINANCIAL STATEMENTS ACCOMPANYING THE RETURN OF INCOME FOR THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2007 - 08, ITA NO S. 1 558 & 1 559 /PN/201 3 SHRI RAM ASHRAM TRUST 3 THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD CLAIMED LOSS ON ACCOUNT OF TRANSFER OF LAND AT POWAI, MUMBAI AT RS.32.45 LA KH S IN ASSESSMENT YEAR 2008 - 09. THE INDEXED COST OF SAID PROPERTY PURCHASED DURING THE FINANCIAL YEAR 1981 - 82 AT RS.6,61,000/ - WAS ADOPTED AT RS.1.20 CRORES WHILE COMPUTING CAPITAL LOSS. HOWEVER, IN THE RETURN OF INCOME FILED FOR ASSESSMENT YEAR 2007 - 08, NO SUCH ASSETS WERE REFLECTED IN THE BALANCE SHEET OF TRUST AS ON 31.03.2007. THE RETURN OF INCOME FOR ASSESSMENT YEAR 2007 - 08 WAS ALSO FILED ON 26.07.2010, WHIC H WAS HELD TO BE NON - EST RETURN BY THE ASSESSING OFFICER. THE ASSESSING OFFICER WAS OF THE VIEW THAT INDEXED COST OF ACQUISITION WAS WRONGLY ADOPTED AT RS.1.20 CRORES. FURTHER, AS ON 31.03.2007, THE ASSESSEE WAS HOLDING LAND AT KOPARI AND CHANDIVA AT RS. 1,73,380/ - . HOWEVER, NO SUCH LAND WAS SHOWN IN THE BALANCE SHEET AS ON 31.03.2008 AND AS PER THE ASSESSING OFFICER, THE SAME INDICATED THAT THE ABOVE MENTIONED LAND WAS TRANSFERRED BY THE TRUST DURING THE YEAR UNDER CONSIDERATION, HOWEVER, ON THIS ACCOUNT , NO CAPITAL GAIN / LOSS WAS SHOWN. THEREFORE, THE ASSESSING OFFICER RECORDED REASONS FOR REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE ACT AND NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED ON 27.09.2011. DURING THE ASSESSMENT PROCEEDINGS, THE ASSES SING OFFICER NOTED THAT THE ASSESSEE TRUST WAS DERIVING INCOME FROM OTHER SOURCES AND WHEREIN THE ASSESSEE HAD SHOWN THE RECEIPTS AT RS. 41,74,965/ - AND SHOWN SURPLUS OF RS. 15,69,737/ - AFTER CLAIMING EXPENDITURE OF RS.26,05,228/ - , OUT OF GROSS RECEIPTS, AS PER INCOME & EXPENDITURE ACCOUNT. THE BOOKS OF ACCOUNT AND OTHER DOCUMENTS WERE CHECKED BY THE ASSESSING OFFICER. THE ASSESSEE WAS ASKED TO SUBMIT THE PROOF OF SALE AND PURCHASE OF PROPERTY. THE ASSESSEE FURNISHED COPY OF ORDER OF CHARITY COMMISSIONER D ATED 29. 1 2.1995, WHERE SANCTION WAS GRANTED FOR SALE OF IMMOVABLE PROPERTY OF THE TRUST IN SURVEY NO.2(PART), SITUATED AT VILLAGE KOBARI AND LAND IN SURVEY NO.6 (PART), SITUATED AT VILLAGE CHANDIWALI IN POWAI STATE OF 4087 SQ.MTRS. IN FAVOUR OF M/S. BUILDF ORCE PROPERTIES PVT. LTD. FOR LUMP SUM AMOUNT OF ITA NO S. 1 558 & 1 559 /PN/201 3 SHRI RAM ASHRAM TRUST 4 RS.6.30 CRORES. AS PER PARA 2 OF THE ORDER, THE CONDITION WAS LAID DOWN THAT THE SALE SHALL BE EXECUTED WITHIN PERIOD OF ONE YEAR FROM THE DATE OF THIS ORDER. THUS, THIS LAND WAS AGREED TO BE SOLD IN 1995 FOR A SUM OF RS.6.30 CRORES. ON PERUSAL OF RECORDS FOR ASSESSMENT YEAR 2009 - 10, IT WAS SEEN THAT THE ASSESSEE HAD SUBMITTED A COPY OF ORDER DATED 05.04.2007 OF THE CHARITY COMMISSIONER, WHERE THE TIME LIMIT PROVIDED IN ITS EARLIER ORDER WAS EXTENDED FOR T HE CONVEYANCE DEED TO BE EXECUTED BY THE TRUST , THE VENDOR IN FAVOUR OF THE DEFENDANTS M/S. BUILDFORCE PROPERTIES PVT. LTD.S NOMINEE M/S. DILIP ESTATE & TOWN PLANNERS PVT. LTD., IN ACCORDANCE WITH CONSENT TERMS FILED BEFORE THE HONBLE HIGH COURT. THE HO NBLE HIGH COURT VIDE ITS ORDER DATED 25.07.2006 IN SUIT NO.2395 OF 1998, WHEREIN THE ASSESSEE WAS PLAINTIFF AND M/S. BUILDFORCE PROPERTIES PVT. LTD. WAS DEFENDANT, VIDE PARA 3 HAD MENTIONED THAT BOTH THE PLAINTIFF AND DEFENDANT HAVE ENTERED INTO CONSENT T ERMS AND HAVE AGREED TO ACCEPT SUM OF RS. 6.28 CRORES BEING FULL AND FINAL SETTLEMENT AS PER CONSENT TERMS. THE SAID PROPERTY HAD BEEN ALLOWED TO BE RETAINED IN THE POSSESSION OF DEFENDANT IN 1998 WHEN THE SUIT WAS FILED. THUS, AFTER 12 YEARS, THE PROPERT Y WHICH WAS HELD IN POSSESSION OF M/S. BUILDFORCE PROPERTIES PVT. LTD. WAS AGREED TO BE TRANSFERRED BY THE TRUST TO THE SAID COMPANY AT THE SAME PRICE WHICH HAD BEEN AGREED TO IN 1995 IGNORING THE APPRECIATION IN THE PROPERTY. IN VIEW THEREOF, THE HONBLE HIGH COURT DID NOT GIVE ANY DECISION IN THE CASE. THE ASSESSING OFFICER VIDE PARA 4.3 OBSERVED THAT THE SALE PRICE WAS FIXED AT RS.6.28 CRORES IN 1995 BUT THE PROPERTY WAS ULTIMATELY SOLD AT THE SAME VALUE AFTER 12 YEARS IN THE YEAR 2007. THE PROPERTY W AS HELD IN THE POSSESSION OF THE COMPANY M/S. BUILDFORCE PROPERTIES PVT. LTD. , BUT EVENTUALLY SOLD TO THE GROUP CONCERN M/S. DILIP ESTATE & TOWN PLANNERS PVT. LTD. AT THE SAME PRICE. REGARDING THE TAXABILITY OF CAPITAL GAINS, THE ASSESSEE PLACED RELIANCE ON CBDTS INSTRUCTION NO.883, DATED 24.09.1975 TO CLAIM THAT THE CAPITAL GAINS ON AN ASSET HELD FOR CHARITY PURPOSE, IF INVESTED IN FD WOULD BE ELIGIBLE FOR EXEMPTION UNDER SECTION ITA NO S. 1 558 & 1 559 /PN/201 3 SHRI RAM ASHRAM TRUST 5 11(1 A ) OF THE ACT. THE ASSESSING OFFICER HAD HIGHLIGHTED THAT THE COST OF PURCHASE CLAIMED AT RS.12 LAKHS AS ON 01.04.1981 FOR COMPUTATION OF CAPITAL GAINS COULD NOT BE EXPLAINED BY THE ASSESSEE REGARDING ITS QUANTIFICATION. HOWEVER, IN THE BALANCE SHEET FOR ASSESSMENT YEAR 2007 - 08 ONLY SUM OF RS. 48,380/ - WAS SHOWN AGAINST THIS AMOUNT AND NO OTHER COST WAS SHOWN, HENCE THE COST OF ACQUISITION OF ASSET AS ON 01.04.1981 WAS HELD BY THE ASSESSING OFFICER NOT TO HAVE BEEN SUBSTANTIATED BY THE ASSESSEE AND IT WAS ALSO NOT CLEAR WHETHER THE LAND WAS OWNED / RECEIVED BY TRANSFER, ETC. BY THE ASSESSEE AS ON 01.04.1981, HENCE, THE BENEFIT OF INDEXATION WAS NOT GIVEN TO THE ASSESSEE. SINCE THE SAID ASSET FOR THE PAST 12 YEARS WAS IN POSSESSION OF M/S. BUILDFORCE PROPERTIES PVT. LTD., THE ASSESSING OFFICER OBSERVED THAT THE ASSET COULD NOT BE SAID TO HAVE BEEN HELD FOR THE PURPOSE OF CHARITY PURPOSE. REFERENCE WAS MADE TO THE PROVISIONS OF SECTION 11(1A)(A) OF THE ACT , WHEREIN IT IS PROVIDED THAT THE PROPERTY SHOULD BE HELD UNDER TRUST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES , ONLY THEN IF ANY PART OF THE NET CONSIDERATION DERIVED FROM SALE OF SAID PROPERTY IS UTILIZED FOR ACQUIRING ANOTHER CAPITAL ASSET, IT SHALL BE DEEMED TO HAVE BEEN APPLIED FOR CHARITABLE OR RELIGIOUS PURPOSES. THE ASSESSING OFFICER THUS, HELD THAT WHERE THE ASSET W AS NOT HELD UNDER THE TRUST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSE ON THE DATE OF TRANSFER, THEREFORE, IN VIEW OF DIRECT PROVISIONS, THE AMOUNT OF RS.6.30 CRORES WAS TO BE ADDED AS INCOME OF THE TRUST. NO EXEMPTION CLAIMED UNDER SECTION 11(1A) OF THE ACT WAS HELD TO BE ALLOWABLE TO THE ASSESSEE . I N THE ABSENCE OF THE ASSESSEE ESTABLISHING THE COST OF ACQUISITION WITH EVIDENCE AND IN VIEW OF DISCREPANCY, THE COST OF PROPERTY WAS TAKEN AT NIL AND THE ADDITION WAS MADE TO THE EXTENT OF RS.6.30 CRORES. 6. THE SECOND ASPECT NOTED BY THE ASSESSING OFFICER WAS THE APPLICATION OF INCOME OF ASSESSEE TRUST. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD ITA NO S. 1 558 & 1 559 /PN/201 3 SHRI RAM ASHRAM TRUST 6 GIVEN DONATION OF RS.20 LAKHS TO NEMICHAND JAIN TRUST, CHANDWAD, DIST. NASHIK. THE ASSESSING OFFICER H ELD THAT IN VIEW OF OBJECTS OF THE ASSESSEE TRUST, IT COULD NOT BE SAID THAT THE TRUST HAS APPLIED FOR ACCUMULATION OF FUNDS. THE ASSESSING OFFICER FURTHER HELD THAT WHERE THE ASSESSEE HAD NOT COMPLIED WITH THE PROVISIONS OF SECTION 11(1A) OF THE ACT, ADD ITION OF RS.20 LAKHS IS TO BE MADE IN THE HANDS OF ASSESSEE. 7. IN APPEAL BEFORE THE CIT(A), THE ASSESSEE EXPLAINED THAT IT HAD SOLD CAPITAL ASSET AND DEPOSITED SALE PROCEEDS IN FD WITH NATIONALIZED BANK AND CO - OPERATIVE BANK, WHICH WAS ALSO APPLICATION O F MONEY AS PER CBDT INSTRUCTION NO.883, DATED 24.09.1975 . THE SAID INVESTMENT IN TERM DEPOSIT WAS MADE AS PER DIRECTIONS OF CHARITY COMMISSIONER AND THE SAME AMOUNTED TO APPLICATION OF INCOME UNDER SECTION 11(1A) OF THE ACT. THE ASSESSEE FURTHER EXPLAINE D THAT THE IMPUGNED LAND WAS RECEIVED BY THE TRUST AS DONATION IN THE YEAR 1972 . THEREAFTER , IN ORDER TO MAKE LEASE OF THE TRUST PROPERTY FOR CHARIT ABLE PURPOSES, THE PERMISSION OF CHARITY COMMISSIONER UNDER THE BOMBAY PUBLIC TRUST ACT, WAS OBTAINED AS PE R ORDER DATED 29. 1 2.1995, TO SELL THE IMPUGNED PROPERTY FOR CONSIDERATION OF RS.6.30 CRORES. HE FURTHER EXPLAINED THAT THERE WAS DISPUTE WITH THE SAID PURCHASER AND THE MATTER WAS IN COURT UPTO THE YEAR 2007 . THEREAFTER, THE CHARITY COMMISSIONER HAD EXTE NDED THE TIME LIMIT ALLOWED AS PER EARLIER PERMISSION VIDE ORDER DATED 05.04.2007 AND THE DEAL WAS FINALIZED AS PER THE CONSENT TERMS AS FILED BEFORE THE HONBLE HIGH COURT AND THERE WAS DELAY OF 12 YEARS IN SELLING THE LAND, WHICH WAS NOT ATTRIBUTABLE TO THE TRUST. THE CIT(A) ACCEPTING THE PLEA OF ASSESSEE THAT WHERE THE LAND HAD BEEN SOLD AS PER PERMISSION GIVEN BY THE CHARITY COMMISSIONER SUBJECT TO THE CONDITION THAT THE SALE PROCEEDS WOULD BE INVESTED IN FIXED DEPOSITS, HENCE UTILIZED FOR CHARITABLE O BJECTS OF THE TRUST, HELD THAT AS PER THE PROVISIONS OF SECTION 11(1A) OF THE ACT , T HE CAPITAL GAINS ARISING FROM THE TRANSFER OF ITA NO S. 1 558 & 1 559 /PN/201 3 SHRI RAM ASHRAM TRUST 7 LAND SHALL BE DEEMED TO HAVE BEEN APPLIED FOR CHARITABLE OR RELIGIOUS PURPOSES. THE CIT(A) ALSO OBSERVED THAT THE DELAY OF 12 YEARS IN EFFECTING THE SALE OF LAND WAS NOT ATTRIBUTABLE TO ASSESSEE TRUST. CO MING TO THE OBJECTIONS OF ASSESSING OFFICER THAT THE IMPUGNED PROPERTY WAS IN POSSESSION OF PURCHASER AND WAS NOT UTILIZED FOR CHARITABLE PURPOSE BY THE ASSESSEE AS REQUIRED UN DER SECTION 11(1A) OF THE ACT FOR CLAIMING THE DEDUCTION, THE CIT(A) HELD THAT THE CONTENTION OF ASSESSING OFFICER IN THIS REGARD WAS INCORRECT AS THE POSSESSION OF PROPERTY WITH M/S. BUILDFORCE PROPERTIES PVT. LTD. WAS NOT LEGAL POSSESSION, WHERE THE PURC HASER HAD NOT FULFILLED LEGAL OBLIGATIONS AND THEREFORE, THE OWNERSHIP OF IMPUGNED PROPERTY WAS LEGALLY WITH THE ASSESSEE. THE REASONS STATED BY THE ASSESSING OFFICER FOR DENYING THE DEDUCTION UNDER SECTION 11 (1A) OF THE ACT TO THE TRUST WERE FOUND TO BE INCORRECT AND WERE REJECTED BY THE CIT(A). THE CIT(A) FURTHER HELD AS UNDER: - THE PROVISIONS O F SECTION 11 (1A) DO NOT CLARIFY THAT WHAT IS CAPITAL ASSET AND WHETHER THE CAPITAL GAIN ON SALE OF IMMOVABLE PROPERTY INVESTED IN FIXED DEPOSIT WITH BANKS I.E. AN INVESTMENT PERMITTED BY BOMBAY PUBLIC TRUSTS ACT IS ALSO A CAPITAL ASSET. HOWEVER; IN VIEW OF DEFINITION OF CAPITAL ASSET IN SECTION 2(14) THE FIXED DEPOSITS WITH BANK ARE TO BE TREATED AS CAPITAL ASSET. FURTHER AS PER FIXED DEPOSITS WITH BANK ARE TO BE TREATED AS CAPITAL ASSET. FURTHER AS PER INSTRUCTION OF CBDT NO.883 - F. NO .180/34/72 - IT (A 1 ) D A TED 25/9/1975, F IXED DEPOSIT WITH BANK FOR A PERIOD EXCEEDING 6 MONTHS CAN BE CONSIDERED TO BE CAPITAL ASSET. IT HAS ALSO BEEN NOTICED THAT THE CALCUTTA HIGH COURT HAS HOWEVER HELD EVEN FIXED DEPOSITS W ITH BANKS FOR 60 DAYS TO BE CAPIT AL ASSETS IN THE CASE OF CIT VS. HINDUSTAN WELFARE TRUST (1993 ) 70 TAXMAN 93 AND THE TRIBUNAL HAS CONSIDERED A FIXED DEPOSIT WITH A BANK FOR 3 MONTHS AS A CAPITAL ASSET, REFUSING REFERENCE TO 'HIGH COURT (R.A.NO.961/(BOM)/1980, 'B' BENCH, BOMBAY, BCA JOURN AL FEBRUARY, 1981, PAGE 118), FIXED DEPOSITS WITH BANKS HAVE ALSO BEEN CONSIDERED TO BE CAPITAL ASSETS BY THE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. DAMODAR KALYANJI MERMORIAL TRUST (IT REFERENCE NO.101 O 1983, DATED 22/03/1989 AND BY THE TRIBUNAL IN I TO VS. ESTATE OF N.C. VASANTHA KOKLAM (TRUST)(1981) 20 CTR (TRIB) 22. IN VIEW OF THE ABOVE FACTS AND DISCUSSION, I AM OF THE CONSIDERED VIEW THAT THE APPELLANT TRUST IS ELIGIBLE FOR DEDUCTION U/S 11(1A) OF THE ACT IN RESPECT OF INVESTMENT OF CAPITAL GAIN ON SALE OF LAND IN FIXED DEPOSIT WITH BANKS. THE ADDITION OF RS.6,30,00,000/ - MADE BY THE A.O., ON ACCOUNT OF CAPITAL GAIN IS THEREFORE DELETED. GROUND NOS.1 & 2 ARE ALLOWED. 8. THE CIT(A) FURTHER DEALT WITH THE SECOND ISSUE WITH REGARD TO DONATION GIV EN TO ANOTHER TRUST BY THE ASSESSEE AMOUNTING TO RS.20 LAKHS. THE CIT(A) IN THIS REGARD NOTED THE INSTRUCTION OF CBDT ON THIS ISSUE AND OBSERVED AS UNDER: - ITA NO S. 1 558 & 1 559 /PN/201 3 SHRI RAM ASHRAM TRUST 8 6.2 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE ASSESSMENT ORDER , LEGAL POSITION ON THE ISSUE AND THE RIVAL CONTENTIONS. THE CONTENTION OF THE AO THAT THE PAYMENT OF DONATIONS TO OTHER CHARITABLE TRUSTS IS NOT SUPPORTED BY THE TRUST DEED IS NOT CORRECT. THE CBDT HAS ISSUED INSTRUCTION NO.1132 DATED 05/01/1978 WHICH STATES AS A QUESTION HA S BEEN RAISED REGARDING THE AVAILABILITY OF OTHER CHARITABLE TRUSTS. THE ISSUE HAS BEEN CONSIDERED BY THE BOARD AND IT HAS BEEN DECIDED THAT AS THE LAW STANDS AS PRESENT THE PAYMENT OF A SUM BY ONE CHARITABLE TRUST TO ANOTHER FOR UTILIZATION BY THE DON E E TRUST TOWARDS ITS CHARITABLE OBJECTS IS PROPER APPLICATION OF INCOME FOR CHARITABLE PURPOSE IN THE HANDS OF THE DONOR TRUST AND THE DONOR TRUST WILL NOT LOSE EXEMPTION UNDER SECTION 11, MERELY BECAUSE TRUST DID NOT SPEND THE DONATION DURING THE TEAR OF REC EIPT ITSELF. 9. THE CIT(A) THUS, HELD AS UNDER: - 6.2.1 IT IS WORTHWHILE TO NOTE HERE THAT AS PER THE INSTRUCTION OF BOARD, THE EXEMPTION SHALL NOT LOSE EVEN IF THE DONEE TRUST DID NOT SPENT THE DONATION RECEIVED DURING THE RELEVANT YEAR FOR THE CHARITAB LE PURPOSE. 10. THE CIT(A) ALLOWED THE CLAIM OF ASSESSEE HOLDING THAT THE DONATION TO A CHARITABLE TRUST WAS APPLICATION OF INCOME FOR CHARITABLE PURPOSES. 11. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 11. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 12. THE LEARNED DEPARTMENTAL REPRESENT ATIVE FOR THE REVENUE POINTED OUT THAT THE MEMORANDUM OF UNDERSTANDING WAS EXECUTED BY THE ASSESSEE IN 1994, COPY OF WHICH IS PLACED AT PAGES 37 TO 55 OF THE PAPER BOOK, UNDER WHICH THE SALE CONSIDERATION WAS FIXED AT RS. 6.30 CRORES. THEN REFERENCE WAS MA DE TO THE ORDER OF CHARITY COMMISSIONER ISSUED IN DECEMBER, 1995, COPY OF WHICH IS PLACED AT PAGES 20 AND 21 OF THE PAPER BOOK. AS PER THE SAID ORDER OF CHARITY COMMISSIONER , THE ASSESSEE WAS BOUND TO DEPOSIT THE ENTIRE SALE PROCEEDS IN FD WITH BANKS AND INTEREST WAS TO BE UTILIZED FOR CHARITABLE PURPOSES. HE FURTHER STATED THAT PURSUANT TO DISPUTE BETWEEN THE PARTIES, THE CHARITY COMMISSIONER APPROVED FURTHER TIME FRAME TO COMPLETE THE TRANSACTION VIDE ORDER DATED 05.04.2007. THE LEARNED DEPARTMENTAL RE PRESENTATIVE FOR THE REVENUE REFERRED TO THE LIST OF FD S AT PAGE 17 OF THE PAPER BOOK. IN THE TOTALITY OF THE ABOVE FACTS ITA NO S. 1 558 & 1 559 /PN/201 3 SHRI RAM ASHRAM TRUST 9 AND CIRCUMSTANCES, THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE POINTED OUT THAT THE PROVISIONS OF SECTION 11(1A) OF THE A CT COULD NOT BE APPLIED AND THE INCOME WAS CHARGEABLE TO TAX IN THE HANDS OF ASSESSEE. 13. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE REFERRED TO LIST OF FD S PLACED AT PAGE 82 OF THE PAPER BOOK AND POINTED OUT THAT FD S HA VE CONTINUED TILL 31 .03.2010. HE FURTHER POINTED OUT THAT THE ASSESSING OFFICER HAD DISALLOWED THE CLAIM OF ASSESSEE AS PHYSICAL POSSESSION OF THE SAID PROPERTY WAS WITH THE PURCHASER BUT THE ASSESSEE HAD LEGAL RIGHTS, WHICH WAS TRANSFERRED BY SALE DEED DATED 20.04.2007 . T H E RIGHT IN LAND WAS CAPITAL ASSET AND SINCE THE INCOME FROM CAPITAL GAINS ARISES IN THE INSTANT ASSESSMENT YEAR, SO THE DEDUCTION UNDER SECTION 11(1A) OF THE ACT IS TO BE ALLOWED TO THE ASSESSEE IN ASSESSMENT YEAR 2007 - 08. WITH RESPECT TO SECOND ISSUE RAI SED I.E. WITH REGARD TO DONATION TO ANOTHER TRUST, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE. 14. WE HAVE HEARD THE RIV AL CONTENTIONS AND PERUSED THE RECORD. THE FIRST ISSUE WHICH ARISES FOR ADJUDICATION BEFORE US IS WITH REGARD TO PROVISIONS OF SECTION 11(1A) OF THE ACT. THE ASSESSEE TRUST WAS GIFTED THE PROPERTY IN THE INITIAL YEARS WHICH WAS AGREED TO BE SOLD BY THE A SSESSEE AS PER MOU EXECUTED BETWEEN THE ASSESSEE AND M/S. BUILDFORCE PROPERTIES PVT. LTD. IN 1994, COPY OF SAID AGREEMENT IS PLACED AT PAGES 37 TO 55 OF THE PAPER BOOK. SINCE THE ASSESSEE WAS A TRUST, IT NEEDED PERMISSION FROM THE CHARITY COMMISSIONER BEF ORE DISPOSING OF ITS PROPERTY. THE ASSESSEE RECEIVED PERMISSION FROM THE CHARITY COMMISSIONER IN THIS REGARD VIDE ORDER DATED 29.12.1995, COPY OF WHICH IS PLACED AT PAGES 20 AND 21 OF THE PAPER BOOK. AS PER THE SANCTION GIVEN BY THE CHARITY COMMISSIONER, THE ITA NO S. 1 558 & 1 559 /PN/201 3 SHRI RAM ASHRAM TRUST 10 ASSESSEE COULD TRANSFER ITS PROPERTY SITUATED AT VILLAGE KOBARI AND LAND AT VILLAGE CHANDIWALI IN POWAI STATE OF 4087 SQ.MTRS. IN FAVOUR OF M/S. BUILDFORCE PROPERTIES PVT. LTD. FOR LUMP SUM OF RS.6.30 CRORES. FURTHER CONDITIONS IMPOSED BY THE CHARITY COMMISSIONER VIDE THE SAID ORDER ITSELF WERE THAT THE AMOUNT OF SALE PROCEEDS WERE TO BE HELD BY THE TRUST AS CORPUS AND TO BE INVESTED IN LONG TERM FIXED DEPOSITS OF ANY NATIONALIZED BANKS, SCHEDULED BANKS OR CO - OPERATIVE BANKS OR ANY PUBLIC SECURITIES E ARNING HIGHER RATE OF INTEREST. IT WAS ALSO DIRECTED THAT ONLY THE INTEREST THEREON MAY BE SPENT BY THE ASSESSEE ON THE OBJECTS OF TRUST. ANOTHER CONDITION WHICH WAS LAID DOWN WAS THAT THE SALE SHALL BE EXECUTED WITHIN PERIOD OF ONE YEAR FROM THE DATE OF ORDER I.E. 29.12.1995. IN VIEW THEREOF, IN ORDER TO TRANSFER ITS LAND, THE ASSESSEE WAS BOUND BY THE ORDER OF CHARITY COMMISSIONER UNDER WHICH SANCTION WAS RECEIVED BY THE ASSESSEE TO TRANSFER ITS IMMOVABLE PROPERTY TO M/S. BUILDFORCE PROPERTIES PVT. LTD . FOR CONSIDERATION OF RS.6.30 CRORES. AS PER THE SAID ORDER ITSELF, THE SALE HAD TO BE EFFECTED WITHIN PERIOD OF ONE YEAR FROM THE DATE OF ORDER. FURTHER, REQUIREMENT WAS TO INVEST THE SALE PROCEEDS IN LONG TERM FIXED DEPOSITS WITH THE BANKS WHETHER NAT IONALIZED, SCHEDULED OR CO - OPERATIVE BANKS OR ANY OTHER PUBLIC SECURITIES. ADMITTEDLY, SYMBOLIC POSSESSION OF THE SAID PROPERTY WAS GIVEN TO M/S. BUILDFORCE PROPERTIES PVT. LTD., AS PER THE MOU ENTERED INTO, COPY OF WHICH IS PLACED AT PAGES 37 TO 55 OF TH E PAPER BOOK. THE MOU WAS FOR DEVELOPMENT OF THE SAID PROPERTY AND SYMBOLIC POSSESSION WAS GIVEN TO M/S. BUILDFORCE PROPERTIES PVT. LTD. CERTAIN DISPUTES AROSE BETWEEN THE PARTIES AND THE ASSESSEE COULD NOT TRANSFER THE SAID IMMOVABLE PROPERTY TO THE DEV ELOPER. THE DISPUTE BETWEEN THE PARTIES WAS SETTLED IN SUIT NO.2395 OF 1998 AND THE PARTIES CAME TO AN UNDERSTANDING BY WAY OF CONSENT TERMS, UNDER WHICH THE PLAINTIFF HAD AGREED TO ACCEPT SUM OF RS.6.28 CRORES BEING THE FULL AND FINAL SETTLEMENT TO BE PA ID AS PER CLAUSE (2) OF THE TERMS OF CONSENT ON DIFFERENT DATES. THE HONBLE HIGH COURT FURTHER DIRECTED THE PARTIES TO APPEAR BEFORE THE CHARITY ITA NO S. 1 558 & 1 559 /PN/201 3 SHRI RAM ASHRAM TRUST 11 COMMISSIONER, MAHARASHTRA STATE AND SEEK APPROPRIATE DIRECTIONS SO AS TO COMPLETE THE TRANSACTION. THE SAID ORDER WAS PASSED BY THE HONBLE HIGH COURT ON 25.07.2006, COPY OF WHICH IS PLACED AT PAGES 22 TO 33 OF THE PAPER BOOK. THEREAFTER, THE PARTIES SOUGHT PERMISSION FROM THE CHARITY COMMISSIONER, MAHARASHTRA STATE, MUMBAI AND VIDE ORDER DATED 05.04.2007, THE PERIOD TO COMPLETE THE TRANSACTION WAS EXTENDED. THE CHARITY COMMISSIONER ACKNOWLEDGED THE DISPUTE BETWEEN THE PARTIES AND THE SUIT FILED BEFORE THE HONBLE BOMBAY HIGH COURT, IN WHICH CONSENT TERMS WERE FILED BY THE PARTIES AND SUIT WAS DISPOSED OF BY TH E HONBLE HIGH COURT. THE CHARITY COMMISSIONER ALSO ACKNOWL EDGED THAT AS PER CONSENT TERMS, CONVEYANCE DEED WOULD BE EXECUTED IN FAVOUR OF DEFENDANTS NOMINEE I.E. M/S. DILIP ESTATE & TOWN PLANNERS PVT. LTD. AND THE TIME TO EXECUTE CONVEYANCE DEED WAS EXTE NDED TILL 31.05.2007, COPY OF SAID ORDER DATED 05.04.2007 IS PLACED AT PAGES 34 TO 36 OF THE PAPER BOOK. THE ASSESSEE THEREAFTER, EXECUTED SALE DEED DATED 20.04.2007 FOR SALE OF LAND AT POWAI, WHICH IS PLACED AT PAGES 8 TO 19 OF THE PAPER BOOK. ON THE EX ECUTION OF SALE DEED, THE ASSESSEE CLAIMS THAT THE SALE PROCEEDS WERE INVESTED AS PER ORIGINAL ORDER OF CHARITY COMMISSIONER IN LONG TERM FIXED DEPOSITS WITH BANKS, AS PER LIST ATTACHED AT PAGE 82 OF THE PAPER BOOK. THE PERUSAL OF SAID LIST REVEALS THE IN VESTMENTS TO THE EXTENT OF RS.6.30 CRORES WITH BANK OF BARODA AND DENA BANK. THE ASSESSEE FURTHER POINTED OUT DURING THE COURSE OF HEARING THAT THE SAID FDS ARE CONTINUING AS ON 31.03.2010, AS PER THE LIST ATTACHED AT PAGE 82 OF THE PAPER BOOK. THE CLAIM OF ASSESSEE IN THIS REGARD IS THAT WHERE SALE PROCEEDS OF CAPITAL ASSET ARE INVESTED IN FDS, THEN NO CAPITAL GAIN IS TO BE ASSESSED IN THE HANDS OF ASSESSEE, IN VIEW OF THE PROVISIONS OF SECTION 11(1A) OF THE ACT. 15. SUB - SECTION (1A) TO SECTION 11 OF THE ACT READS AS UNDER: - (1A) FOR THE PURPOSE OF SUB - SECTION (1), - ( A ) WHERE A CAPITAL ASSET, BEING PROPERTY HELD UNDER TRUST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES, IS TRANSFERRED AND THE WHOLE OR ANY PART OF THE NET ITA NO S. 1 558 & 1 559 /PN/201 3 SHRI RAM ASHRAM TRUST 12 CONSIDERATION IS UTILIZATION FOR A CQUIRING ANOTHER CAPITAL ASSET TO BE SO HELD, THEN, THE CAPITAL GAIN ARISING FROM THE TRANSFER SHALL BE DEEMED TO HAVE BEEN APPLIED TO CHARITABLE OR RELIGIOUS PURPOSES TO THE EXTENT SPECIFIED HEREUNDER, NAMELY: - ( I ) WHERE THE WHOLE OF THE NET CONSIDERATION IS UTILIZED IN ACQUIRING THE NEW CAPITAL ASSET, THE WHOLE OF SUCH CAPITAL GAIN; ( II ) WHERE ONLY PART OF THE NET CONSIDERATION IS UTILIZED FOR ACQUIRING THE NEW CAPITAL ASSET, SO MUCH OF SUCH CAPITAL GAIN AS IS EQUAL TO THE AMOUNT, IF ANY, BY WHICH THE AMOUNT SO U TILIZED EXCEEDS THE COST OF THE TRANSFERRED ASSET; ( B ) WHERE A CAPITAL ASSET, BEING PROPERTY HELD UNDER TRUST IN PART ONLY FOR SUCH PURPOSES, IS TRANSFERRED AND THE WHOLE OR ANY PART OF THE NET CONSIDERATION IS UTILIZED FOR ACQUIRING ANOTHER CAPITAL ASSET TO B E SO HELD, THEN, THE APPROPRIATE FRACTION OF THE CAPITAL GAIN ARISING FROM THE TRANSFER SHALL BE DEEMED TO HAVE BEEN APPLIED TO CHARITABLE OR RELIGIOUS PURPOSES TO THE EXTENT SPECIFIED HEREUNDER, NAMELY: - ( I ) WHERE THE WHOLE OF THE NET CONSIDERATION IS UTILIZ ED IN ACQUIRING THE NEW CAPITAL ASSET, THE WHOLE OF THE APPROPRIATE FRACTION OF SUCH CAPITAL GAIN; ( II ) IN ANY OTHER CASE, SO MUCH OF THE APPROPRIATE FRACTION OF THE CAPITAL GAIN AS IN EQUAL TO THE AMOUNT, IF ANY, BY WHICH THE APPROPRIATE FRACTION OF THE AMOUNT UTILIZED FOR ACQUIRING THE NEW ASSET EXCEEDS THE APPROPRIATE FRACTION OF THE COST OF THE TRANSFERRED ASSET. 16. AS PER CLAUSE ( A ), IT IS PROVIDED THAT WHERE THE ASSESSEE HOLDS CAPITAL ASSET UNDER TRUST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSE AND THE SAME IS TRANSFERRED, THEN WHERE WHOLE OR ANY PART OF NET CONSIDERATION IS UTILIZED FOR ACQUIRING ANOTHER CAPITAL ASSET, THEN THE CAPITAL GAINS ARISING FROM THE TRANSFER SHALL BE DEEMED TO HAVE BEEN APPLIED FOR CHARITABLE OR RELIGIOUS PURPOSES DEPENDING ON WHETHER WHOLE OR PART OF NET CONSIDERATION IS SO UTILIZED, THEN SO MUCH OF CAPITAL GAINS EQUAL TO THE AMOUNT IF ANY, SO EXCEEDS THE COST OF ASSET IS TO BE ALLOWED AS DEDUCTION. IN OTHER WORDS, IN THE HANDS OF ASSESSEE, WHERE THE ASSESSEE HAS SOLD THE CAPI TAL ASSET BEING IMMOVABLE PROPERTY, WHICH THE ASSESSEE CLAIMS THAT IT WAS HOLDING UNDER TRUST FOR WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES AND ON ITS TRANSFER, THE SALE PROCEEDS ARE INVESTED IN LONG TERM INVESTMENTS WITH BANKS IN THE FORM OF FDRS, THEN SINCE WHOLE OF NET CONSIDERATION HAS BEEN SO INVESTED, NO CAPITAL GAINS ARISES TO THE ASSESSEE. HOWEVER, ON THE OTHER HAND, THE CASE OF REVENUE IS THAT THE ASSESSEE ENTERED INTO AN AGREEMENT WITH M/S. BUILDFORCE PROPERTIES PVT. LTD. IN 1994 AND THE SALE D EED WAS EXECUTED IN FAVOUR OF NOMINEE ITA NO S. 1 558 & 1 559 /PN/201 3 SHRI RAM ASHRAM TRUST 13 OF SAID CONCERN ON 20.04.2007 I.E. AFTER PERIOD OF 12 YEARS, THEN IN THIS INTERVENING PERIOD OF 12 YEARS, WHERE THE POSSESSION OF SAID PROPERTY W AS WITH M/S. BUILDFORCE PROPERTIES PVT. LTD. AND THE ASSESSEE WAS NOT IN POSSESSION, IT CANNOT BE HELD THAT THE SAID PROPERTY WAS BEING HELD UNDER TRUST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES. THE ASSESSING OFFICER HELD THAT SINCE THE ASSESSEE HAS NOT FULFILLED THIS LIMB OF SECTION 11(1A) OF THE ACT, THE ASSESSEE IS NOT E NTITLED TO THE BENEFIT PROVIDED UNDER THE SAID SECTION. HOWEVER, THE CIT(A) HAS HELD OTHERWISE. 17. THE LIMITED ISSUE WHICH ARISES IN THE PRESENT CASE IS WHETHER THE ASSESSEE IS ENTITLED TO CLAIM THE BENEFIT UNDER SECTION 11(1A) OF THE ACT. THE ASSESSEE ADMITTEDLY, WAS THE OWNER OF SAID PROPERTY AND HE WAS THE LEGAL OWNER OF PROPERTY AND HAD ALL RIGHTS IN THE SAID ASSET, WHICH ADMITTEDLY, WERE TRANSFERRED BY THE ASSESSEE IN THE YEAR UNDER APPEAL. IN OTHER WORDS, ONCE THE INCOME FROM LONG TERM CAPITAL GA INS IS BEING ASSESSED IN THE HANDS OF ASSESSEE IN THE INSTANT ASSESSMENT YEAR, THEN IN SUCH CIRCUMSTANCES, IT CANNOT BE SAID THAT THE ASSESSEE WAS NOT HOLDING THE SAID PROPERTY IN TRUST UPTO THE YEAR OF SALE. ONCE THE YEAR OF SALE IS TAKEN TO BE ASSESSMEN T YEAR 2008 - 09, THEN ADMITTEDLY, THE POSSESSION OF SAID PROPERTY IS DEEMED TO HAVE BEEN GIVEN IN THE INSTANT ASSESSMENT YEAR SINCE CAPITAL GAIN S ARE CHARGE ABLE ON TRANSFER OF POSSESSION FROM THE VENDOR TO THE VENDEE AND ON RECEIPT, MAY BE PART CONSIDERATIO N . I N VIEW OF PROVISIONS OF THE ACT I.E. SECTION 45 OF THE ACT, WHICH RECOGNIZE THE COMPUTATION OF INCOME FROM LONG TERM CAPITAL GAINS ON SALE OF ASSETS AND ONCE THE ASSESSING OFFICER HAS ACCEPTED THE PLEA OF ASSESSEE THAT THE TRANSFER TOOK PLACE IN THE I NSTANT ASSESSMENT YEAR AND HAS ASSESSED THE INCOME UNDER THE HEAD LONG TERM CAPITAL GAINS IN THE HANDS OF ASSESSEE, IT CANNOT BE SAID THAT THE POSSESSION WAS NOT TRANSFERRED IN THE INSTANT ASSESSMENT YEAR. ONCE LEGAL POSSESSION HAS BEEN HANDED OVER BY T HE ASSESSEE IN THE YEAR UNDER APPEAL, THEN IT IS PRESUMED AND ACCEPTED THAT THE SAID ITA NO S. 1 558 & 1 559 /PN/201 3 SHRI RAM ASHRAM TRUST 14 CAPITAL ASSET WAS BEING HELD BY THE ASSESSEE IN TRUST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES TILL THE DATE OF ITS SALE. IT MAY BE CLARIFIED HEREIN THAT ONLY SYMBOLIC POSSESSION WAS GIVEN TO M/S. BUILDFORCE PROPERTIES PVT. LTD. IN 1994, AS PER THE TERMS OF MOU IN ORDER TO DEVELOP THE SAID PROPERTY. HOWEVER, THE SAID DEVELOPMENT DID NOT TAKE PLACE AND CERTAIN DISPUTES AROSE BETWEEN THE PARTIES, WHICH WERE SETTLED BY WA Y OF CONSENT DECREE PASSED BY THE HONBLE HIGH COURT ON 25.07.2006. ANOTHER ASPECT TO BE KEPT IN MIND IS THAT SINCE THE ASSESSEE IS PUBLIC TRUST, IT IS GOVERNED BY THE BOMBAY PUBLIC TRUST ACT AND IN CASE THE ASSESSEE IS DESIROUS OF SELLING ANY OF ITS CAPI TAL ASSETS, IT IS INCUMBENT UPON THE ASSESSEE TO TAKE PERMISSION FROM THE CHARITY COMMISSIONER, MAHARASHTRA STATE, MUMBAI. THE ASSESSEE HAD SOUGHT THE PERMISSION EARLIER VIDE ORDER OF CHARITY COMMISSIONER DATED 29.12.1995 UNDER WHICH, HE DIRECTED THE ASSE SSEE TO TRANSFER THE SAID ASSET TO M/S. BUILDFORCE PROPERTIES PVT. LTD. ON SALE CONSIDERATION OF RS.6.30 CRORES. THE ASSESSEE HAS EVENTUALLY SOLD THE PROPERTY TO THE NOMINEE OF M/S. BUILDFORCE PROPERTIES PVT. LTD. VIDE SALE DEED DATED 20.04.2007. BEFORE EXECUTING THE SAID SALE DEED, IT WAS AGAIN INCUMBENT UPON THE ASSESSEE TO SEEK PERMISSION FROM THE CHARITY COMMISSIONER, MAHARASHTRA STATE, MUMBAI, SINCE THE EARLIER PERMISSION WAS TO TRANSFER THE LAND IN FAVOUR OF M/S. BUILDFORCE PROPERTIES PVT. LTD., WHO NOW WANTED IT SHOULD BE TRANSFERRED TO ITS NOMINEE M/S. DILIP ESTATE & TOWN PLANNERS PVT. LTD. THE ASSESSEE DID SEEK THE PERMISSION OF CHARITY COMMISSIONER VIDE ORDER PASSED ON 05.04.2007, WHEREIN IT WAS RECOGNIZED THAT THE CAPITAL ASSET IS TO BE SOLD FO R CONSIDERATION OF RS.6.30 CRORES TO THE NOMINEE OF M/S.BUILDFORCE PROPERTIES PVT. LTD. WITHIN PERIOD OF ONE YEAR FROM THE DATE OF ORDER. FOLLOWING THE SAID SANCTION, THE ASSESSEE EXECUTED SALE DEED ON 20.04.2007 AND COMPLIED WITH THE CONDITIONS IMPOSED B Y THE CHARITY COMMISSIONER. ACCORDINGLY, WE HOLD THAT THE SALE DEED EXECUTED BY THE ASSESSEE WAS OF AN ASSET HELD BY THE ASSESSEE IN TRUST FOR CHARITABLE AND RELIGIOUS PURPOSES AND ONCE THE CONSIDERATION RECEIVED ON ITA NO S. 1 558 & 1 559 /PN/201 3 SHRI RAM ASHRAM TRUST 15 SALE OF SAID CAPITAL ASSET WAS UTILIZED FOR LONG TERM INVESTMENTS IN FDS WITH BANK OF BARODA AND DENA BANK AS PER LIST PLACED AT PAGE 82 OF THE PAPER BOOK , WHICH FIXED DEPOSITS WERE HELD TILL 31.03.2010 ALSO, THE ASSESSEE HAS FULFILLED THE CONDITIONS LAID DOWN IN SECTION 11(1A) OF THE ACT AND I S ENTITLED TO THE CLAIM OF EXEMPTION PROVIDED THEREIN. ACCORDINGLY, WE CONFIRM THE ORDER OF CIT(A) IN THIS REGARD AND DISMISS THE GROUND OF APPEAL NO.1 RAISED BY THE REVENUE. 18. NOW, COMING TO THE SECOND ISSUE RAISED BY THE REVENUE I.E. AGAINST THE ORDE R OF CIT(A) IN ALLOWING DONATION MADE BY THE ASSESSEE TO ANOTHER TRUST AS APPLICATION OF INCOME. 19. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT SIMILAR ISSUE AROSE BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE IN ASSESSMENT YEA R 2009 - 10, WHEREIN THE ASSESSEE HAD GIVEN DONATION OF RS.65 LAKHS TO NEMICHAND JAIN TRUST, CHANDWAD, DIST. NASHIK. THE TRIBUNAL HELD THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE RATIO LAID DOWN BY JURISDICTIONAL HIGH COURT IN CIT VS. TRUSTE ES OF THE JADI TRUST REPORTED IN133 ITR 494 (BOM) AND ALSO AS PER INSTRUCTION NO.1132, DATED 05.01.2007 ISSUED BY THE CBDT, WHEREIN IT IS PROVIDED THAT IT IS NOT MANDATORY THAT THERE SHOULD BE SPECIFIC OBJECT IN THE TRUST DEED IN THIS REGARD. FOLLOWING T HE SAID PRECEDENT IN ASSESSEES OWN CASE, W E HOLD THAT WHERE THE DONATIONS ARE GIVEN TO THE DONEE TRUST FOR APPLYING THE SAME FOR CHARITABLE PURPOSES, THE SAID DONATIONS ARE TO BE ALLOWED AS APPLICATION OF INCOME IN THE HANDS OF ASSESSEE. ACCORDINGLY, GRO UNDS OF APPEAL NO.2 RAISED BY THE REVENUE IS DISMISSED. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE THUS, DISMISSED. ITA NO S. 1 558 & 1 559 /PN/201 3 SHRI RAM ASHRAM TRUST 16 20. IN APPEAL RELATING TO ASSESSMENT YEAR 2010 - 11, THE ONLY ISSUE RAISED IS AGAINST APPLICATION OF INCOME I.E. BY WAY OF DONATION TO NEMICHAND JAIN TRUST, CHANDWAD, DIST. NASHIK , WHICH IS ALSO CO VERED, HENCE THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE DISMISSED. 21. IN THE RESULT, BOTH THE APPEALS OF REVENUE ARE DISMISSED. ORDER PRONOUNCED ON THIS 26 TH DAY OF AUGUST , 201 6 . SD/ - SD/ - ( R.K. PANDA ) ( SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; D ATED : 26 TH AUGUST , 201 6 . GCVSR GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - I , NASHIK ; 4. / THE CIT - I, NASHIK ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE