VEDANTA FOUNDATION, MUMBAI V. DDIT (E) 1(2), MUMBAI

ITA 1786/MUM/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6584 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 07-05-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 14-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS A C TEJPAL
• Assessee Lawyers: SOUMITRA CHOUDHRY
• Keywords: Charitable institution; Earning of tax free income; Competent authority; Benefit of exemption; Capital expenditure
• Section: 80G; 12A; 12

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI . . , , , BEFORE SHRI N.K. BILLAIYA , ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER . / ITA NO. 1786 / MUM./ 2014 ( / ASSESSMENT YEAR : 20 10 11 ) VEDANTA FOUNDATION OPP. NIRANJAN BUILDING CORNER OF E ROAD MARINE DRIVE MUMBAI 400 002 .. / APPELLANT V/S DY. COMMISSIONER OF INCOME TA X (E) RANGE 1 (2), PIRAMAL CHAMBERS PAREL, MUMBAI 400 012 .... / RESPONDENT . / PERMANENT ACCOUNT NUMBER AABTS7173D / ASSESSEE BY : MS. SOUMITRA CHOUDHRY / REV ENUE BY : MRS. A.C. TEJPAL / DATE OF HEARING 0 7 . 0 5 .201 4 / DATE OF ORDER 0 9 .05.2014 / ORDER . . , / PER N.K. BILLAIYA , A .M. THE PRESENT APPEAL IS PREFERRED BY THE ASS ESSEE CHALLENGING THE IMPUGNED ORDER DATED 24 TH JANUARY 2014, PASSED BY THE LEARNED COMMISSIONER (APPEALS) I, MUMBAI, FOR THE ASSESSMENT YEAR 2010 11 . VEDANTA FOUNDATION 2 2 . GROUND NO.1, BEING GENERAL IN NATURE, HENCE, NO SEPARATE ADJUDICATION IS REQUIRED. 3 . GROUND NO.2, 3 AND 4, READ AS UNDER: 2. FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF ` 59,16,386 EVEN THOUGH THE SAID AMOUNT WAS LESS THAN 15% OF THE TOTAL INCOME OF THE APPELLANT AND THUS WAS ELIGIBLE TO BE A CCUMULATED AND CARRIED FORWARD AND THIS ACTION OF THE LEARNED CIT(A) IS ARBITRARY, UNJUSTIFIED, UNWARRANTED AND ILLEGAL. 3. FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) IGNORING THE JURISDICTIONAL ITATS ORDER IN ASSESSEES OWN CASE IN ITA NO.6641/MUM./2011 WRONGLY DENIED THE BENEFIT OF EXEMPTION U/S 11 ON A WRONG PRETEXT THAT THE INCOME OF THE TRUST FROM NON 35AC FUNDS WAS SPENT FOR 35AC PROJECT EVEN THOUGH THIS WAS NOT THE CASE AND THE LEARNED CIT(A) WITHOUT VERIFYING THESE FAC TS SIMPLY CONFIRMED THE ACTION OF THE LD. A.O. AND THUS ACTION OF THE AUTHORITIES BELOW WAS TOTALLY WRONG, ARBITRARY, UNJUSTIFIED, UNWARRANTED AND ILLEGAL. 4. FOR THAT THE LEARNED CIT(A) ERRED IN CONFIRMING ` 22.25 CRORES BEING CORPUS DONATION RECEIVED BY THE APPELLANT AND EXMPT U/S 11(1)(D) OF THE ACT AND THE ACTION FO THE LEARNED CIT(A) WAS TOTALLY ARBITRARY, UNJUSTIFIED, UNWARRANTED AND ILLEGAL. 4 . THE ASSESSEE IS A TRUST REGISTERED UNDER SECTION 12A OF THE ACT, AS CHARITABLE ORGANISATION WITH THE DIRECT OR OF INCOME TAX (EXEMPTION), MUMBAI ,AND ALSO WITH CHARITY COMMISSIONER , MUMBAI. THE ASSESSEE IS ALSO REGISTERED UNDER SECTION 35AC, VIDE NOTIFICATION ISSUED BY THE MINISTRY OF FINANCE, GOVERNMENT OF INDIA, DATED 14 TH OCTOBER 2009. THE ASSESSEE IS ENGAGE D IN THE ACTIVITY OF SETTING UP OF RUNNING OF VOCATIONAL TRAINING CENTRE FOR COMPUTER AND TAILORING CLASSES HAVING 192 COMPUTER CENTERS AND 386 TAILORING CLASSES THROUGHOUT INDIA. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS SELECTED FOR SCRUT INY AND STATUTORY NOTICE WAS ISSUED AND SERVED ON THE ASSESSEE. WHILE SCRUTINISING THE RETURN OF INCOME, THE ASSESSING OFFICER VEDANTA FOUNDATION 3 NOTICED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE IS IN RECEIPT OF THE TOTAL INCOME OF ` 31,59,75,001, WHICH INCLUDE S ` 22,25,00,000 CLAIMED EXEMPTION UNDER SECTION 11(1)(D) OF THE ACT. THE ASSESSING OFFICER FURTHER NOTICED THAT APART FROM THIS, THE ASSESSEE IS ALSO IN RECEIPT OF GENERAL DONATIONS TO THE TUNE OF ` 5,83,95,619. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE ASSESSEE HAS INCURRED ` 2,68,03,772 TOWARDS THE VOCATIONAL TRAINING CENTRE BEING THE AMOUNT INCURRED FOR ACTIVITIES UNDER SECTION 35AC, FOR WHICH THE ASSESSEE HAS IDENTIFIED AS PER THE NOTIFICATION ISSUED BY THE GOVERNMENT OF INDIA . THE ASSESSING OFFI CER FURTHER OBSERVED THAT THE FUNDS UTILISED BY THE ASSESSEE FOR SPONSORED PROJECT UNDER SECTION 35AC IS OUT OF REVENUE ACCOUNT AND NOT OUT OF SECTION 35AC ACCOUNT CRE A TED BY THE ASSESSEE SPECIFICALLY FOR THE NOTIFIED PROJECT UNDER SECTION 35 AC. T HE ASSESS EE WAS SHOW CAUSED TO EXPLAIN WHY THIS SHOULD NOT BE VIEWED ADVERSELY AND DENY THE BENEFIT OF SECTION 11. THE ASSESSEE FILED A DETAIL REPLY SUBSTANTIATING ITS CLAIM. THE REPLY OF THE ASSESSEE IS INCORPORATED IN THE BODY OF THE ASSESSMENT ORDER. THE REPLY O F THE ASSESSEE WAS CONSIDERED BUT WAS NOT FOUND TENABLE BY THE ASSESSING OFFICER. THE ASSESSING OFFICER WAS OF THE OPINION THAT THE ASSESSEE HAS INCURRED ` 8,75,58,615 ON THE OBJECTS OF THE TRUST INCLUSIVE OF ` 6,53,68,821, BEING EXPENDITURE INCURRED FOR S ECTION 35AC PROJECT. THE ASSESSING OFFICER WAS OF THE FIRM BELIEVE THAT ` 2,21,89,794, IS UTILISED BY THE ASSESSEE FOR THE PURPOSE OTHER THAN SECTION 35AC WHICH IS IN CLUSIVE OF CHARITY AND DONATION, CHILD CARE, WELFARE PROJECT, MEDICAL RELIEF TO POOR, EDUC ATIONAL DEVELOPMENT, ETC. ACCORDING TO T HE ASSESSING OFFICER EXEMPTION CAN ONLY BE ALLOWED TO THE ASSESSEE IF DURING THE PREVIOUS YEAR, THE ASSESSEE HAS UTILISED THE FUNDS TOWARDS THE CHARITY PURPOSE FOR WHICH IT IS CREATED. THE ASSESSING OFFICER FURTHER EXAMINED THE UTILISATION OF FUNDS RECEIVED IN THE CORPUS IN THE LIGHT OF THE PROVISIONS VEDANTA FOUNDATION 4 OF SECTION 11(1)(D) OF THE ACT. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS TREATED THE SAID AMOUNT RECEIVED AS EXEMPT INCOME AND HAS DIRECTLY TAKEN TO THE BAL ANCE SHEET WITHOUT PASSING THROUGH THE INCOME AND EXPENDITURE ACCOUNT. THE ASSESSING OFFICER WAS OF THE OPINION THAT THE ASSESSEE CANNOT ENJOY THE BENEFIT OF THE EXEMPTION FOR ANY INCOME WHERE IT FAILED TO CARRY THE DIRECTION OF THE DONOR. THE ASSESSING OF FICER FINALLY CONCLUDED THAT THE AMOUNT DONATED IS NOT UTILISED FOR THE PURPOSE OF SECTION 35AC PROJECT, THEREFORE, THE TOTAL INCOME OF THE ASSESSEE HAS TO BE COMPUTED WITHOUT ALLOWING THE BENEFITS OF SECTION 11. THE ASSESSING OFFICER COMPUTED THE TAXABLE INCOME OF THE ASSESSEE BY MAKING THE FOLLOWING ADDITIONS: I ) CORPUS DONATION OF ` 22,25,00,000, UNDER SECTION 11(1)(D); II ) DISALLOWANCE OF DONATION OF ` 22,78,212; AND III ) EDUCATIONAL DEVELOPMENT EXPENDITURE OF ` 80,34,375, BEING EXPENDITURE OF CAPITAL IN NATURE . 5 . AGGRIEVED BY THE AFORESAID ADDITIONS, THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED COMMISSIONER (APPEALS), WHEREIN, THE ASSESSEE REITERATED THE CLAIM OF ITS EXEMPTION BY SUBMITTING THE DETAILS WHICH WERE SUBMITTED BEFORE THE ASSESSING OFFICER DUR ING THE COURSE OF THE ASSESSMENT PROCEEDINGS. FOR THE CLAIM OF EXEMPTION UNDER SECTION 11, THE LEARNED COMMISSIONER (APPEALS), VIDE PARA 4.25 AT PAGE 19 OF HIS ORDER, HELD AS UNDER: 4.25 HENCE, IT IS CONCLUDED THAT REQUIREMENT OF 85% APPLICATION OF INCO ME DURING THE YEAR AND OR FAILURE ON THE PART OF APPELLANT TO FULFILL MANDATORY CONDITIONS FOR ACCUMULATING MORE THAN 15% OF INCOME, SEPARATELY FOR ITS INCOME OF ELIGIBLE PROJECT U/S 35AC AND FOR (NON 35AC) OTHER CHARITABLE PURPOSES AND/OR CUMULATIVELY COM BINING BOTH TOGETHER, IN BOTH THE WAYS, HAS EFFECT OF LOOSING THE EXCLUSION / EXEMPTION OF ITS INCOME DURING VEDANTA FOUNDATION 5 EH YEAR AS PER SECTION 11 OF THE I.T. ACT. AS PER CIRCULAR NO.335 DATED 13.04.1982, THE EXEMPTION U/S 11(1)(A) WILL BE AVAILABLE ONLY IF AT LEAST 75% OF INCOME IS APPLIED FOR CHARITABLE OR RELIGIOUS PURPOSE IN INDIA DURING THE YEAR AND THE REMAINING AMOUNT IS INVESTED IN THE FORMS OR MODES SPECIFIED U/S 13(5). THUS, BOTH THE REQUIREMENTS WILL HAVE TO BE FULFILLED BEFORE THE TRUST CAN CLAIM AND AVAIL OF THE EXEMPTION U/S 11(1)(A). SINCE THE REQUIREMENTS U/S 11(1)(A) READ WITH OTHER PROVISIONS OF SECTION 11 AND 13 ARE TO BE SATISFIED CUMULATIVELY FOR CLAIMING EXEMPTION, WHICH HAVE NOT BEEN DONE / SATISFIED BY THE APPELLANT, AS DISCUSSED ABOVE, THEREFO RE, APPELLANT IS NOT ENTITLED FOR EXEMPTION U/S 11 OF THE I.T. ACT FOR THE REASONS DISCUSSED AS ABOVE. ACCORDINGLY, GROUND NOS.1, 2, 3, 4, 5, 6, & 7 ARE DISMISSED. 6 . INSOFAR AS THE DISALLOWANCE OF ` 22,78,212 ON ACCOUNT OF DONATION IS CONCERNED, THE ASSES SEE CLAIMED BEFORE THE LEARNED COMMISSIONER (APPEALS) THAT THE ACT PROVIDES THAT THE AMOUNT INCURRED BY A TRUST , WHETHER CAPITAL OR REVENUE IN NATURE, IS AN APPLICATION OF FUND. THE ASSESSEE RELIED UPON THE DECISION OF THE HONBLE KERALA HIGH COURT IN CIT V/S ST. GEORGE FORANA CHURCH , [ 1988 ] 170 ITR 62 (KER.). HOWEVER, THE LEARNED COMMISSIONER (APPEALS) WAS OF THE FIRM BELIEF THAT THE CAPITAL EXPENDITURE IS NOT LIABLE TO BE DEDUCTED AGAINST THE INCOME WHICH IS A REVENUE RECEIPT. THE LEARNED COMMISSIONER (AP PEALS) FURTHER OBSERVED THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IN RESPECT OF THE CAPITAL EXPENDITURE DOES NOT QUALIFY FOR DEDUCTION FROM THE REVENUE RECEIPTS. THE LEARNED COMMISSIONER (APPEALS) CONFIRMED THE DISALLOWANCE ON ACCOUNT OF DONATION S AMOUNTING TO ` 22,78,212 AND ALSO THE DISALLOWANCE OF ` 80,34,375, MADE BY THE ASSESSING OFFICER AS CAPITAL EXPENDITURE. 7 . DURING THE COURSE OF APPELLATE PROCEEDINGS, THE LEARNED COMMISSIONER (APPEALS) ALSO ISSUED FORMAL NOTICE OF ENHANCEMENT OF INCOME. A FTER CONSIDERING THE REPLY OF THE ASSESSEE IN RESPONSE TO THE VEDANTA FOUNDATION 6 ENHANCEMENT NOTICE, THE LEARNED COMMISSIONER (APPEALS) OBSERVED AS UNDER: 7.4 THE ARGUMENTS AND SUBMISSIONS OF THE APPELLANT AS SUMMARIZED ABOVE ARE CONSIDERED AND IT IS FOUND THAT THE RELIAN CE PLACED BY THE APPELLANT ON THE APPROVAL NOTIFICATION FOR THE PURPOSE OF SECTION 35AC FOR COLLECTING CORPUS FUND IS MISPLACED IN RELATION TO PROVISIONS OF SECTION 11 AND 12 OF THE I.T. ACT. PRIMARILY, THE PAYMENTS RECEIVED BY THE APPELLANT U/S 35AC ARE N OT IN THE NATURE OF DONATION AND NOT OUT OF A DONOR / DONE RELATIONSHIP BETWEEN THE TRANSACTING PARTIES AS DISCUSSED ABOVE. IF THE AMOUNTS SO RECEIVED BY THE APPELLANT WERE REQUIRED TO BE MAINTAINED AS A DEMARCATED FUND FOR SPECIFIC PURPOSE IN TERMS OF THE APPROVAL / NOTIFICATION, THE SAME WAS POSSIBLE UNDER PROVISIONS OF SECTION 11 & 12 OF THE I.T. ACT BY WAY OF ACCUMULATION WITHOUT HOLDING SUCH RECEIPTS IN THE MANNER OF CORPUS FUND OF THE TRUST, WHICH IS NEITHER LEGALLY VALID NOR ACTUALLY IN THE NATUR E OF SUCH TRANSACTION OF CORPUS DONATION, AS DISCUSSED ABOVE IN THE FOREGOING PARAGRAPHS IN DETAIL. 7.5 T HE SUBMISSION RELATING TO RELEVANCE OF SECTION 35AC, 80G IS GENERAL HAVING NO BEARING TO THE ISSUE IN HAND. THE DISCUSSION IN THE FOREGOING PARAGRAPHS OF THIS ORDER IS WITH A VIEW TO CLARIFY THE POSITION THAT THE RECEIPTS U/S 35AC ARE NOT IN THE NATURE OF CORPUS DONATION. THEREFORE, THE ARGUMENTS AND SUBMISSIONS ON THE ISSUE OF EXPLANATIONS RELATING TO CORPUS DONATION DO NOT APPLY TO THE RECEIPT OF ` 22 .25 CRORES U/S 35AC, IN THE HANDS OF APPELLANT, UNDER THE PARTICULAR FACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED ABOVE. 7.6 THE APPELLANT HAS SUBMITTED AND ARGUED ON THE ASSUMPTION THAT THE RECEIPT OF ` 22.25 CRORES IS A CORPUS DONATION, WHICH IS NOT THE CASE AS PER LAW AND FACTS IN THE CONTEXT OF THE PARTICULAR TRANSACTION. THE APPROVAL U/S 35AC CONTINUING WITH THE APPELLANT IS AN ENTITLEMENT FOR ONLY RECEIVING SUCH PAYMENTS WITH A BENEFIT OF 00% DEDUCTION TO THE PERSON MAKING SUCH PAYMENT BUT THE CO MPUTATION OF SUCH RECEIPTS, ITS MAINTENANCE AND UTILIZATION IN TERMS OF SECTION 11, 12 & 13 OF THE I.T. ACT IS A MANDATORY LEGAL REQUIREMENT FOR AVAILING EXEMPTION FROM TAXATION UNDER THE VERY SAME PROVISIONS. THEREFORE, ARGUMENTS RELATING TO PROVISIONS OF SECTION 35AC OR THE APPROVAL NOTIFICATION FOR CLAIMING EXEMPTION ARE NOT RELEVANT TO THE EXTENT THEY ARE INCONSISTENT OR LACKING IN REQUIRED COMPLIANCES WITH / OR SECTION 11, 12 & 13 OF THE I.T. ACT OR TO THE EXTENT NOT SPECIFICALLY PROVIDED FOR CONSIDE RATION UNDER THESE PROVISIONS. THUS, THERE IS NO VEDANTA FOUNDATION 7 SUSTAINABLE AND RELEVANT SUBMISSION AND ARGUMENT WHICH HAS BEEN FORWARDED BY THE APPELLANT IN THE REPLY TO THE NOTICE OF ENHANCEMENT WHICH COULD BE CONSIDERED FOR THIS PURPOSE. THE LEARNED COMMISSIONER (A PPEALS) FINALLY CONCLUDED AS UNDER: 7.8 IN VIEW OF ABOVE DISCUSSION AND FOR THE REASONS THEREIN, THE INCOME OF THE APPELLANT FOR THE YEAR IS ENHANCED BY ` 4,23,18,594 ( ` 97,09,355/ + ` 3,26,09,239/ AS IN PARA 7.1 & 7.2 ETC.). THUS, THE TOTAL INCOME WORKS OUT TO ` 28,10,47,567/ [ ` 23,87,28973/ (ASSESSED BY A.O.) + ` 4,23,18,594/ (ENHANCED VIDE THIS ORDER)]. THE A.O. IS FURTHER DIRECTED TO CALCULATE THE RESULTANT DEMAND, TAKE ON RECORD, TAKE NOTE OF THE ENHANCEMENT AND PROCEED FURTHER AS PER LAW. AGGRIEVED BY THE AFORESAID DECISION OF THE LEARNED COMMISSIONER (APPEALS), THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 8 . THE LEARNED COUNSEL, BEFORE US, ON BEHALF OF THE ASSESSEE, SUBMITTED THAT THE ISSUE RELATING TO THE ENTIRE DISALLOWANCE IS CO VERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2008 09 IN AN APPEAL PREFERRED BY THE REVENUE IN ITA NO.6641/MUM./2011 DATED 13 TH MARCH 2013. 9 . THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OT HER HAND, COULD NOT BRING ON RECORD ANY DISTINGUISHING FACTS OR ANY CONTRARY DECISION ON THE ISSUE. 10 . WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008 09 IN AN APPEAL FILED BY THE REVENUE IN ITA NO.6641/MUM./2011, ORDER DATED 13 TH MARCH 2013. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: VEDANTA FOUNDATION 8 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) JUSTIFIED IN ALLOWING H E EXEMPTION U/S 11 AND 11(1)(D), INSPITE OF THE FACT THAT RUNNING VOCATIONAL TRAINING CENTRE OF COMPUTER AND TAILORING ARE BUSINESS ACTIVITY AND NOT A CHARITABLE ACTIVITY AS CLAIMED BY THE ASSESSEE. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED CIT(A) WAS RIGHT IN IGNORING THE RATIO OF HON'BLE SUPREME COURT JUDGMENT IN THE CASE OF ESCORTS LTD. V/S UNION OF INDIA (199 ITR 43) WHEREIN HON'BLE SUPREME COURT HAS HELD THAT DOUBLE DEDUCTION CANNOT BE PRESUMED IF THE SAME IS NOT SP ECIFICALLY PROVIDED BY LAW, IN ADDITION TO NORMAL DEDUCTION. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) WAS JUSTIFIED IN ALLOWING HE DONATION TO THE TUNE OF 1.41 CRORES BY IGNORING THE FACT THAT THE ASSESSEE HAS N OT SUBMITTED 80G CERTIFICATE ISSUED BY THE COMPETENT AUTHORITY FOR HIS CLAIM OF DONATION. AFTER CONSIDERING THE FACTS, THE TRIBUNAL, AT PARA 3.3, HELD AS UNDER: 3.3. WE HAVE HEARD BOTH THE SIDES ON THIS ISSUE AND PERUSED THE MATERIAL ON RECORD. IT IS OBSERVED THAT THE COPIES OF THE PAST ASSESSMENT ORDERS AVAILABLE AT PAGE NO 82 TO 98 OF THE PAPER BOOK REVEAL THAT THE ASSESSEE HAS BEEN TREATED AS A PUBLIC CHARITABLE TRUST IN THE EARLIER YEARS. GIVEN THE SAME SET OF FACTS, WE DO NOT FIND ANY REASON OR B ASIS FOR ARRIVING AT A CONCLUSION THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SETTING UP AND RUNNING OF VOCATIONAL TRAINING SO AS TO PRESUME THAT THE ASSESSEE AS A BUSINESS ENTITY IN THE YEAR UNDER CONSIDERATION. IT IS ALSO FOUND THAT THE ASSESSEE HAS NOT DIVERTED ANY SPECIFIED FUNDS OF 35AC PROJECTS TOWARDS NON SPECIFIED PROJECTS WHEREAS THE ASEESEE HAS SPENT CORPUS DONATION FOR 35AC PROJECTS AND THE SAME CANNOT BE THE BASIS FOR DENYING THE BENEFITS OF EXEMPTION AS THE LATER IS NOT PROHIBITED BY THE PR OVISIONS OF THE ACT. IN VIEW OF THAT MATTER, WE DO NOT FIND ANY JUSTIFIABLE REASON TO INTERFERE WITH THE DECISION OF THE LD.CIT(A) ON THIS COUNT AND ACCORDINGLY GROUND NO. 1 IS DISMISSED. 11 . SINCE THE ISSUE ARISING OUT OF GROUND NO.2, 3 AND 4 WAS CONSIDERED BY THE TRIBUNAL IN AN APPEAL PREFERRED BY THE REVENUE CITED VEDANTA FOUNDATION 9 SUPRA, WHEREIN THE TRIBUNAL HAS DECIDED THE ISSUE AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE, C ONSISTENT WITH THE AFORESAID FINDINGS GIVEN BY THE TRIBUNAL, GROUND NO.2, 3 AND 4 RAISED BY T HE ASSESSEE ARE ALLOWED. 12 . IN G ROUND NO.5, THE ASSESSEE HAS CHALLENGED THE ADDITION OF ` 22,78,212 ON ACCOUNT OF DONATION MADE BY THE ASSESSEE. 13 . AFTER HEARING BOTH THE PARTIES, WE FIND THAT THIS ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN AN APPEAL FILED BY T HE REVENUE IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008 09 IN ITA NO.6641/MUM./ 2011, ORDER DATED 13 TH MARCH 2013, WHEREIN, THE TRIBUNAL, VIDE PARA 5.2 OF ITS ORDER, DECIDED THIS ISSUE AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE . THE RELEVANT FINDINGS OF THE TRIBUNAL ON THIS ISSUE ARE REPRODUCED BELOW: 5.2 WE HAVE HEARD THE RIVAL SUBMISSIONS ON THIS GROUND AND PERUSED THE MATERIAL ON RECORD. IT IS PERTINENT TO MENTION THAT ACCORDING TO THE CBDT CIRCULAR NO.1132 DATED 5.1.1978, THE PAYMENT OF A SUM BY ONE CHARITABLE TRUST TO ANOTHER FOR UTILISATION BY THE DONEE TRUST TOWARDS ITS CHARITABLE OBJECTS IS PROPER APPLICATION OF INCOME FOR CHARITABLE PURPOSES IN THE HANDS OF THE DONE TRUST AND THE DONOR TRUST WILL NOT LOSE EXEMPTION U/S 11 OF THE ACT . ACCORDING TO THE DECISION OF THE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SARLADEVI SARABHAI TRUST NO. 2, THE CHARITABLE TRUST WILL NOT LOSE ITS EXEMPTION U/S 11, IF IT PASSES SOME MONEY TO ANOTHER CHARITABLE TRUST, FOR UTILISATION BY THE DONEE TRUST TO WARDS ITS CHARITABLE PURPOSES. THE ARGUMENT OF THE REVENUE THAT SINCE THE ASSESSEE HAS NOT PRODUCED 80G CERTIFICATE, IT IS NOT ELIGIBLE TO CLAIM THE BENEFIT IS NOT ACCEPTABLE IN VIEW OF THE FACT THAT THE PROVISIONS OF 80G IS NOT APPLICABLE TO THE FACTS IN THIS CASE. IN VIEW OF THAT MATTER, WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF THE LD.CIT(A) DIRECTING THE AO TO DELETE THE IMPUGNED ADDITION. ACCORDINGLY, GROUND NO. 3 IS DISMISSED. VEDANTA FOUNDATION 10 14 . SINCE THE GROUND NO.5 RAISED BY THE ASSESSEE IS COVERED IN FAVOUR O F THE ASSESSEE BY THE AFORESAID DECISION OF THE TRIBUNAL, THEREFORE, FOLLOWING THE SAME, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) AND ALLOW THE GROUND. 15 . GROUND NO.6 RELATES TO THE ADDITION OF ` 80,34,375 BEING CAPITAL I N NATURE. 16 . AFTER HEARING BOTH THE PARTIES, WE FIND THAT IN THE ASSESSMENT YEAR 2008 09, THE LEARNED COMMISSIONER (APPEALS) HAS DELETED THE ADDITION ON ACCOUNT OF SIMILAR ISSUE. IN THAT YEAR, THE ADDITION WAS OF ` 85,15,239 WHICH WAS CONSIDERED BY THE LEARN ED COMMISSIONER (APPEALS) VIDE GROUND NO.10 AND 11 BEFORE HIM AND AT PARA 7 OF HIS ORDER, THE LEARNED COMMISSIONER (APPEALS) FOLLOWED THE DECISION OF THE KERALA HIGH COURT IN ST. GEORGE FORANA CHURCH (SUPRA) AND HELD THAT CONSTRUCTION OF SCHOOL / COLLEGE B UILDING IS ALLOWABLE AS APPLICATION OF INCOME TOWARDS THE OBJECT OF THE TRUST AND EVEN CAPITAL EXPENDITURE IS ALLOWABLE IN THE HANDS OF THE TRUST FOR THE OBJECT OF THE TRUST. WE ALSO FIND THAT THE REVENUE HAS ACCEPTED THIS FINDING OF THE LEARNED COMMISSION ER (APPEALS) AS IT HAS NOT CHALLENGED THIS FINDING BEFORE THE TRIBUNAL IN ITA NO.6641/MUM./2011. SINCE THE REVENUE ITSELF HAS ACCEPTED THE FINDING OF THE LEARNED COMMISSIONER (APPEALS) IN EARLIER ASSESSMENT YEAR, WE DO NOT FIND ANY REASON TO DEVIATE FROM T HE FINDINGS OF EARLIER ASSESSMENT YEAR AND, ACCORDINGLY, SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) AND DELETE THE ADDITION OF ` 80,34,375. GROUND NO.6 IS THUS ALLOWED. 17 . GROUND NO.7 RELATES TO ENHANCEMENT ON ACCOUNT OF CAPITA L EXPENDITURE. VEDANTA FOUNDATION 11 18 . SINCE WE HAVE HELD ELSEWHERE IN THIS APPEAL THAT THE CAPITAL EXPENDITURE IS ALSO ELIGIBLE FOR BEING TREATED AS APPLICATION OF INCOME FOR THE PURPOSE OF SECTION 11 OF THE ACT, T HE ADDITION THUS MADE ON THIS ACCOUNT STANDS AUTOMATICALLY DELET ED. THE GRIEVANCE RAISED VIDE GROUND NO.7 BECOMES OTIOSE. GROUND NO.7 IS ALLOWED. 19 . 1 9 . IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. 9 TH MAY 2014 ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH MAY 2014 SD / - SANJAY GA RG JUDICIAL MEMBER SD / - . . N.K. BILLAIYA ACCOUNTANT MEMBER MUMBAI, DATED : 9 TH MAY 2014 / COPY OF THE ORDER FORWARDED TO : ( 1 ) / THE ASSESSEE ; ( 2 ) / THE REVENUE; ( 3 ) ( ) / THE CIT(A ) ; ( 4 ) / THE CIT, MUMBAI CITY CONCERNED ; ( 5 ) , , / THE DR, ITAT, MUMBAI ; ( 6 ) / GUARD FILE . / TRUE COPY / BY ORDER . / PRA DEEP J. CHOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) , / ITAT, MUM BAI