Thermax Social Initiative Foundation, Pune V. Income-tax Officer (Exemptions).,

ITA 1959/PUN/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0344 (ITAT-PUNE)
• Duration Of Justice: 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 01-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Assessee Lawyers: H P MAHAJANI
• Keywords: Charitable institution; Capital receipt
• Section: 12A; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , !'# ! $ , %& BEFORE SHRI R.P. TOLANI, JM AND SHRI ANIL CHATURVED I, AM ' / ITA NO. 1959/PUN/2016 ' !(' / ASSESSMENT YEAR : 2013-2014 THERMAX SOCIAL INITIATIVE FOUNDATION (NOW KNOWN AS : THERMAX FOUNDATION), THERMAX HOUSE, 14, MUMBAI- PUNE ROAD, WAKDEWADI, PUNE-411003 PAN : AACCT6450E ....... APPELLANT / V/S. INCOME TAX OFFICER (EXEMPTIONS) WARD -1 PUNE. / RESPONDENT ASSESSEE BY : SHRI H.P MAHAJANI (FCA) REVENUE BY : SHRI P.L KUREEL (CIT DR) / DATE OF HEARING .. : 20.12.2016 / DATE OF PRONOUNCEMENT IN OPEN COURT : 22 .12.2016 ) / ORDER PER R.P TOLANI, JM THIS IS ASSESSEES APPEAL FOLLOWING EFFECTIVE GROUNDS ARE RAISED: 2. WITHOUT PREJUDICE TO THE ABOVE, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND CONTRARY TO THE POSITION IN LAW, THE LD. CIT(A) ERRED IN TREATING DONATIONS OF RS. 9,37,00,000/-, RECEIVED FROM DO NORS WITH A SPECIFIC DIRECTION THAT THEY ARE TOWARDS CORPUS, AS VOLUNTARY CONTRIBUTION/DONATIONS AND CONSEQUENTLY ALSO DENYING THE APPELLANT THE BENEFIT OF SECTION 11(1) (D) OF THE INCOME TAX ACT. WITHOUT PREJUDICE TO THE ABOVE LD. CIT(A) OUGHT TO HA VE HELD THAT CORPUS DONATIONS WERE NOT EXIGIBLE TO TAX BEING IN THE NATURE OF CAPITAL RECEIPTS. 2 ITA NO. 1959/PUN/2016 IN ANY EVENT, THE ACTION OF LD. CIT(A) OF TREATING ENTIR E CORPUS DONATION OF RS.9,37,00,000/- AS INCOME IN PLACE OF RS. 5,61,83,906/- TREA TED BY THE A.O. AS INCOME AMOUNTS TO BE AN ENHANCEMENT OF INCOME FOR WHICH HE FAILED TO GIVE THE APPELLANT AN OPPORTUNITY OF BEING H EARD AS REQUIRED BY LAW; THE ORDER PASSED BY THE LD. CIT(A) IS THEREFORE BAD I N LAW. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN COMPUTING APPELLANTS TOTAL INCOME AT RS. 3,74,48,948/- AS AGAINST NIL INCOME DECLARED IN THE RET URN OF INCOME FILED BY IT. WITHOUT PREJUDICE TO THE ABOVE, THE LD. CIT(A) HAVING H ELD THAT THE TAXABLE INCOME OF THE APPELLANT WAS RS.3,74,48,948/-(AS AG AINST RS.5,61,83,906/- DETERMINED BY THE A.O.) ERRED IN YET DISM ISSING GROUND OF APPEAL NO.2 THEREBY DENYING THE PARTIAL RELI EF DUE EVEN AS PER THE ORDER PASSED BY HIM. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND CONTRARY TO THE POSITION IN LAW, THE LD. CIT(A) ERRED IN HOLDING TH AT DONATIONS OF RS.4,81,13,000/- MADE BY THE APPELLANT TO OTHER CHARITABLE TRUSTS DID NOT AMOUNT TO DIRECT APPLICATION BY THE APPELLANT TO WARDS ITS OWN OBJECTS. 5. WITHOUT PREJUDICE TO THE ABOVE, ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAVING CONTRIVED THAT THE APPLICATION OF INCOME DURING THE YEAR WAS LESS THAN 85% OF THE I NCOME (THOUGH NOT FACTUALLY SO) ERRED IN NOT GRANTING AN OPPORTUNITY TO THE APPELLANT TO COMPLY WITH THE PROVISIONS OF SECTION 11(2) OF THE AC T WHICH WOULD HAVE HAD THE EFFECT OF REDUCING TO NIL EVEN THE TAXABLE I NCOME OF RS.3,74,48,948/- COMPUTED BY HIM. WITHOUT PREJUDICE TO THE ABOVE LD. CIT(A) OUGHT TO HA VE AT LEAST DIRECTED THE A.O. TO GIVE THE APPELLANT AN OPPORTUNITY TO COMPLY WITH THE PROVISIONS OF SECTION 11(2) OF THE ACT. 2. BRIEF FACTS ARE AS UNDER: 1. THE ASSESSEE IS A S COMPANY REGISTERED U/S 25 OF THE COMPANIES ACT, 1956. IT IS ALSO REGISTERED U/S 12A OF THE INCOME TAX ACT AS PER LETTER DATED 02.11.2007 (ANNEXURE 1) ISSUED B Y THE COMMISSIONER OF INCOME TAX-1, PUNE. IN TERMS OF ITS MEM ORANDUM OF ASSOCIATION ENCLOSED AS ANNEXURE 2 BEFORE AO THE COMPAN Y WAS FORMED WITH THE MAIN OBJECT OF CARRYING ON ACTIVITIES THAT WOULD SUPPORT, PROMOTE AND ENCOURAGE EDUCATION AMONG MASSES INCLUDING THE UNDERPRIVILEGED. THERE ARE OTHER CHARITABLE OBJECTS RELATING TO 3 ITA NO. 1959/PUN/2016 REMOVAL OF POVERTY AND UNEMPLOYMENT, PROVIDING MEDICAL AID, UNDERTAKING ACTIVITIES THAT WOULD HELP TALENTED SPORTS PERSONS. TO ACHIEVE ITS OBJECT THE ASSESSEE TRUST HAS PARTNE RED WITH THE PUNE MUNICIPAL CORPORATION, STATE GOVT. AND CENTRAL GO VT. AGENCIES ALSO TO CARRY OUT AFFILIATED CHARITABLE AND EDUCATIO NAL PROJECTS TO FURTHER ITS OBJECTS. SIMILAR TYPES OF CORPUS DONATIONS AS IN THIS YEAR HAVE BEEN EXCLUDED FROM INCOME BY THE INCOME TAX DEPART MENT IN EARLIER YEARS. SOME OF THE CHARITABLE ACTIVITIES PARTNERED WITH PMC ARE AS UNDER: A. K.C THRACKERAY VIDYA NIKETAN ENGLISH MEDIUM SCHOOL, PUNE B. SAVITRI BAI PHULE ENGLISH MEDIUM SCHOOL, PUNE AND C. MATOSHRI ENGLISH MEDIUM SCHOOL, RAMNAGAR, YERAWADA, PUNE DURING THE YEAR ASSESSEE HAS ALSO GIVEN FOLLOWING DONATIONS TO INSTITUTIONS ENGAGED IN ACTIVITIES IN THE FIELD OF EDUCATION. TH E CHARITABLE PROFILE OF THESE INSTITUTIONS IS DETAILED IN WRITTEN SUBMISSIONS BEFORE LD. AO AND LD. CIT(A): 1) TEACH TO LEAD ( RS. 1.60 CRORES) 2) SHOSHIT SEVA SANGH (SSS), PATNA ( RS. 2.00 CRORES) 3) PARIVAAR EDUCATION SOCIETY, KOLKATA ( RS.1.00 CRORES) 2. THIS METHODOLOGY OF APPLICATION OF REGULAR AND CORPUS DONATIONS AS WELL TOWARDS OBJECTS TO THE TRUST WAS ALSO DONE IN THE PAST YEARS AND ACCEPTED BY THE DEPARTMENT AS UNDER: SR. NO. PARTICULARS AMOUNT(RS) FY 2009- 10 AMOUNT (RS) FY 2010-11 AMOUNT(RS) FY 2011-12 1. DONATION RECEIVED TOWARDS CORPUS FROM THERMAX LTD. 1,81,00,000 7,58,60,000 5,87,00,000 2. INCOME RECEIVED 8,01,541 32,04,727 88,94,511 3. EXPENDITURE 68,53,861 89,30,500 2,81,35,463 4 ITA NO. 1959/PUN/2016 4. EXCESS OF EXP . OVER INCOME. 60,52,320 57,25,773 1,92,40,952 3. LD. A.O HOWEVER DEVIATED FROM THE CONSISTENT COURSE OF ASSESSMENT AND HELD THAT ASSESSEE HAS VIOLATED THE PRO VISIONS OF SECTION 11(1)(D) OF THE ACT AS IT HAD MADE APPLIED THE CORPU S DONATIONS TO THE OBJECTS OF TRUST. LD. AO ASSUMED THAT PURPOSE OF CORPUS DONATIONS WAS DEFEATED AND AMOUNTED TO GOING AGAINST THE WISHES OF THE CORPUS FUND DONORS. IT WAS HELD THAT T HE REAL INTENTION OF RECEIVING SUCH CORPUS DONATIONS WAS TO AVOID THE AMBIT OF INCOME TAX ACT. 4. IT WAS HELD THAT ASSESSEE HAD VIOLATED THE PROVISIONS OF SECTION 11(1)(A) AND 11(1)(D) AND WAS, THEREFORE, NOT ENTITLED T O THE BENEFIT OF THOSE SECTIONS. THE AMOUNT OF RS. 5,61,83,906/ - ( BEING THE EXCESS OF AMOUNT APPLIED BY ASSESSEE TO CHAR ITABLE PURPOSES DURING THE YEAR OVER INCOME WHICH INCLUDED CORP US DONATION) DID NOT QUALIFY FOR EXEMPTION U/S 11(1)(D) OR 11(1)(A) O F THE ACT AND WAS HELD AS TAXABLE INCOME, RESULTING IN IMPUG NED DEMAND. 3. BEING AGGRIEVED, ASSESSEE PREFERRED FIRST APPEAL WHERE LD. CIT(A) OBSERVED AS UNDER : CONSIDERING THE ABOVE FACTS, THE A.O. HAD TWO OBJECTIONS : (A) THE AMOUNT RAISED FROM THERMAX LTD. CONSIDERED AS CO RPUS DONATION IS NOT A CORPUS IN NATURE AS THE DONOR HAS NOT SPECIFIED THE PURPOSE FOR WHICH THE ABOVE AMOUNT WAS REQUIRED TO BE SPENT, HENCE THE BENEFIT OF SECTION 11(1)(D) CANNOT BE GIVEN TO THE APPELLANT. (B) SINCE THE AMOUNT WAS NOT SPENT BY THE APPELLANT ITSEL F ON THE OBJECT OF THE TRUST BUT HAS BEEN DONATED TO SOME OT HER CONCERNED TRUSTS, THE AMOUNT SO SPENT CANNOT BE CONSIDERED AS CORRECT APPLICATION OF INCOME IN TERMS OF SECTION 11(1)(A) OF THE I .T ACT. 5 ITA NO. 1959/PUN/2016 (III) AS REGARDS THE FIRST OBJECTION REGARDING TREATM ENT TO BE GIVEN TO THE DONATION AMOUNT RECEIVED FROM THERMAX LTD. WH ETHER VOLUNTARY IN NATURE OR CORPUS DONATION, IT IS PERTINE NT TO UNDERSTAND THE MEANING OF CORPUS. IN COMMON PARLANCE , THIS TERM IS UNDERSTOOD AS CAPITAL SUM. THIS ALSO INCLUDES ENDOWME NT. IT IS AN ACT OF ENDOWING WHICH IS A CAPITAL SUM PROVIDED AN D PROVIDES FOR A PERMANENT INCOME. IN TERMS OF CHARITY, THE CORPUS SYM BOLIZES FUNDS TO RETAIN ITS CHARACTER AS A PRINCIPAL AMOUNT, WHICH ALSO DENOTES THE FUNDS EARMARKED FOR A SPECIFIC PURPOSE. THE INTENTION OF CORPUS IS THAT, THE FUNDS SHOULD NOT BE DEPLETED AN D IT RETAINS ITS ORIGINAL CHARACTER OF THE FUND I.E PRINCIPAL. THE DIRECT TAX LAWS (AMENDMENT) ACT, 1989 W.E.F 01.04.1989 HAD REVAMPED CORPUS DONATION. THE AMENDMENT CARRIED OUT IS THAT THE CORPUS DONATION IS A VOLUNTA RY CONTRIBUTION, THEREFORE, CONSTITUTES INCOME U/S 2(24) (IIA) OF THE I.T ACT. ANOTHER AMENDMENT WAS MADE IN SECTION 11(1)(D) BY THE SAME A CT. THE EFFECT OF THE AMENDMENT IS THAT DEDUCTION WILL BE ALLO WED U/S 11(1)(D) IN RESPECT OF VOLUNTARY CONTRIBUTION WITH SPEC IFIC DIRECTION THAT THEY SHALL FORM PART OF THE CORPUS OF THE TRUST. PRIOR TO THIS AMENDMENT, VOLUNTARY CONTRIBUTION WITH A SPECIFIC DIRE CTION WHICH IS ALSO KNOWN AS CORPUS DONATION WAS NEVER CONSIDERE D AS AN INCOME AND WAS TOTALLY EXCLUDED FROM THE PURVIEW OF IN COME. THE SPECIFIC DIRECTION MUST BE WITH REGARD TO (A) THE OBJECT FOR WHICH SUCH CONTRIBUTION SHOULD BE UTILIZED . (B) THE PERIOD OF HOLDING OR UTILIZING THE FUNDS (C) TO HOLD FUNDS TOWARDS CORPUS. (IV) IN IMPUGNED CASE, DURING THE YEAR UNDER CONSIDER ATION, THE APPELLANT TRUST HAS RECEIVED AN AMOUNT OF RS.10,15,00,0 00/- AS DONATION FROM THERMAX LTD. OUT OF IT, AN AMOUNT OF RS.78,00,000/- WAS RECEIVED SPECIFICALLY FOR AN ELIGIBLE PROJECT, UNDER SECTION 35AC NAMELY, SAVITRIBAI PHULE ENGLISH MED IUM SCHOOL HOWEVER, FOR REMAINING AMOUNT OF RS.9,37,00,000/- THERMAX LTD I.E THE DONOR HAS GIVEN AN INSTRUCTION I N GENERAL MANNER. THE A.O HAS INCORPORATED THE CONTENT OF THE LE TTER IN ASSESSMENT ORDER, WHICH IS REPRODUCED HERE AS UNDER: DATE 30 TH JUNE, 2012 TO THERMAX SOCIAL INITIATIVE FOUNDATION, 4, THERMAX HOUSE, PUNE MUMBAI ROAD, SHIVAJINAGAR, PUNE 411005. SUB : DONATION PLEASE FIND ENCLOSED HEREWITH CHEQUE NO. 223059 DRAWN O N CITIBANK DATED 30 TH JUNE, 2012 FOR RS. 200,00,000/- ( RUPEES TWO CRORE ONLY) BEING DONATION TOWARDS THE CORPUS OF THERMAX SOCIAL INITIATIVE FOUNDATION. KINDLY GIVE US RECEIPT FOR THE SAME ALONG WITH COPY OF TAX EXEMPTION CERTIFICATE. THANK YOU, 6 ITA NO. 1959/PUN/2016 FOR THERMAX LIMITED. SD/- AUTHORISED COMPANY. THE CONTENT OF THE ABOVE LETTER CLEARLY SHOWS THAT NO SPEC IFIC DIRECTION, WHATSOEVER, HAS BEEN GIVEN BY THE DONOR TO THE APPELLANT DONE REGARDING UTILIZATION OF THE FUND BUT HAS MERELY MENTIONED THAT IT SHOULD BE PART OF CORPUS OF THE APP ELLANT TRUST. HENCE, CONSIDERING THE ABOVE DISCUSSION AND FACTS AV AILABLE ON RECORD, THE IMPUGNED DONATION MAY NOT FALL UNDER THE CA TEGORY OF CORPUS DONATION EXCEPT THE AMOUNT OF RS. 78 LACS SPE CIFICALLY GIVEN OR EARMARKED FOR THE PROJECT NAMELY, SAVITRIBAI PHULE ENGLISH MEDIUM SCHOOL. FURTHER RIGHTLY POINTED OUT BY A.O THA T THE ALLEGED CORPUS FUND OF RS.4,81,13,000/- HAS ULTIMATELY BEE N DONATED TO OTHER SEVERAL CONCERNS AS VOLUNTARILY DONA TION BY THE APPELLANT AND THE SAID AMOUNT HAS NOT BEEN DIRECTLY APPLIED BY THE APPELLANT ON ITS OWN OBJECTS. CONSIDERING THE ABOVE FACTS OF THE CASE, THE AMOUNT OF RS.9,37,00,000/-(10,15,00,000/- 78,00,000/- CANNOT BE CONSIDERED AS CORPUS DONATION AS IT LACKS SPECIFIC DIRECTION FROM THE DONOR WITH REGARD TO UTI LIZATION OF THE FUND. HOWEVER, THE SAME DESERVES TO BE TREATED AS VOLU NTARY CONTRIBUTION/ DONATION, WHICH IS REQUIRED TO BE CREDIT ED IN THE INCOME AND EXPENDITURE A/C FOR THE YEAR UNDER CONSID ERATION. ACCORDINGLY THE INCOME AND EXPENDITURE A/C FOR THE YEAR ENDING ON 31.03.2013 WILL BE AS UNDER : PARTICULARS EXPENDITURE (RS) PARTICULARS INCOME ( RS) EMPLOYEE BENEFIT 1,43,71,056 INTEREST INCOME 1,10,53,825 DEP 11,53,445 DIVIDEND INCOME 16,77,962 OTHER EXPENSES INCLUDING DONATION OF RS. 4,81,13,000/- GIVEN TO OTHER CONCERN. 5,35,01,538 VOLUNTARY DONATION FROM THERMAX LTD (10,15,00,000- 78,00,000 9,37,00,000 SURPLUS OF INCOME OVER EXPENDITURE 3,74,48,948 MISCELLANEOUS INCOME 43,200 10,64,74,987 10,64,74,987 (V ) FURTHER, SECTION 11(1)(A) OF I.T ACT PROVIDES THAT THE INCOME DERIVED FROM PROPERTY HELD UNDER TRUST WHOLLY FOR CHA RITABLE PURPOSE, TO THE EXTENT TO WHICH SUCH INCOME IS APPLI ED TO SUCH PURPOSES IN INDIA, SHALL NOT BE INCLUDED IN THE TOTAL INC OME OF THE PREVIOUS YEAR OF THE PERSON IN RESPECT OF THE INCO ME. THE SCHEME OF CLAIMING EXEMPTION PROVIDES THAT OUT OF THE INCOM E MINIMUM 85% OF THE INCOME HAS TO BE APPLIED FOR WHOLLY CHARITA BLE PURPOSE. IN THE EVENT, IT COULD NOT BE APPLIED TO THAT EXTENT T HEN, IT CAN BE ACCUMULATED. SECTION 11(2) OF I.T ACT DEALS WITH SITUATIO N THAT 85% 7 ITA NO. 1959/PUN/2016 OF ITS INCOME COULD NOT BE APPLIED FOR CHARITABLE PURP OSE DURING THE RELEVANT PREVIOUS YEAR, THEN SUCH SHORT FALL CAN BE ACCUMULATED IN A MANNER AS PROVIDED IN SECTION 11(2) R.W. RULE 17 OF I.T RULES, AN APPLICATION HAS TO BE FILED FOR ACCUM ULATION BY FILING FORM NO.10 TO THE CONCERNED A.O, WITHIN THE DUE D ATE FOR FILING THE RETURN OF INCOME FOR THE YEAR UNDER CONSI DERATION. THE CONDITIONS ARE: (A) FIRSTLY, AN APPLICATION HAS TO BE FILED IN WRITING TO TH E A.O CONCERNED IN PRESCRIBED MANNER AND SPECIFY THEREIN THE PURPOSE FOR WHICH THE INCOME IS ACCUMULATED OR SET APART AND THE PERIOD FOR WHICH THE INCOME IS TO BE ACCUMULATE D OR SET APART WHICH IN NO CASE EXCEEDS FIVE YEARS. (B) SECONDLY, THE ACCUMULATED INCOME HAS TO BE INVESTED I N A MANNER PROVIDED U/S 11(5) OF I.T ACT. HOWEVER, IN IMPUGNED CASE, THE APPELLANT HAS APPLIED AN AMOUNT OF RS.6,90,26,039/- ONLY TOWARD ITS CHARITABLE OBJECT DURIN G THE YEAR UNDER CONSIDERATION, WHICH IS 64% OF THE GROSS INCOME AND ACCORDINGLY THERE IS A SHORTFALL OF 21%. AS THE APPELLA NT HAS FAILED TO COMPLY THE STATUTORY REQUIREMENTS IN TERMS OF SE CTION 11(1)(A) R.W.S 11(5) OF I.T ACT, BY NOT SUBMITTING FORM-10 BEFORE THE CONCERNED A.O WITHIN STIPULATED TIME. HENCE, THE BENEFIT OF SECTION 11 AND 12 OF I.T ACT HAS CORRECTLY BEEN DENIED BY A.O FOR THE YEAR UNDER APPEAL. HOWEVER, THE TOTAL TAXABLE INCOME WILL BE AT RS.3,74,48,948/- I.E THE AMOUNT OF SURPLUS DETERMINED IN INCOME AND EXPENDITURE A/C MENTIONED AT PAGE 23 OF THE IMPUG NED APPEAL ORDER. ACCORDINGLY GROUND OF APPEAL NO. 2 IS DISMISSED. THOUGH THE ASSESSEES TAXABLE INCOME WAS IN EFFECT REDU CED FROM RS.5,61,83,906/-TO RS.3,74,48,948/-, HOWEVER, LD. CIT(A) HELD T HE ASSESSEES APPEAL AS DISMISSED. 4. LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT THERE IS NO DISPUTE THAT ASSESSEE TRUST SINCE PAST MANY YEARS IS A GENUIN E CHARITABLE ORGANIZATION WHOSE VARIOUS PROGRAMS ARE PARTNERED BY P UNE MUNICIPAL CORPORATION, STATE AND CENTRAL GOVERNMENT; THESE CHARITA BLE ACTIVITIES ARE BEING CONDUCTED SUCCESSFULLY FOR BENEFITS OF PUBLIC AT LA RGE WITHOUT ANY DISCRIMINATION ON CASTE, RELIGION OR ANY OTHER SECTARIAN CONSIDERATION. THE LETTER ISSUED BY THE DONOR THERMAX L TD, GIVES AN UNEQUIVOCAL DIRECTION THAT THE DONATIONS ARE TOWARDS COR PUS OF THE 8 ITA NO. 1959/PUN/2016 ASSESSEE TRUST, THERE IS NO JUSTIFICATION TO ASSUME THAT THEY ARE NON CORPUS. THESE TYPES OF DONATIONS HAVE NOT BEEN GIVEN FO R THE FIRST TIME. IN PRECEDING YEARS ALSO DONATIONS AND THEIR UTILIZATION ON SIMILAR PATTERN HAVE BEEN USED AND NO QUESTION HAS BEEN RAISE D BY THE INCOME TAX DEPARTMENT. LD. CIT(A) WHILE REFERRING TO SECTION 11(1)(D) HAS MISINTERPRETED THE SAME. THE AMENDED SECTION 11(1)(D) R EADS AS UNDER : INCOME FROM PROPERTY HELD FOR CHARITABLE OR RELIGIO US PURPOSES . 11.(1) SUBJECT TO THE PROVISION OF SECTION 60 TO 63, THE FO LLOWING INCOME SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE PREVIO US YEAR OF THE PERSON IN RESPECT OF THE INCOME . [(D) INCOME IN THE FORM OF VOLUNTARY CONTRIBUTION MAD E WITH SPECIFIC DIRECTION THAT THEY SHALL FORM PART OF THE CORPUS OF THE TRUST OR INSTITUTION . THE SIMPLE READING OF THE ABOVE PROVISION REVEALS THAT VO LUNTARY CONTRIBUTION MADE WITH SPECIFIC DIRECTION TO FORM PART OF THE CORPUS OF THE TRUST OR INSTITUTION SHOULD NOT BE INCLUDED IN THE TOT AL INCOME OF THE ASSESSEE. IN THIS CASE THE IMPUGNED VOLUNTARY CONT RIBUTIONS BY THE THERMAX LTD CLEARLY GIVE A SPECIFIC DIRECTION FOR BEING PAR T OF CORPUS OF THE TRUST. THESE SPECIFIC CORPUS DONATION SPECIFIC DIRECTION CANNOT BE INTERPRETED DIFFERENTLY BY LD. CIT(A) BASED ON PERCEPTION, P ROVISION DONT GRANT SUCH DISCRETION. THUS LD. CIT(A) HAS MISINTERPRE TED THE SPECIFIC DIRECTIONS AND SUBSTITUTED HIS OWN VIEW UNTENABLE VIEW TO ASSUME THAT THE SPECIFIC DIRECTION IS NOT CLEAR AND BE DEE MED TO BE NON CORPUS DONATION. 5. THE VIEW ADOPTED BY LD. CIT(A) IS CONTRARY TO THE VAR IOUS JUDICIAL PRECEDENTS LAYING DOWN FOLLOWING PROPOSITIONS: 1) NAGARJUNA EDUCATION SOCIETY, 46, SOT 501 (VSP) 9 ITA NO. 1959/PUN/2016 A) DIRECTION THAT DONATION SHOULD FORM PART OF CORPU S SHOULD COME FROM THE DONOR AND NOT THE DISCRETION OF OTHERS. B) IT DOES NOT DEPEND ON THE SWEET WILL OF THE DONE E/INSTITUTION OR OTHER AGENCIES. C) A.O. CANNOT CHANGE CHARACTER FROM CORPUS TO VOLUNTARY. 2) TRUSTEES OF THE JADI TRUST 133 ITR 494(BOM) DONATING INCOME TO ANOTHER CHARITABLE TRUST AMOUNTS TO APPLICATION OF INCOME FOR CHARITABLE PURPOSES. 3) DHARMA PRATISHTHANAM 11ITD 40 (DELHI) : THERE IS NO OBLIGATION TO RETAIN CORPUS FOREVER AND MAY BE USED FOR OBJECTS OF THE TRUST. T HESE JUDGMENTS WHILE LAYING DOWN CLEAR PROPOSITIONS AS MENTIONED ABOVE IN TURN RELY ON CATENA OF OTHER BINDING JUDGMENTS MENTIONED IN THESE ORDERS. 6. APROPOS LD. CIT(A)S OBSERVATION THAT THE CORPUS FUND S OF RS. 4,81,13,000/- WAS ULTIMATELY DONATED TO OTHER CHARITABLE IN STITUTION AMOUNT TO NON APPLICATION OF THE INCOME TOWARDS ASSESSE ES OWN OBJECTS HAS NO LEGS TO STAND AS EVEN HONBLE SUPREME COURT HAS HELD SUCH DONATIONS TO BE PERMISSIBLE APPLICATION OF INCOME DERIV ED FROM THE PROPERTY OF THE TRUST. THE VIEW ADOPTED HONBLE BOMBAY HIGH COURT IN THE CASE CIT V/S. TRUSTEES OF THE JADI TRUST (SUPRA) TO THE EFFECT THAT DONATING INCOME TO ANOTHER CHARITABLE TRUST A MOUNTS TO APPLICATION OF INCOME FOR CHARITABLE PURPOSES WHICH IS A BINDING PRECEDENT WHICH IS TO BE FOLLOWED WITH UTMOST REQUEST. 7. APROPOS LD. CIT(A)S REFUSAL TO CONSIDER THE ASSESSEE S ALTERNATIVE GROUND THAT IN CASE IT IS HELD THAT IN VIEW OF T HE NEW INTERPRETATION THE 85 % OF RUST INCOME HAS NOT BEEN APP LIED IN THIS YEAR, THE ASSESSEE BY PROVISION OF SECTION 11(2) IS ENTITLED TO APPLY THE 10 ITA NO. 1959/PUN/2016 INCOME IN NEXT SIX YEARS. IN SINCE THE ASSESSEE WAS NOT BONAFIDE EVER BASED ON THE PAST VIEW THEREOF OPPORTUNITY TO CORRECT FORM-10 SHOULD HAVE BEEN GIVEN TO THE ASSESSEE AS MATTER OF RIGHT AS HELD IN THE CASE OF KANDLA DOCK LABOUR BOARD 133 ITD 156 ( RAJKOT). THUS , IF A NEW EVENTUALITY ARISES DUE TO A NEW LEGAL INTERPRETATION, THE A SSESSEE HAS A RIGHT OF AN OPPORTUNITY TO AMEND FORM-10 WITHIN A FRAME W ORK OF LAW. FURTHER RELIANCE HAS BEEN PLACED ON THE FOLLOWING JUDGMENTS: A) INSTITUTE OF BANKING 264 ITR 110 ( BOM) B) SUMAN RAMESH TULSIANI ITA 4683 & 4684/MUM/2010 C) SHRI RAM MEMORIAL FOUNDATION 269 ITR 35 ( DEL) D) THE SONHIRA FOUNDATION FOR RURAL DEVELOPMENT. 8. TO SUM UP, LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT: A) THE IMPUGNED DONATIONS BEING SPECIFICALLY TOWARDS CORP US CANNOT BE INCLUDED IN THE INCOME ON ASSUMPTIONS OF AUTHORITIES BELOW. B) ASSESSEES PROMOTION OF ITS CHARITABLE OBJECTS BY DO NATION TO SIMILAR TYPE OF CHARITABLE INSTITUTION HAS BEEN ACCEPTED BY THE DEPARTMENT AND THERE IS NO BAR EITHER IN INCOME TAX AC T OR BOMBAY PUBLIC TRUST ACT AGAINST SUCH DONATION TO OTHER CHARITAB LE ORGANIZATIONS IN FURTHERANCE OF ASSESSEE TRUSTS OBJECTIVES. C) IN ANY CASE, ASSESSEE SHOULD HAVE BEEN GIVEN OPPOR TUNITY TO AMEND FORM-10 FOR SET APART IN APPLIED INCOME IN NEXT SIX YEARS AS PROVIDED BY LAW ON ITS OBJECT. THUS, ACTIONS OF AUTHORITIES BELOW ON ALL THESE COUNTS ARE UNJUSTIFIED, ARBITRARY AND UNSUSTAINABLE. 9. LD. D.R HAS PLACED RELIANCE ON THE ORDER OF AUTHORITIES BELOW. 11 ITA NO. 1959/PUN/2016 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON THE RECORD. 11. IT EMERGES FROM THE RECORD THAT THE IMPUGNED DONA TIONS WERE GIVEN BY THERMAX LTD TO THE ASSESSEE AS CORPUS DONAT ION, A FACT WHICH IS EVIDENT FROM THE LETTER MENTIONED ABOVE. THERMAX LTD THE DONOR HAS GIVEN SPECIFIC DIRECTION FOR CORPUS OF THE ASSESSEE TRUST A ND IN OUR CONSIDERED OPINION THE SAME CANNOT BE INTERPRETED IN A D IFFERENT MANNER BY INTENDMENT AND PRESUMPTIONS BY AUTHORITIES BE LOW. SIMILAR METHODOLOGY OF THERMAX LD. DONATION AND THEIR SIMILAR UTILIZATION HAS BEEN ACCEPTED BY THE DEPARTMENT IN PAST YEARS AS DEPICTED IN THE CHART ABOVE. THE REASONS GIVEN BY LD. CI T(A) TO ADOPT DIFFERENT VIEW IS BASED ON THE MISINTERPRETATION AND PRESUM PTIONS, WHICH ARE UNSUSTAINABLE. 12. IN OUR CONSIDERED VIEW, VOLUNTARY CONTRIBUTION OF THER MAX LTD TOWARDS CORPUS OF THE TRUST CANNOT BE INCLUDED IN THE IN COME OF THE ASSESSEE IN CLEAR TERMS OF SECTION 11(1)(D). OUR VIEW IS FORTIFIED BY VISAKHAPATNAM ITAT JUDGMENT IN THE CASE OF NAGARJUNA E DUCATIONAL SOCIETY (SUPRA.) AND BY DELHI ITAT, IN THE CASE OF DHARMA PRATISHTHANAM ( SUPRA.) 13. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, THE FIN DINGS OF LD. CIT(A) ON THIS ISSUE IS HEREBY REVERSED. 14. APROPOS THE SECOND ISSUE ALLEGING THAT THE ASSESSEE HAS VIOLATED THE PROVISION OF SEC. 11 AND 12 BY GIVING DONATION FOR FURTH ERANCE OF ITS OBJECTS TO THE OTHER REGISTERED CHARITABLE TRUST HAVING SIMILAR OBJECTS. NOTHING HAS BEEN BROUGHT ON RECORD TO SUGGEST THAT A SSESSEES TO CARRY 12 ITA NO. 1959/PUN/2016 OUT ITS OBJECTS THERE IS ANY CLAUSE IN THE MEMORANDUM P ROHIBITING THIS. IT IS SETTLED LAW THAT THE CHARITABLE OBJECTS CAN A LSO BE PROMOTED WITH OWN EFFORTS AND BY DONATING OTHER TRUST HAVING CHAR ITABLE OBJECTS. OUR VIEW IS SUPPORTED BY MUMBAI ITAT IN THE CASE OF SUMA N RAMESH TULSIANI (SUPRA.) WHICH AGAIN RELIES ON VARIOUS OTHER JUDGMEN TS BESIDES, HONBLE BOMBAY HIGH COURT IN THE CASE OF TRUSTEES OF THE JADI TRUST. 15. IN VIEW OF THE FOREGOING, WE HAVE NO HESITATION TO HOLD THAT ASSESSEES TRUST CAN PROMOTE ITS CHARITABLE OBJECTS BY GIVING DONATION TO OTHER CHARITABLE ORGANIZATIONS AND SUCH DONATIONS WILL A MOUNT TO APPLICATION OF INCOME OF THE TRUST. 16. THUS, THE FINDINGS OF THE LD. CIT(A) ON THE SECOND ISSU E IS ALSO REVERSED. 17. SINCE WE HAVE ALLOWED THE SUBSTANTIVE GROUNDS OF THE ASSESSEE HOLDING THAT THE CORPUS DONATION CAN NOT BE INCLUDED IN T HE INCOME OF THE ASSESSEE AND THE DONATION TO OTHER TRUST AMOUNTS TO APPLICATION OF INCOME. AS A RESULT, ASSESSEES EXPENDITURE ON PROMOTION OF ITS OBJEVCTS IN THIS YEAR EXCEEDS THE INCOME DERIVED FROM TR UST PROPERTY. CONSEQUENTLY, THERE IS NO REASON TO DWELL ON THE ALTERNA TIVE GROUNDS. HOWEVER, BEFORE PARTING, IT WILL NOT BE OUT OF PLACE TO MENTIO N THAT LD. CIT(A) WAS NOT JUSTIFIED IN REFUSING TO ALLOW THE OPPORTUN ITY TO AMEND OF ITS FORM-10 IN VIEW OF THE NEW VIEW BEING ADOPTED BY A UTHORITIES BELOW. JUDICIAL AUTHORITIES IN THE CASE OF KANDLA DOCK LABOUR BOARD, THE SONHIRA FOUNDATION FOR RURAL DEVELOPMENT (SUPRA) ALLOW SUCH CORRECTION/ AMENDMENT IN FORM 10. THE HONBLE GUJRAT HIG H COURT IN THE CASE OF MAYUR FOUNDATION ALSO ALLOWED SUCH AMENDMEN T. THIS 13 ITA NO. 1959/PUN/2016 BEING LEGAL RIGHT CANNOT BE REFUSED TO THE ASSESSEE. THER EFORE, WE MAY EXPRESS THE VIEW THAT THE ASSESSEES CLAIM WAS UNJUSTIFIABLY D ENIED. 18. IN VIEW OF THE FOREGOING, WE ALLOWED THE ASSESSEES MA IN GROUND ON THE ISSUE MENTIONED ABOVE WHICH RESULT IN ALLOWING THE A PPEAL OF THE ASSESSEE. 19. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. SD/- SD/- ( # ! $ /ANIL CHATURVEDI) ( / R.P TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER / PUNE; !' / DATED : 22 ND DECEMBER, 2016 SB )*+,-.-( / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A), PUNE-10 4. THE PR. CCIT, PUNE. #$ %&' () , * () , +,- , / DR, ITAT, B BENCH, PUNE. 6. './01 / GUARD FILE. // TRUE COPY // *2 / BY ORDER, 3 (- PRIVATE SECRETARY, * () , / ITAT,