Appeal Details
Counselvise Citation
[2017] 127 COUNSELVISE.COM (IT) 5084 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
3 year(s) 1 month(s) 8 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
04-08-2017
Appeal Filed By
Department
Order Result
Allowed
Bench Allotted
G
Next Hearing Date
01-05-2017
Assessment Year
2010-2011
Appeal Filed On
26-06-2014
Judgement Text
ITO V SWAMI OMKARANANAD SARASWATI CHARITABLE TRUST A Y 2010 - 11 ITA 3744 /DEL/2014 & CIO 104/DEL/2015 PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G : NEW DELHI BEFORE SHRI H.S.SIDHU , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 3744/DEL/2014 (ASSESSMENT YEAR: 2010 - 11 ) ITO, WARD - 2, RISHIKESH VS. SWAMI OMKARNANDA SARASWATI CHARITABLE TRUST, SWAMI OMKARNANDA MARG, MUNI KI RETI, PO - SHIVANANDNAGAR, TEHRI GARHWAL, UTTRAKHAND PAN:AABTS8947F (APPELLANT) (RESPONDENT) CO NO. 104/DEL/2015 (IN ITA NO. 3744/DEL/2014) (ASSESSMENT YEAR: 2010 - 11) SWAMI OMKARNANDA SARASWATI CHARITABLE TRUST, SWAMI OMKARNANDA MARG, MUNI KI RETI, PO - SHIVANANDNAGAR, TEHRI GARHWAL, UTTRAKHAND PAN:AABTS8947F VS. ITO, WARD - 2, RISHIKESH (APPELLANT) (RESPONDENT) ASSESSEE BY : SH RI C . S . AGARWAL, SR. ADV SHRI R P MALL ADVOCATE REVENUE BY: SHRI S S RANA CIT DR DATE OF HEARING 0 8/05 / 2017 DATE OF PRONOUNCEMENT 0 4 / 0 8 / 2017 O R D E R PER PRASHANT MAHARISHI , A. M. 1. APPEAL NO . 3744/ DEL/2014 HAS BEEN FILED BY THE INCOME TAX OFFICER WARD - 2 RISHIKESH ,[ HEREINAFTER REFERRED TO AS THE LD AO ] AGAINST THE ORDER OF THE LD CIT (A) 1 , DEHRADUN [ HEREINAFTER REFERRED TO THE LD CIT (A)] DATED 17/4/2014 WHERE IN THE APPEAL OF THE ASSESSEE PREFERRED AGAINST THE ORDER OF LD A O PASSED U/S 143(3) OF THE ACT ON 31/3/2012 IS SUBSTANTIALLY ALLOWED. ASSESSEE CHARITABLE TRUST HAS ALSO PREFERRED CROSS ITO V SWAMI OMKARANANAD SARASWATI CHARITABLE TRUST A Y 2010 - 11 ITA 3744 /DEL/2014 & CIO 104/DEL/2015 PAGE | 2 OBJECTION IN THE APPEAL FILED BY THE REVENUE RAISING OBJECTIONS AGAINST CERTAIN OBSERVA TION OF THE LD CIT (A ) IN HIS ORDER. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE FACT THAT ASSESSEE TRUST RENTED OUT VARIOUS COMMERCIAL PROPERTIES FOR COMMERCIAL PURPOS ES AND REPORTED COMMERCIAL RECEIPTS IN THE FORM OF RENTAL INCOME AT RS. 63,17,202/ - WHICH IS THE SEPARATE ACTIVITY PURELY COMMERCIAL NATURE HAVING NO RELEVANCE WITH THE EDUCATIONAL ACTIVITY THUS COVERED WITH THE AMENDED PROVISION OF SECTION 2(15) OF THE IT ACT, 1961. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE FACT THAT THE ASSESSEE IS IMPOSING VARIOUS COSTS UPON EDUCATION IN THE FORM OF ADMIN EXPENSES, ADVERTISEMENT, STAFF MESS, STAFF UNIFORMS, TRAVELLING AND CONVEYANCE, REPAIR AND MAINTENANCE, INTEREST ON LOAN FOR ACQUISITION OF ASSETS AND EVEN NOT REFUNDED CAUTION MONEY TO THE STUDENTS AFTER LAPSE OF YEARS THUS CASE OF ASSESSEE IS FULLY COVERED WITH THE CASE LAW DECIDED BY THE HON'BLE JURISDICTIONAL HIGH COURT IN CASE OF ACIT VS. GRAPHIC ERA EDUCATIONAL SOCIETY, 108 ITJ 608 AND RATION OF CASE LAW OF CASE VODITHALA EDUCATION SOCIETY VS. ADIT (EXEM)(ITAT, HYD) 20 SOT 353 IS FULLY APPLICABLE IN THE CASE OF ASSESSEE. 3. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE FACT THAT IMPARTING EDUCATION WITH PRIMARY PURPOSE OF EARNING SURPLUS OF RS. 60,75,878/ - IN THE CURRENT YEAR CANNOT BE A CHARITABLE ACTIVITY THUS RATION OF CASE LAW IN CASE OF CIT VS. NATIONAL INSTITUTE OF AERONAUTICAL ENGINEERING EDUCATIO NAL SOCIETY (UTTRAKHAND) 315 ITR 428 AND CIT VS. QUEENS EDUCATION SOCIETY, 319 ITR 160. 4. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE FACT THAT THERE ARE COMMON MEMBERS IN THE DONEE TRUST AND DONOR TRUST, THUS COVERED AS ENGAGED IN DONATING TRUST FUND TO ITS RELATED INSTITUTIONS COVERED UNDER THE INTERESTED PERSONS WITHIN THE MEANING OF SECTION 13(1)(C) READ WITH SECTION 13(3}(E) OF THE IT ACT 1961 FOR WHICH NO FURTHER EXAMINATION OF APPLICATION OF DONATED FUND IS NEEDED TO BE ENV ISAGED ON THE PART OF AO. 5. THE LD. CIT{A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THE FACT THAT THE ASSESSEE SIX OUT OF NINE VEHICLES HAS REGISTERED IN THE NAME OF INDIVIDUAL TRUSTEES, THUS MISAPPROPRIATION OF FUND WITH THE TRUST PROPERTY THUS INFRINGED LAW HELD IN SECTION 13{2){G) READ WITH SECTION 13(3)(E) OF THE IT ACT, 1961. 6. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THE ASSESSEE TRUST AS CHARITABLE ONE BUT NOT CONSIDERING THE ALTERNATIVE FINDINGS OF AO PLACED AT PAGE NO. 2 1 OF THE ASSESSMENT ORDER WHEREIN FIGURE OF ANONYMOUS DONATION OF RS.40,81,528/ - HAS BEEN WORKED OUT, THUS IN CASE ASSESSEE IS FOUND CHARITABLE ONE, ANONYMOUS DONATION OF ITO V SWAMI OMKARANANAD SARASWATI CHARITABLE TRUST A Y 2010 - 11 ITA 3744 /DEL/2014 & CIO 104/DEL/2015 PAGE | 3 RS. 40,81,528 / - - INVARIABLY IS TO BE TAXED UNDER SECTION 115BBC OF THE IT ACT, 1961. 3. IN ITS CROSS OBJECTION, ASSESSEE TRUST HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN HOLDING, THAT PRINCIPLES OF CONSISTENCY DO NOT APPLY, DESPITE THE FACT THAT HE HAS HELD WHILE ADJUD ICATING THE CLAIM OF THE ASSESSEE THAT NO INCOME OF THE ASSESSEE IS TO BE INCLUDED IN THE TOTAL INCOME, AS WAS HELD IN THE PRECEDING ASSESSMENT YEARS. 2. THAT IN SO HOLDING HE HAS FAILED TO COMPREHEND THAT ADMITTEDLY THE FACTS AND CIRCUMSTANCES OF THE INSTANT YEAR ARE IDENTICALLY THE SAME AS WERE IN THE PRECEDING ASSESSMENT YEARS WHEN IT WAS HELD THAT THE SURPLUS OF THE ASSESSEE TRUST WAS NOT TO BE INCLUDED IN THE TOTAL INCOME AS THE INCOME HAD BEEN DERIVED FROM THE PROPERTY HELD UNDER TRUST AND THAT TH E ASSESSEE TRUST WAS EXISTING SOLELY FOR EDUCATIONAL AND CHARITABLE PURPOSES AND THERE WAS NO PROFIT MOTIVE. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FURTHER ERRED IN FAILING TO CONSIDER THE JUDGMENTS OF THE APEX COURT IN THE CASE OF CI T VS. EXCEL INDUSTRIES LTD. 358 ITR 295 WHEREIN IT HAS BEEN HELD THAT HAVING TAKEN A STAND IN THE PRECEDING ASSESSMENT YEARS, REVENUE CANNOT BE ALLOWED TO FLIP - FLOP ON THE ISSUE. 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FURTHER ERRED I N NOT RECORDING A SPECIFIC FINDING THAT THE ASSESSEE IS ALSO ENGAGED IN THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY DESPITE THE FACT THAT HE HAS HELD IN PARA 4.1 THAT PRIMA FACIE, NO CASE IS MADE OUT FOR THE TRUST TO BE COVERED UNDER THE OTHER OBJECTS CLAUSE IN SECTION 2(15) OF THE ACT. 5. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN HOLDING, THAT PRINCIPLES OF CONSISTENCY DO NOT APPLY, DESPITE THE FACT THAT HE HAS HELD WHILE ADJUDICATING THE CLAIM OF THE ASSESSEE THA T NO INCOME OF THE ASSESSEE IS TO BE INCLUDED IN THE TOTAL INCOME, AS WAS HELD IN THE PRECEDING ASSESSMENT YEARS. 6. THAT IN SO HOLDING HE HAS FAILED TO COMPREHEND THAT ADMITTEDLY THE FACTS AND CIRCUMSTANCES OF THE INSTANT YEAR ARE IDENTICALLY THE SAME AS WERE IN THE PRECEDING ASSESSMENT YEARS WHEN IT WAS HELD THAT THE SURPLUS OF THE ASSESSEE TRUST WAS NOT TO BE INCLUDED IN THE TOTAL INCOME AS THE INCOME HAD BEEN DERIVED FROM THE PROPERTY HELD UNDER TRUST AND THAT THE ASSESSEE TRUST WAS EXISTING SOLELY FOR EDUCATIONAL AND CHARITABLE PURPOSES AND THERE WAS NO PROFIT MOTIVE. 7. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FURTHER ERRED IN FAILING TO CONSIDER THE JUDGMENTS OF THE APEX COURT IN THE CASE OF CIT VS. EXCEL INDUSTRIES LTD. 358 ITR 295 W HEREIN IT HAS BEEN HELD THAT HAVING TAKEN A STAND IN THE PRECEDING ASSESSMENT YEARS, REVENUE CANNOT BE ALLOWED TO FLIP - FLOP ON THE ISSUE. ITO V SWAMI OMKARANANAD SARASWATI CHARITABLE TRUST A Y 2010 - 11 ITA 3744 /DEL/2014 & CIO 104/DEL/2015 PAGE | 4 8. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FURTHER ERRED IN NOT RECORDING A SPECIFIC FINDING THAT T HE ASSESSEE IS ALSO ENGAGED IN THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY DESPITE THE FACT THAT HE HAS HELD IN PARA 4.1 THAT PRIMA FACIE, NO CASE IS MADE OUT FOR THE TRUST TO BE COVERED UNDER THE OTHER OBJECTS CLAUSE IN SECTION 2(15) OF THE ACT. 4. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A TRUST RUNNING EDUCATION INSTITUTIONS UNDER THE NAME AND STYLE OF OMKARNANDA INSTITUTE OF TECHNOLOGY AT SHIVANANDA NAGAR . IT CARRIES ON PROFESSIONAL COURSES SUCH AS MBA, BBA, BCA AND MSC THROUGH THIS. THE TRUSTS OBJECT S ARE TO ESTABLISH AND DEVELOP SCHOOLS AND COLLEGES FOR IMPARTING EDUCATION AND MEDICAL AID TO THE NEEDY. THEREFORE, THE ABOVE TRUST IS REGISTERED U/S 12A O F THE ACT W.E.F. 01.04.1989. IT FILED ITS RETURN OF INCOME FOR AY 2010 - 11 ON 15.10.2010 SHOWING ITS ENTIRE INCOME AS NOT CHARGEABLE TO TAX BY APPLYING THE PROVISIONS OF SECTION 11 AND 12 OF THE INCOME TAX ACT, 1961. ALONG WITH THE RETURN OF INCOME, THE ASS ESSEE HAS FURNISHED AUDIT REPORT IN FORM NO. 10B . THE VARIOUS COURSES CONDUCTED BY THE ASSESSEE TRUST THROUGH ITS VARIOUS EDUCATION INSTITUTES RUN BY THE TRUST WHO MAINTAINS SEPARATE BOOKS OF ACCOUNTS AND PREPARES SEPARATE INCOME AND EXPENDITURE ACCOUNTS AND BALANCE SHEET. AT THE END OF THE YEAR, IT IS INCORPORATED IN THE MAIN TRUST AND BALANCE SHEET IS CONSOLIDATED BY SHOWING THE VARIOUS INSTITUTES AS BALANCES IN THE BALANCE SHEET. DURING THE YEAR THE LD ASSESSING OFFICER ISSUED NOTICE TO THE ASSESSEE O N 27 POINTS, WHICH WAS REPLIED TO, BY THE ASSESSEE ON 27.12.2012. HOWEVER, THE LD ASSESSING OFFICER WAS NOT SATISFIED BY THE REPLY OF THE ASSESSEE AND STATED AS UNDER: - I. THE ASSESSEE IS ENGAGED IN BUSINESS ACTIVITIES IN THE GUISE OF EDUCATIONAL ACTIVITIES AS IT CHARGES HUGE FEES AND HAS CAUTION MONEY. II. ASSESSEE IS YIELDING PROFITS @26% OF THE GROSS RECEIPT AND THEREFORE, IT IS RUNNING CHARITY ACTIVITY WITH A PROFIT MOTIVE. III. IT HAS SEVERAL RECEIPTS IN THE MAIN TRUST SUCH AS RENT RECEIPT FROM 15 DIFFERENT IMMOVABLE PROPERTIES AND FURTHER DONATION ITO V SWAMI OMKARANANAD SARASWATI CHARITABLE TRUST A Y 2010 - 11 ITA 3744 /DEL/2014 & CIO 104/DEL/2015 PAGE | 5 RECEIVED FROM VARIOUS DHARAMSHALA WHERE COMPLETE ADDRESS OF THE DONOR WAS NOT AVAILABLE. IV. THE ASSESSEE IS EARNING INTEREST INCOME OF RS. 5438244/ - AS INTEREST ON FIXED DEPOSITS AND THEREFORE, ASSESSEE IS ENGAGED IN THE BUSINESS OF CAPITAL BUILDING. V. THE ASSESSEE HAS GIVEN DONATION TO OTHER TRUSTS WHICH VIOLATES THE PROVISIONS OF SECTION 13(1(C)OF THE ACT. HENCE, ACCORDING TO THE ASSESS ING OFFICER ASSESSEE IS NOT ENTITLED FOR CLAIMING EXEMPTION U/S 11 AND 12 OF THE ACT. VI. THE SIX OUT OF NINE VEHICLES ARE PURCHASES IN THE NAME OF THE TRUSTEES THEREFORE THE PROVISIONS OF SECTION 13(2)(G) ARE VIOLATED. VII. ASSESSEE IS ENGAGED IN THE ACTIVITIES OF ADVANCEMENT OF ANY OTHER OBJECTION OF GENERAL PUBLIC UTILITY SUCH AS RENTAL INCOME, ROOM CHARGES IN DHARAMSHALA ETC. VIII. THE ASSESSEE HAS CLAIMED DEPRECIATION OF RS. 1668317/ - WHICH IS NOT ALLOWABLE SINCE THE ASSESSEE HAS ALREADY CLAIMED THE DEDUCTION OF T HIS SUM AS APPLICATION OF INCOME AND THEREFORE, FURTHER CLAIM OF DEPRECIATION IS NOT ELIGIBLE. 5. CONSEQUENTLY TOTAL INCOME OF THE ASSESSEE WAS ASSESSED AT RS. 18072277/ - DENYING IT THE BENEFIT OF SECTION 11 AND 12 OF THE ACT BY ASSESSMENT U/S 143(3) OF THE ACT ON 31.12.2012. 6. ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE LD AO , PREFERRED AN APPEAL BEFORE THE LD CIT(A). HE VIDE ORDER DATED 17.04.2014 HELD THAT ACTIVITIES OF THE ASSESSEE FALLS U/S 2(15) AND NOT UNDER THE PROVISO TO THAT SECTION AS ANY OTHER OBJECT OF THE PUBLIC UTILITY AND THEREFORE THE ASSESSEE IS ENTITLED FOR EXEMPTION U/S 11 AND 12 OF THE ACT. H E FURTHER HELD THAT NONE OF THE ALLEGATION LEVELED BY THE ASSESSING OFFICER VIOLATES THE PROVISIONS U/S 13(1) OF THE INCOME TAX ACT AND THEREFORE, THE EXEMPTION OF THE ASSESSEE CANNOT BE WITHDRAWN. HE FURTHER HELD THAT DEPRECIATION ALLOWABLE TO THE ASSE SSEE OF RS. 1668317/ - HAS NOT BEEN CLAIMED BY THE ASSESSEE IN THE COMPUTATION OF TOTAL INCOME. IT WAS FURTHER HELD THAT THE ADDITION OF THE FIXED ASSETS WAS NOT REQUIRED TO BE ADJUDICATED AS APPLICATION OF INCOME AS THE ASSESSEE HAS BEEN GRANTED AS PER S ECTION 11 ITO V SWAMI OMKARANANAD SARASWATI CHARITABLE TRUST A Y 2010 - 11 ITA 3744 /DEL/2014 & CIO 104/DEL/2015 PAGE | 6 OF THE ACT. IN NUTSHELL AND IN SUBSTANCE , THE LD CIT(A) ALLOWED THE BENEFIT OF SECTION 11 AND 12 OF THE ACT. THEREFORE, THE REVENUE AGGRIEVED WITH THAT ORDER HAS PREFERRED APPEAL BEFORE US. 7. THE LD DR, FIRSTLY PUT BEFORE US HIS SUBMISSION ON APPLICABILITY OF PROVISO TO SECTION 2 (15) OF THE ACT STATING THAT CERTAIN ACTIVITIES OF THE TRUST ASSESSEE ARE IN NATURE OF OBJECT OF GENERAL PUBLIC UTILITY WHICH ARE CARRIED ON AS BUSINESS AND THEREFORE THE INCOME OF THE ASSESSEE IS NOT ELIGIBLE FOR PREFERENTIAL TREATMENT U/S 11 AND 12 OF THE INCOME TAX ACT. HE FURTHER REFERRED TO PARA NO. 2 OF THE ASSESSMENT ORDER AND SUBMITTE D THAT THOSE INCOMES OF THE ASSESSEE ARE BUSINESS INCOME IN THE NATURE. THE ASSESSEE IS PURCHASING HOTELS AND LET IT OUT, AS THE DHARMSHALAS. HE FURTHER STATED THAT VEHICLES ARE REGISTERED IN THE NAME OF THE TRUSTEES AND FURTHER THE AMENDMENT MADE IN THE T RUST DEED IS NOT INFORMED TO THE ASSESSING OFFICER. IT WAS FURTHER STATED THAT NO SEPARATE BOOKS OF ACCOUNTS WAS MAINTAINED BY THE ASSESSEE AND THE HOSTEL ACTIVITIES , BUS FEE ETC ARE NOT EDUCATIONAL ACTIVITIES. HE FURTHER REFERRED TO PAGE NO. 21 OF THE O RDER OF THE LD. ASSESSING OFFICER TO SAY THAT THERE ARE ANONYMOUS RECEIPTS OF THE DONATION. HE FURTHER STATED THAT THE SAME IS A PROFIT - MAKING BUSINESS OF THE ASSESSEE AND FURTHER THE EXPENSE ON EDUCATIONAL ACTIVITIES IS MERELY 2.2%. IT WAS FURTHER HIS AR GUMENT THAT DONATIONS ARE NOT VOLUNTARY, BUT ARE ROOM RENT CHARGES AND HENCE CANNOT BE STATED TO BE VOLUNTARY CONTRIBUTION. HE FURTHER REFERRED TO THE VARIOUS DECISIONS CITED BY HIM IN THE GROUNDS OF APPEAL. HIS WRITTEN SUBMISSION IS AS UNDER: - WRITTEN SUBMISSION IN THE ABOVE CASE - REG. IN THE ABOVE CASE, IT MAY BE POINTED OUT THAT THE LD.CIT(A) HAS NOT CONSIDERED THE ARGUMENTS GIVEN BY ASESSING OFFICER IN HIS 36 PAGE ORDER AND GIVEN FINDINGS IN A VERY SMALL PARA 4.1 IT IS HUMBLY SUBMITTED THAT THE FOLLOWING FACTS MAY KINDLY BE CONSIDERED : 1. SECTION 2(15) OF I.T.ACT HAS BEEN AMENDED W.E.F 01.04.2009. THE RELEVANT PROVISION IS REPRODUCED BELOW: (15) 'CHARITABLE PURPOSE' INCLUDES RELIEF OF THE POOR, EDUCATION, MEDICAL RELIEF. [PRESERVATION OF E NVIRONMENT (INCLUDING WATERSHEDS, ITO V SWAMI OMKARANANAD SARASWATI CHARITABLE TRUST A Y 2010 - 11 ITA 3744 /DEL/2014 & CIO 104/DEL/2015 PAGE | 7 FORESTS AND WILDLIFE) AND PRESERVATION OF MONUMENTS OR PLACES OR OBJECTS OF ARTISTIC OR HISTORIC INTEREST.] AND THE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY: PROVIDED THAT THE ADVANCEMENT OF ANY OTHER O BJECT OF GENERAL PUBLIC UTILITY SHALL NOT BE A CHARITABLE PURPOSE, IF IT INVOLVES THE CARRYING ON OF ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE OR BUSINESS, FOR A C ESS OR FEE OR ANY OTHER CONSIDERATION, IRRESPECTIVE OF THE NATURE OF USE OR APPLICATION, OR RETENTION, OF THE INCOME FROM SUCH ACTIVITY:] PROVIDED FURTHER THAT THE FIRST PROVISO SHALL NOT APPL Y IF THE AGGREGATE VALUE OF THE RECEIPTS FROM THE ACTIVITIES RE FERRED TO THEREIN IS T W ENTY - FIVC LAKH RUPEES} OR LESS IN THE PREVIOUS YEAR;] IN VIEW OF THE ABOVE AMENDMENT, THE DECISIONS OF HON'BLE ITAT IN FAVOUR OF THE ASSESSEE IN EARLIER YEARS ARE NOT RELEVANT TO THE PRESENT PROCEEDINGS. MOREOVER, PRINCIPLE OF RES JUDICATA APPLIES TO INCOME TAX PROCEEDINGS. 2. ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY: (I) ALL RECEIPTS FROM DHARAMSHALA, RENTING OUT OF PROPERTY AS WELL AS RECEIPTS FROM T & D FEE, ENROLLMENT FEE, DEVELOPMENT FEE, WELFARE FEE, PR OSPECTUS FEE, SPORTS FEE, EXAMINATION FEE, BUS CHARGES, INSURANCE, SECURITY, SALE OF MAT FORM (II) ALL EXPENSES ON DHARAMSHALA, ACQUISITION OF PROPERTIES LET OUT, REPAIR & MAINTENANCE OF PROPERTIES LET OUT AND PERTAINING TO ABOVE RECEIPTS 3. IN VIEW OF DETAILED REASONS GIVEN IN THE ASSESSMENT ORDER, THE ASSESSEE IS COVERED BY PROVISO TO SECTION 2(15) OF I.T.ACT AND HENCE NOT ELIGIBLE FOR DEDUCTION U/S 11 & 12 OF I.T.ACT. SOME OF THE PROMINENT FINDINGS OF ASSESSING OFFICER ARE SUMMARIZED BELOW: (I) THE TRUST OWNED 55 IMMOVABLE PROPERTIES AT DIFFERENT LOCATIONS. IT PURCHASED HOTEL PARAS FROM PREVIOUS OWNER NOW FUNCTIONING AS DHARAMSHALA. THESE IMMOVABLE PROPERTIES HAVE BEEN RENTED OUT TO PERSONS/BUSINESS ENTITIES CONTAINING 82 NAMES. II. THE ASSES SEE AMENDED CLAUSE 7 OF THE TRUST DEAL WITHOUT PROVIDING INFORMATION TO THE COMMISSIONER OF INCOME TAX. III THE ASSESSEE MADE DONATIONS OF RS. 42,83,687/ - TO OTHER TRUSTS/ ORGANIZATIONS HAVING COMMON MEMBERS/ TRUSTEES. THE ITO V SWAMI OMKARANANAD SARASWATI CHARITABLE TRUST A Y 2010 - 11 ITA 3744 /DEL/2014 & CIO 104/DEL/2015 PAGE | 8 ONUS LIES UPON THE ASSESSEE TO P ROVE THAT THESE TRUSTS WERE HAVING SIMILAR OBJECTS, WHICH HAS NOT BEEN DISCHARGED (IV) THE ASSESSEE IS RECEIVING RENTAL OF RS.63,17,202/ - FROM SO CALLED DHARAMSHALAS. NO SEPARATE BOOKS OF ACCOUNT HAVE BEEN MAINTAINED FOR DHARAMSHALAS WHICH IS MANDATORY AS PER PROVISIONS OF SECTION 11 (4A). (V) 6 OUT OF 9 VEHICLES HAVE BEEN PURCHASED AND REGISTERED IN THE NAME OF INDIVIDUAL TRUSTEES/ MANAGER. (VI) THE ASSESSEE HAS NOT MAINTAINED PROPER ADDRESSES OF DONORS/ MONEY GIVERS. THERE ARE NO COMPLETE DETAILS OF RS.40,81,528/ - RECEIVED FROM FOREIGNERS AS DONATION. (VII) CAUTION MONEY OF RS. 26,95,426/ - HAS NOT BEEN REFUNDED. THE ASSESSEE IS CHARGING FOR T & D FEE, ENROLLMENT FEE, DEVELOPMENT FEE, WELFARE FEE, PROSPECTUS FEE, SPORTS FEE, EXAMINATION FEE, BUS CHARGES, INSURANCE, SECURITY, SALE OF MAT FORM, (VIII) IT IS RUNNING ONLY PROFESSIONAL COURSES, (IX) THE ASSESSEE IS CHARGING FEES AT THE RATES PRESCRIBED BY THE GOVERNMENT WITHOUT GIVING ANY DISCOUNT. (X) ASSESSING OFFICER HAS POINTED OUT THAT THE ASSESSEE WAS CHARGING RENTAL AGAINST ACCOMMODATION PROVIDED IN DHARAMSHALA. THE MONEY SHOWN AS DONATION RECEIPT WAS ACTUALLY ROOM RENT CHARGED FROM VISITORS, (XI) IN THE DETAILS OF EXPENDITURE INCURRED ON OBJECTS OF THE TRUST, THE ASSESSEE HAS ITSELF MENTIONED 'TO CARRY OUT OBJECTS OF GENERAL PUBLIC UTILITY AND SECURITY SUCH AS .........' IN VIEW OF THE ABOVE FACTS, IT IS EVIDENT THAT THE ASSESSEE IS COVER ED BY PROVISO TO SECTION 2(15) AND HENCE ACTIVITIES CARRIED ON BY IT ARE NOT FOR CHARITABLE PURPOSE AS PER THIS PROVISION. 4. RELIANCE IS PLACED UPON FOLLOWING DECISIONS: (I) INFORMATION SYSTEMS AUDIT AND CONTROL ASSOCIATION V. DDIT (E) 157 ITD 8 15 /46 ITR 665 //179 TTJ 99 WHERE HON'BLE ITAT CHENNAI HELD THAT COACHING FOR PARTICULAR EXAMINATION NOT AMOUNTING TO IMPARTING EDUCATION (II) DESHPANDE EDUCATION TRUST VS. ACIT (ITAT BANGALORE) ITA NO.1422 & 1423 (BANG)2016 ITO V SWAMI OMKARANANAD SARASWATI CHARITABLE TRUST A Y 2010 - 11 ITA 3744 /DEL/2014 & CIO 104/DEL/2015 PAGE | 9 (III) M/S. MATRU KARMA DHARA TRUST VS. CIT ( ITAT CHENNAI) ITA NO. 2053/MDS/2016 (IV) DAYA NAND PUSHPA DEVI CHARITABLE TRUST VS. ADDL. CIT (ITAT DELHI) ITA NO.4238/DEL/2015 (V) DIT VS CHARANJIV CHARITABLE TRUST [2014] 43 TAXMANN.COM 300 (DELHI)/[2014] 223 TAXMAN 71 (DEL HI)/[2014] 267 CTR 305 (DELHI)] WHERE HON'BLE DELHI HIGH COURT HELD THAT WHERE IN CASE OF A CHARITABLE TRUST, IT IS FOUND THAT PROVISIONS OF SECTION 13(1)(C)(II) READ WITH SECTION 13(3) ARE NOT FOLLOWED, TRUST WOULD LOSE ITS EXEMPTION IN ENTIRETY, WITH RES ULT THAT ASSESSMENT OF ITS INCOME WILL BE MADE ACCORDING TO PROVISIONS OF ACT. 5. RELIANCE IS ALSO PLACED ON FOLLOWING DECISIONS POINTED OUT BY CIT IN GROUNDS OF APPEAL : (I) ACIT VS. GRAPHIC ERA EDUCATIONAL SOCIETY (DELHI HIGH COURT) 108 ITJ 608 (II) VODITHALA EDUCATION SOCIETY VS. ADIT (EXEM) (ITAT HYDERABAD) 20 SOT353 (III) CIT VS. NATIONAL INSTITUTE OF AERONAUTICAL ENGINEERING EDUCATIONAL SOCIETY (UTTRAKAHAND)315LTR428 (IV) CIT VS. QUEENS EDUCATION SOCIETY (319 ITR 160) 6. TH E ASSESSEE HAS VIOLATED PROVISIONS OF SECTION 13 AS FOLLOWS: (I) THE ASSESSEE MADE DONATIONS OF RS.42,83,687/ - TO OTHER TRUSTS/ ORGANIZATIONS HAVING COMMON MEMBERS/ TRUSTEES. THE ONUS LIES UPON THE ASSESSEE TO PROVE THAT THESE TRUSTS WERE HAVING SIM ILAR OBJECTS WHICH HAS NOT BEEN DISCHARGED (II) 6 OUT OF 9 VEHICLES HAVE BEEN PURCHASED AND REGISTERED IN THE NAME OF INDIVIDUAL TRUSTEES/ MANAGER IN THIS REGARD, THE FOLLOWING DECISION MAY KINDLY BE CONSIDERED: 1 - D IT VS CHARANIIV CHARITABLE TRUST [20 141 43 TAXMANN.COM 300 (DELHI)/[2014L 223 TAXMAN 71 (DELHI)/[2014] 267 CTR 305 (DELHI)! (COPY ENCLOSED) WHERE HON'BLE DELHI HIGH COURT HELD THAT WHERE IN CASE OF A CHARITABLE TRUST, IT IS FOUND THAT PROVISIONS OF SECTION 13(1)(C)(II) READ WITH SECTION 13(3) ARE NOT FOLLOWED, TRUST WOULD LOSE ITS EXEMPTION IN ENTIRETY, WITH RESULT THAT ASSESSMENT OF ITS INCOME WILL BE MADE ACCORDING TO PROVISIONS OF ACT. ITO V SWAMI OMKARANANAD SARASWATI CHARITABLE TRUST A Y 2010 - 11 ITA 3744 /DEL/2014 & CIO 104/DEL/2015 PAGE | 10 8. THE LD. AUTHORIZED REPRESENTATIVE, SENIOR ADVOCATE SH RI C. S. AGRAWAL, VEHEMENTLY CONTESTED THE ARGUMENT OF THE LD. DEPARTMENTAL REPRESENTATIVE, AND RELIED UP ON THE ORDER OF THE LD. CIT (A). HE FURTHER REFERRED TO HIS WRITTEN SUBMISSION PLACED BEFORE THE LD. CIT (A) PLACED AT PAGE NUMBER 501 - 534 OF PAPER BOOK AND FURTHER HE HA S PLACED THE WRITTEN SUBMISSION SEPARATELY BEFORE US TO BE CONSIDERED. HE FURTHER STATED THAT IN PAST YEAR AS WELL AS IN THIS YEAR , RECEIPTS ARE IDENTICAL AND THERE IS NO CHANGE IN THE NATURE OF RECEIPTS FOR ASSESSMENT YEAR 2003 04 TO 2009 10 . HE F URTHER REFERRED TO THE ORDER OF THE COORDINATE BENCH IN ASSESSEES OW N CASE FOR ASSESSMENT YEAR 2002 - 2003, WHEREIN ON IDENTICAL FACTS AND CIRCUMSTANCES THE COORDINATE BENCH HAS HELD THAT THERE IS NO VIOLATION OF SECTION 13 (1) (C) READ WITH SECTION 13 (3 ) OF THE INCOME T AX A CT 1961, WHICH CAN RESULT IN TO REFUSAL OF EXEMPTION TO THE TRUST. HE FURTHER REFERRED TO THE COPY OF THE TRUST DEED PLACED AT PAGE NO. 37 58 OF THE PAPER BOOK AS WELL AS THE REGISTRATION ALREADY GRANTED TO THE TRUST UNDER SECTION 12 A OF THE INCOME TAX ACT W.E.F. 1/4/1989. HE FURTHER EXTENSIVELY REFERRED TO HIS SUBMISSION PLACED AT PAGE NO. 68 379, WHICH IS A LETTER DATED 30/08/2012 BEFORE LD AO EXPLAINING THE QUERIES OF THE LD AO. WITH RESPECT TO VEHICLES REGISTERED IN THE NAM E OF THE TRUSTEES HE SUBMITTED THAT THE VEHICLES ARE OWNED BY THE TRUST , THEY ARE SHOWN IN THE BOOKS OF ACCOUNTS OF THE TRUST , THEY ARE USED FOR THE PURPOSES OF THE OBJECTS OF THE TRUST, THEIR EXPENSES INCLUDING INTEREST IS BORNE BY THE TRUST, MERELY BE CAUSE THE REGISTRATION HAS BEEN MADE IN THE NAME OF THE TRUST IT DOES NOT BECOME THE ASSET OF THE TRUSTEES. IN THE END, HE REFERRED TO THE PROVISIONS OF SECTION 13 EXTENSIVELY TO STATE THAT THERE IS NO BENEFIT OF ANY NATURE TO ANY OF THE TRUSTEES. WITH RES PECT TO THE PROVISIONS OF SECTION 2 (15) , HE SUBMITTED THAT ASSESSEE IS CARRYING ON EDUCATIONAL ACTIVITIES AND FURTHER THE IMMO VABLE PROPERTY IS OWNED BY THE TRUST FOR OBJECTS OF THE TRUST AND IN FACT, ACCORDING TO THE PROVISIONS OF SECTION 11, 12 AND 13 OF THE ACT AND STATED THAT INCOME FROM PROPERTY HELD FOR CHARITABLE RELIGIOUS PURPOSES IS CHARGEABLE TO TAX UNDER THE SCHEME OF THESE SECTIONS. HE FURTHER SUBMITTED THAT IT IS NOT THE CASE OF ITO V SWAMI OMKARANANAD SARASWATI CHARITABLE TRUST A Y 2010 - 11 ITA 3744 /DEL/2014 & CIO 104/DEL/2015 PAGE | 11 THE REVENUE THAT THESE ARE PROPERTIES NOT HELD FOR CHARITABLE, RELIGIOUS PURPOSES. WITH R ESPECT TO THE DONATION OF RS. 4 283687/ TO VARIOUS TRUST IS SUBMITTED THAT THAT THESE TRUSTS WERE HAVING THE SIMILAR OBJECTS TO THE OBJECTS OF THE ASS ESSEE TRUST, THEREFORE THERE IS NO VIOLATION OF THE PROVISIONS OF SECTION 13 OF THE INCOME TAX ACT, AS THE INCOME OF THE TRUST IS NOT APPLIED FOR OBJECTS OTHER THAN THE OBJECTS OF THE TRUST. HE FURTHER SUBMITTED THAT THE AMOUNT OF DONATIONS RECEIVED ON AC COUNT OF THE DHARAMSHALA ARE NOT THE BUSINESS OF THE TRUST BUT THESE ARE THE ACTIVITIES WHICH IS SUBSERVIENT TO THE MAIN OBJECT OF THE TRUST AND ARE NOT INDEPENDENT ACTIVITIES. THESE ARE NOT TARIFF S OF THE GUEST HOUSES BUT CONTRIBUTIONS ARE MADE BY THE PERSONS WHO HAVE STAYED IN THE DHARMSHALA. THEREFORE, THESE ARE VOLUNTARY CONTRIBUTIONS ONLY. HE SUBMITTED THAT LD AO HAS WRONGLY REACHED TO THE CONCLUSION THAT DHARMSHALA DONATIONS ARE TARIFFS OF STAYING IN THAT PRECINCTS. HE FURTHER SUBMITTED THAT WIT H RESPECT TO THE DONATION RECEIVED FROM THE FOREIGNERS TH E ASSESSEE IS REGISTERED UNDER THE FOREIGN C ONTRIBUTION REGULATION ACT , WHICH COVERS THE DONATION RECEIVED FROM THE FOREIGN NATIONALS AND COMPLETE DETAILS ARE MAINTAINED BY THE ASSESSEE. THEREFORE, T HE CLAIM OF THE R EVENUE THAT A DONATION OF RS. 4 081528/ - RECEIVED FROM THE FOREIGN NATIONALS DOE S NOT HAVE THE COMPLETE DETAILS IS INCORRECT. HE FURTHER SUBMITTED THAT THOSE DONATIONS ARE REQUIRED TO BE DEPOSITED IN A SEPARATE BANK ACCOUNT AND THEIR NAMES ARE KYC COMPLIANT. HE IN FACT SUBMITTED THAT THERE IS A SEPARATE LAW WHICH THE GOVERNS THE IDENTITY OF THE PERSONS WHO ARE GIVING DONATION TO AN INDIAN TRUST FROM FOREIGN COUNTRIES AND THE PROVISION OF THAT ACT ARE MORE STRINGENT THAN THE INCOME TAX ACT . HE FURTHER SUBMITTED THAT THE RECEIPT OF CAUTION MONEY , ENROLMENT FEE , WELFARE FEE , PROSPECTUS FEE , SPORTS FEE , EXAMINATION FEE AND BUS CHARGES ETC ARE ALL FOR THE PURPOSES OF EDUCATIONAL ACTIVITY OF THE ASSESSEE AND THEY CANNOT BE SEEN AS AN INDEP ENDENT ACTIVITIES CARRIED OUT BY THE ASSESSEE. HE FURTHER STATED THAT THE CLAIM OF THE REVENUE THAT THE DONATION RECEIVED IS ACTUALLY ROOM RENT CHARGES FROM VISITORS IS DEVOID OF ANY MERIT BECAUSE IT IS AS PER THE WILL OF THE PERSONS WHO STAYED IN THE GUES THOUSE AND THERE IS NO FIXED RATE OF THOSE DONATIONS ITO V SWAMI OMKARANANAD SARASWATI CHARITABLE TRUST A Y 2010 - 11 ITA 3744 /DEL/2014 & CIO 104/DEL/2015 PAGE | 12 THEREFORE, IN FACT, THESE ARE VOLUNTARY DONATION AND ARE NOT ROOM RENT. HE THEREFORE SUBMITTED THAT ASSESSEE IS NOT COVERED BY THE PROVISO TO SECTION 2 (15) OF THE INCOME TAX ACT AND HENCE ACTIVITIES CA RRIED ON BY IT ARE FOR CHARITABLE PURPOSES AND ELIGIBLE FOR PREFERENTIAL TREATMENT UNDER SECTION 11, 12 AND 13 OF THE INCOME TAX ACT. HE FURTHER REFERRED TO THE VARIOUS DECISIONS CITED IN PARA NO. 4 OF THE WRITTEN SUBMISSION OF THE LD. APARTMENT REPRESENT ATIVE TO STATE THAT THESE ARE NOT APPLICABLE TO THE FACTS OF THE CASE AND FURTHER THE DECISION OF THE HONBLE DELHI HIGH COURT IN CASE OF DCIT VERSUS CHIRANJEEV CHARITABLE TRUST TO 67 CTR 305 (DELHI) DOES NOT APPLY TO THE FACTS OF THE CASE AS ASSESSEE HAS NOT VIOLATED ANY OF THE PROVISIONS OF SECTION 13 OF THE INCOME TAX ACT . HE FURTHER PLACED HIS WRITTEN SUBMISSION, WHICH IS AS UNDER: - 1. THAT THE CAPTIONED APPEAL WAS PARTLY HEARD ON 02.05.2017 WHEN LEARNED CIT DR CONCLUDED HIS ARGUMENTS AND ALSO FILED WRITTEN SUBMISSION SUPPORTING THE ORDER OF THE LEARNED AO. IN RESPONSE TO THE AFORESAID WRITTEN SUBMISSIONS, THE ASSESSEE HAD ORALLY MADE PART OF THE SUBMISSIONS AND SEEKS TO FILE ITS REJOINDER WRITTEN SUBMISSIONS WHICH ARE AS UNDER. PRELIMINARY SUBM ISSIONS: 2. THAT SWAMI OMKARANANDA SARASWATI CHARITABLE TRUST IS A CHARITABLE TRUST, WHICH CAME INTO EXISTENCE ON 31 S| MARCH, 1989 WITH THE PREDOMINANT OBJECT OF ESTABLISHING AND DEVELOPING INSTITUTIONS SUCH AS SCHOOLS AND COLLEGES IN INDIA FOR IMPARTING EDUCATION FOUNDED ON TRUE SPIRITUAL AND SECULAR IDEALS AS ALSO FOR PROVIDING MEDICAL AID FOR THE NEEDY THROUGH WELL APP OINTED HOSPITALS AS IS EVIDENT FROM THE TRUST DEED (SEE PAGE 38 OF THE PAPER BOOK). IT WOULD THEREFORE BE SEEN THAT PREDOMINANT OBJECT OF THE ASSESSEE TRUST IS EDUCATION AND MEDICAL RELIEF WHICH IS CHARITABLE WITHIN THE MEANING OF SECTION 2(15) OF THE ACT. THAT SINCE THE OBJECTS OF THE ASSESSEE TRUST IS CHARITABLE AS SUCH, ASSESSEE TRUST WAS GRANTED REGISTRATION UNDER SECTION 12A(A) OF THE ACT VIDE REGISTRATION NO. C NO.: 40(3)/NIBANDHAN/RISHIKESH/89 - 9 - /CIB/22448 ON 31.01.1990 WITH EFFECT FROM 01.04.1989 AN D AFORESAID REGISTRATION IS STILL SUBSISTING. 2.1 THAT SINCE ITS INCEPTION I.E. AY 1990 - 91, ASSESSEE TRUST HAD BEEN FURNISHING ITS RETURN OF INCOME AND TILL THE AY 2009 - 10, EXEMPTION CLAIMED BY THE ASSESSEE HAS BEEN ALLOWED EXCEPT FOR THE AY 2002 - 03 WHEN EXEMPTION WAS DENIED BY THE AO, HOWEVER SAME WAS ALLOWED BY THE LEARNED CIT(A) AND UPHELD BY THE HON'BLE TRIBUNAL AND HON'BLE HIGH COURT (SEE PAGE 465 - 489 OF PB). THAT THE NATURE OF ACTIVITIES CARRIED BY THE ASSESSEE CONTINUES TO REMAIN THE SAME AND T HERE HAS BEEN NO CHANGE IN FACTS AND CIRCUMSTANCES OF THE CASE (SEE PAGE 504 - 506 OF PB). 2.2 THAT THE ASSESSEE TRUST IN THE YEAR UNDER CONSIDERATION CARRIED ON FOLLOWING CHARITABLE ACTIVITIES: I. RUNNING OF EDUCATIONAL INSTITUTE IN THE NAME OF OMKARANANDA INSTITUTE OF ITO V SWAMI OMKARANANAD SARASWATI CHARITABLE TRUST A Y 2010 - 11 ITA 3744 /DEL/2014 & CIO 104/DEL/2015 PAGE | 13 MANAGEMENT AND TECHNOLOGY. II. RUNNING TWO PUBLIC LIBRARIES IN THE FOLLOWING NAMES: A. OMKARANANDA PUBLIC LIBRARY B. OMKARANANDA RAM ASHRAM LIBRARY III. RUNNING THREE DHARMASHALAS IN MUNI KI RETI AND RISHIKESH IN THE FOLLOWING NAMES: A. OMKARANANDA GANGA - MATA MANDIR B. OMKARANANDA GANGA SADAN C. OMKARANANDA GITA SADAN IV. PROVIDING FINANCIAL SUPPORT TO OTHER CHARITABL E INSTITUTIONS HAVING SIMILAR OBJECTS AND ALSO UNDERTAKING EDUCATIONAL ACTIVITIES. 2.3 THAT THE ASSESSEE HAD RECEIPTS FROM THE EDUCATIONAL INSTITUTION OF RS. 2,34,68,3787 - AND OTHER RECEIPTS IN THE FORM OF VOLUNTARY DONATIONS OF RS. 65,33,5967 - , RENT RECE IVED FROM PROPERTIES HELD BY THE TRUST OF RS. 63,17,2027 - , INTEREST RECEIVED OF RS. 54,38,2447 - AND MISCELLANEOUS RECEIPTS OF RS. 79,0007 - (RS. 65,33,5967 - PLUS RS. 63,17,2027 - PLUS RS. 54,38,2447 - PLUS RS. 79,0007 - - RSL,83,68,0437 - ), WHICH AGGREGATES TO RS. 4,18,36,4217 - (SEE PAGE 17 OF THE PAPER BOOK). THAT AFORESAID RECEIPT HAS WHOLLY BEEN APPLIED TOWARDS THE OBJECTS OF THE TRUST IN THE FOLLOWING MANNER: PARTICULARS AMOUNT I . EXPENDITURE INCURRED ON RUNNING OF THE EDUCATIONAL EXPENSES (EXCLUDING DEPRECIATION). RS. 1,73,92,5007 - 2 . DHARMSHALA RUNNING EXPENSES RS. 38,70,1747 - 3 . DONATION TO OTHER CHARITABLE INSTITUTIONS RS. 42,83,6877 - 4. EDUCATIONAL ACTIVITY EXPENSES RS. 4,99,6127 - 5. PUBLIC LIBRARY EXPENSES RS. 42,4747 - 6. RELIGIOUS, CULTURAL AND SOCIAL EXPENSES RS. 1, 13,8047 - 7. REPAIR AND MAINTENANCE EXPENSES RS. 58,84,8597 - 8. EXPENDITURE INCURRED FOR RUNNING THE TRUST RS. 24,32,4677 - 9. FIXED ASSETS (IMMOVABLE) RS. 32,11,5107 - 10. FIXED ASSET (MOVABLE) RS. 32,60,2377 - ITO V SWAMI OMKARANANAD SARASWATI CHARITABLE TRUST A Y 2010 - 11 ITA 3744 /DEL/2014 & CIO 104/DEL/2015 PAGE | 14 TOTAL RS. 4,09,91,3257 - 2.4 IT WOULD BE SEEN THAT THE ASSESSEE HAS APPLIED A SUM OF RS. 4,09,91,3257 - TOWARDS CHARITABLE PURPOSES OUT OF THE AGGREGATE RECEIPT OF RS. 4,18,36,4217 - AND BALANCE OF RS. 8,45,0967 - (RS. 4,18,36,4217 - LESS RS. 4,09,91,3257 - ) WAS CLAIMED EXEMPT UNDER SECTION LL(L)(A) OF THE ACT BEING LESS THAN THE 15% OF THE AGGREGATE RECEIPTS OF RS. 4,18,36,4217 - . IT IS SUBMITTED THAT DESPITE THE FACT THAT WHOLE OF THE RECEIPTS HAVE BEEN APPLIED FOR CHARIT ABLE PURPOSES, LEARNED AO DENIED THE EXEMPTION AND COMPUTED THE INCOME OF THE ASSESSEE IN FOLLOWING MANNER: PARTICULARS AMOUNT I. SURPLUS DECLARED BY THE ASSESSE RS. 56,48,5267 - II. DISALLOWANCE OF DEPRECIATION RS. 16,68,3177 - III. DISALLOWANCE OF INTER ORGANIZATION DONATIONS RS. 42,83,6877 - IV. ADDITION ON ACCOUNT OF FIXED ASSETS RS. 64,7 1,7877 - TOTAL RS. 1,80,72,2777 - 2.5 BEFORE THE LEARNED CIT(A) ASSESSEE FILED A PAPER BOOK CONTAINING NOTICES ISSUED BY THE LEARNED AO, REPLIES FILED BY THE ASSESSEE ALONG WITH DOCUMENTARY EVI DENCES WHICH ARE APPEARING AT SL . NO. 1 - 22 OF THE PAPER BOOK FILED BEFORE THE HON'BLE TRIBUNAL. ASSESSEE ALSO FILED ITS DETAILED WRITTEN SUBMISSIONS BEFORE THE LEARNED CIT(A) WHICH IS APPEARING AT PAG ES 501 - 534 OF PB WHEREIN EACH OF THE FINDING OF THE LEARNED AO HAS BEEN COUNTERED BY THE ASSESSEE. THE ASSESSEE SUBMITTED THAT THERE WERE MORE THAN 30 FACTUAL ERRORS IN THE ORDER OF THE LEARNED AO. A COPY OF SUCH FACTUAL ERRORS AS WAS SUBMITTED BEFORE THE LEA RNED CIT(A) HAS BEEN ANNEXED AS ANNEXURE - I OF THE BRIEF SYNOPSIS. THAT THE LEARNED CIT DR HAS MADE NO ADVERSE COMMENTS ON SUCH SUBMISSIONS WHICH WAS ON THE RECORD OF THE LEARNED CIT(A). 2.6 THAT THE LEARNED CIT(A) AFTER DULY CONSIDERING TH E FINDING OF THE LEARNED AO, SUBMISSIONS OF THE ASSESSEE AND PAPER BOOK FILED BEFORE HIM, ALLOWED THE APPEAL OF THE ASSESSEE BY HOLDING THAT THE PRIMARY OBJECT OF THE ASSESSEE IS EDUCATION AND IS NOT CARRYING OUT OBJECT OF GENERAL PUBLIC UTILITY WHEN HE DI D NOT APPRECIATE THAT THE ASSESSEE TRUST ALSO IS ENGAGED IN THE ADVANCEMENT OF OBJECT OF GENERAL PUBLIC UTILITY IN RESPECT OF WHICH FINDING, ASSESSEE HAS FILED ITS CROSS OBJECTIONS. HE FURTHER HELD THAT SURPLUS ARISING TO THE ASSESSEE HAS ALSO BEEN UTILIZE D FOR ITS OBJECTS AND IT DOES NOT INDICATE THAT THERE IS PROFIT MOTIVE. PARA WISE REBUTTAL SUBMISSIONS: S.N O CONTENTION OF THE REVENUE REBUTTAL SUBMISSIONS ITO V SWAMI OMKARANANAD SARASWATI CHARITABLE TRUST A Y 2010 - 11 ITA 3744 /DEL/2014 & CIO 104/DEL/2015 PAGE | 15 A . SECTION 2(15) OF THE ACT HAS BEEN AMENDED WITH EFFECT FROM 01.04.2009 AS SUCH EARLIER YEARS ORDERS ARE NOT RELEVANT FOR THE INSTANT ASSESSMENT YEAR. IT IS SUBMITTED THAT CONTENTION OF THE REVENUE IS WHOLLY MISCONCEIVED AS EVEN AFTER AMENDMENT, IF AN ASSESSEE IS CARRYING CHARITABLE OBJECTS AS PROVIDED U/S 2(15) OF THE ACT WITHOUT ANY PROFIT MOTIV E, EXEMPTION WOULD NOT BE DENIED EVEN IF THERE IS SURPLUS. IN FACT IN THE CASE OF INDIA TRADE PROMOTION ORGANIZATION V. DIRECTOR GENERAL OF INCOME - TAX (EXEMPTIONS) [2015] 371 ITR 333 (DELHI) IT HAS BEEN HELD THAT WHERE AN INSTITUTION IS NOT DRIVEN PRIMARIL Y BY A DESIRE OR MOTIVE TO EARN PROFITS, BUT TO DO CHARITY THROUGH THE ADVANCEMENT OF AN OBJECT OF GENERAL PUBLIC UTILITY, IT CANNOT BUT BE REGARDED AS AN INSTITUTION ESTABLISHED FOR CHARITABLE PURPOSES. FURTHER RELIANCE IF PLACED ON THE FOLLOWING JUDGMENT S: HAMDARD LABORATORIES INDIA V. ASSISTANT DIRECTOR OF INCOME - TAX (EXEMPTION) [2015] 379 ITR 393 (DELHI) ASSISTANT DIRECTOR OF INCOME - TAX (E) V. INDIAN MEDICAL ASSOCIATION [2015] 68 SOT 377 (DELHI - TRIB.) PHD CHAMBER OF COMMERCE & INDUSTRY VS. DIT (E) [2013] 357 ITR 296 (DELHI) PATANJALI YOGPEETH (NYAS) VS. ADIT (E) [2017] 163 ITD 323 (DELHI - TRIB.) IT IS SUBMITTED THAT IN THE INSTANT CASE, OBJECTS OF THE ASSESSEE IS CHARITABLE AND REGISTRATION U/S 12A OF THE ACT HAS BEEN GRANTED SINCE INCEPTION OBJECTS OF THE ASSESSEE REMAINS IT AND THERE IS NO CHANGE. FURTHER, ALL THE RECEIPTS OF THE ASSESSEE HAS BEEN APPLIED FOR CHARITABLE PURPOSES. THAT IN NONE OF THE PRECEDING ASSESSMENT YEARS, IT HAS EVEN BEEN ALLEGED THAT ASSES SEE IS CARRYING ON ITS ACTIVITIES WITH PROFIT MOTIVE. HENCE THE CONTENTION THAT BECAUSE OF THE AMENDMENT IN SECTION 2(15) W.E.F. 01.04.2009, PRECEDING YEARS ORDERS HAS NO RELEVANCE IS WHOLLY MISCONCEIVED B . RECEIPTS OF DHARMASHALA, RENTING OF PROPERTIES, RECEIPTS OF T&D, ENROLLMENT FEE, DEVELOPMENT FEE, WELFARE FEE, PROSPECTUS FEE, SPORTS FEE, EXAMINATION FEE, BUS CHARGES, INSURANCE, SECURITY, SALE OF MAT FORM IS IN THE NATURE OF ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY. DETA ILED SUBMISSIONS ARE AT PAGE 512 - 518, 521 & 522 - 523 OF PB IT IS SUBMITTED THAT AFORESAID CONTENTION OF THE REVENUE IS MISCONCEIVED AS HE HAS FAILED TO APPRECIATE THAT PREDOMINANT OBJECT OF THE ASSESSEE IS TO PROVIDE EDUCATION AND DURING THE COURSE OF AFORESAID OBJECTS, IT HAS RECEIPTS FROM RECEIPTS OF T&D, ENROLL MENT FEE, DEVELOPMENT FEE, WELFARE FEE, PROSPECTUS FEE, SPORTS FEE, EXAMINATION FEE, BUS CHARGES, INSURANCE, SECURITY, SALE OF MAT FORM, HOWEVER ALL SUCH RECEIPTS HAVE BEEN APPLIED FOR THE CHARITABLE PURPOSES. IT IS SUBMITTED THAT ASSESSEE TRUST IS RUNNIN G EDUCATIONAL INSTITUTION AND TO FACILITATE THE STUDENTS FOR GETTING THE EDUCATION, IT HAS PROVIDED VARIOUS FACILITIES TO THE STUDENTS SO THAT STUDENTS CAN GET THE EDUCATION WITH MINIMUM DISTURBANCE. IN FACT, THERE IS NO ALLEGATION THAT FEE CHARGED BY THE ASSESSEE IN RESPECT OF SUCH SERVICES ARE EXCESSIVE. IT IS SUBMITTED THAT FEE CHARGED IN RESPECT OF T&D, ENROLLMENT, DEVELOPMENT, WELFARE, PROSPECTUS, SPORTS, EXAMINATION, BUS CHARGES, INSURANCE, SECURITY, SALE OF MAT IS ONLY INCIDENTAL TO THE OBJECT OF PRO VIDING EDUCATION. IT IS IN FACT, THERE IS NO EVEN ALLEGATION THAT FEE CHARGED BY THE ASSESSEE IS IN EXCESS OF THE FEE PRESCRIBED BY THE GOVERNMENT. IN FACT IN THE CASE OF ITO VS. LOKMANYA SHIKSHAN SAMITI (2008) 115 TTJ 135 (IND), IT HAS BEEN HELD THAT PROV IDING OF LUNCH TO STUDENTS, AS WELL AS TRANSPORTATION FACILITIES BY THE SCHOOL AUTHORITIES IS NOT FOR THE PURPOSE OF PROFIT BUT IS ANCILLARY ACTIVITY TO THE MAIN ACTIVITY OF IMPARTING EDUCATION. FURTHER IN THE CASE OF CIT VS. KARNATAKA LINGAYAT SOCIETY (KA R) [2015] 371 ITR 249 (KARNATAKA) IT WAS HELD THAT PROVIDING HOSTEL TO THE STUDENTS IS INCIDENTAL TO ACHIEVE THE OBJECTS OF THE SOCIETY. IN RESPECT OF RUNNING OF DHARMASHALA. IT IS SUBMITTED THAT DHARMASALA. IS DERIVED FROM SANSKRIT WHICH IS A COMPOUND O F DHARMAAND SHALA (3TTPTT) WHICH MEANS 'SPIRITUAL DWELLING' I.E. A SHELTER OR REST HOUSE FOR SPIRITUAL PILGRIMS. IT IS THEREFORE SUBMITTED THAT FROM THE DESCRIPTION OF THE AFORESAID WORD, IT IS MORE THAN APPARENT THAT DHARMASHALA IS A PLACE WHERE PILGRIM S STAY. THAT THE ASSESSEE IS RUNNING A DHARMSHALA FOR THE STAY OF THE PILGRIMS WHO VISIT THE HOLY SHRINE OF GARHWAL. IT IS SUBMITTED THAT ASSESSEE TRUST IS NOT CHARGING ANY RENT IN RESPECT OF THE STAY IN THE DHARMASHALAS RUN BY THE ASSESSEE AND DEVOTEES A T THE TIME OF LEAVING THE DHARMASHALA, VOLUNTARILY GIVE DONATION TO THE TRUSTS AND DHARAMSHALA IS NOT RUN BY ASSESSEE FOR THE PURPOSE OF MAKING PROFIT. IT IS SUBMITTED THAT THE FINDING OF THE LEARNED AO THAT THE ITO V SWAMI OMKARANANAD SARASWATI CHARITABLE TRUST A Y 2010 - 11 ITA 3744 /DEL/2014 & CIO 104/DEL/2015 PAGE | 16 ASSESSEE IS CHARGING RENT FROM THE VISITORS OF THE DHARMASHALA IS WHOLLY ERRONEOUS AND WITHOUT ANY EVIDENCE OR MATERIAL. AT THIS JUNCTURE, RELIANCE IS PLACED ON THE JUDGMENT OF THE APEX COURT IN THE CASE OF ADDL. COMMISSIONER OF INCOME TAX V. SURAT ART SILK CLOTH MANUFACTURERS ASSOCIATION: [1980] 12 1 ITR 1 (SC), WHEREIN IT HAS BEEN HELD THAT WHERE THE PREDOMINANT OBJECT 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 ACTIV ITY.' IN THE LIGHT OF THE AFORESAID JUDGMENT, IT IS SUBMITTED THAT SINCE THE PREDOMINANT OBJECT OF THE ACTIVITY IS TO CARRY OUT THE CHARITABLE PURPOSE AND NOT TO EARN PROFIT, AS SUCH, MERELY BECAUSE, ASSESSEE HAS RECEIPTS FROM SUCH ACTIVITIES, C . IN VIEW OF THE REASONS GIVEN IN THE ASSESSMENT ORDER, THE ASSESSEE IS COVERED BY PROVISO TO SECTION 2(15) OF THE ACT AND HENCE NOT ELIGIBLE FOR DEDUCTION U/S 11 & 12 OF THE ACT. THE FINDING ON THE BASIS OF WHICH AFORESAID CONTENTION HAS BEEN MADE ARE AS UNDER: THAT THE AFORESAID CONTENTION OF THE REVENUE IS WHOLLY MISCONCEIVED AS FINDING OF THE LEARNED AO IS BASED ON 34 FACTUAL ERRORS AND WITHOUT CONSIDERING THE SUBMISSIONS MADE BEFORE THE LEARNED AO AS WELL AS OVERLOOKING THE MATERIAL/EVIDENCES ON RECORD. THE S UBMISSION OF THE ASSESSEE IN RESPECT OF EACH OF THE FINDING IS STATED HEREUNDER: I THE TRUST OWNED 55 IMMOVABLE PROPERTIES AND HAS PURCHASED HOTELS WHICH ARE NOW FUNCTIONING AS DHARMASHALA. DETAILED SUBMISSIONS ARE AT PAGE 519 - 521 OF PB IT IS RESPECTFULLY SUBMITTED THAT THAT NONE OF THE AFORESAID PROPERTIES HAS BEEN PURCHASED BY THE ASSESSEE DURING THIS YEAR (SEE PAGE 492 - 495 OF THE PAPER BOOK). FROM THE PERUSAL OF THE LIST OF THE PROPERTIES PURCHASED/ACQUIRED BY THE ASSESSEE IT WOULD BE SEE N THAT THE EXCEPT ONE PROPERTY (WHICH WAS ACQUIRED IN AY 2005 - 2006), ALL THE REMAINING PROPERTIES WERE PURCHASED EITHER IN AY 1999 - 2000 OR BEFORE THAT ASSESSMENT YEAR, AND PURCHASE OF THE AFORESAID PROPERTIES ARE DULY DISCLOSED TO THE REVENUE, AND NO ADV ERSE INFERENCE HAS BEEN DRAWN BY THE REVENUE IN ANY OF THE PRECEDING ASSESSMENT YEARS AS SUCH, ADVERSE OBSERVATION DRAWN BY THE REVENUE DURING THE INSTANT YEAR IS AGAINST THE PRINCIPLES OF THE CONSISTENCY AND DESERVES TO BE DELETED. IT IS FURTHER SUBMITTED THAT OUT OF THE AFORESAID PROPERTIES ACQUIRED BY THE ASSESSEE, 32 PROPERTIES HAS BEEN USED BY THE ASSESSEE FOR CHARITABLE ACTIVITIES BY ITS OWN OR BY OTHER CHARITABLE INSTITUTIONS HAVING SIMILAR OBJECTS, AND ONLY R EMAINING PROPERTIES HAS BEEN GIVEN ON RENT (SEE PAGE PAGES 341 TO 348 OF THE PAPER BOOK), WHICH RENTAL HAS BEEN USED FOR THE CHARITABLE PURPOSES. IT IS SUBMITTED THAT THE AFORESAID PROPERTIES WERE ACQUIRED OUT OF CORPUS DONATED BY THE SETTLER, AND HAS N OT BEEN ACQUIRED OUT OF THE SURPLUS FUND. IT IS SUBMITTED THAT ONCE THE AFORESAID PROPERTIES HAS BEEN HELD TO BE TRUST PROPERTY IN THE EARLIER ASSESSMENT YEARS, AND ASSESSEE FOR THE EFFICIENT UTILISATION OF THE AFORESAID PROPERTIES HAS GIVEN THE AFORESAID PROPERTIES ON RENT (DETAILS OF THE RENTAL RECEIVED BY THE ASSESSEE HAS BEEN PLACED AT PAGES 341 TO 348 OF THE PAPER BOOK) WHICH RENT HAS DULY BEEN UTILISED FOR TOWARDS THE OBJECTS OF THE TRUST, AND APPLICATION OF THE RENTAL TOWARDS THE OBJECTS OF THE TRUST HAS NOT BEEN DOUBTED BY THE LEARNED AO. FURTHER IN RESPECT OF PURCHASE OF HOTEL PARAS WHICH IS NOW FUNCTIONING AS DHARMASHALA, IT IS SUBMITTED THAT ASSESSEE IS NOT RUNNING THE HOTEL, BUT IS RUNNING DHARMSHALA TO PROVIDE STAY TO THE PILGRIMS OF T HE HOLY SHRINE OF GARHWAL. FURTHER THE ASSESSEE TRUST IS NOT CHARGING ANY RENT IN RESPECT OF THE STAY IN THE DHARMASHALAS. THAT RENTAL RECEIVED FROM THE PROPERTIES HELD UNDER TRUST HAS ALSO BEEN APPLIED FOR THE CHARITABLE PURPOSES AND IN THE CASE OF ACIT V S SWAMI OMKARA NAND SARASWATI REPORTED IN 43 ITD 214, THE TRIBUNAL HAS HELD THAT WHERE EARNING OF THE RENTAL INCOME WAS NOT THE BUSINESS OF THE ASSESSEE, AND RENTAL INCOME WAS UTILIZED FOR THE CHARITABLE PURPOSES, EXEMPTION CANNOT BE DENIED. THAT HIGH COUR T OF CALCUTTA IN THE CASE OF DIRECTOR OF INCOME TAX (EXEMPTION) VS. SAHU JAIN TRUST, 56 DTR 402, IT WAS HELD THAT EXEMPTION U/S 11 CANNOT BE DENIED ON THE GROUND THAT TRUST HAD LET OUT THE PROPERTY FOR EFFICIENT UTILIZATION OF ITS ASSETS. FURTHER, PUNE BEN CH OF THE HON'BLE TRIBUNAL IN THE CASE OF BHARATI VIDYAPEETH (ITA NO. 916/PN/2010 ASSTT. YEAR: 1999 - 2000 DATED 23RD JANUARY, 2012) HAS HELD THAT THERE IS NO PROHIBITION IN SECTION 11 THAT A CHARITABLE TRUST CANNOT GIVE ITS PROPERTIES ON RENT. I I ASSESSEE AMENDED CLAUSE 7 OF THE TRUST DEED WITHOUT PROVIDING INFORMATION TO THE COMMISSIONER OF INCOME TAX. THIS CONTENTION IS AGAIN MISCONCEIVED AS FROM THE PERUSAL OF TRUST DEED IT WOULD BE SEEN THAT THE TRUST DEED IS DATED 31.03.1989 (PAGE 37 - 58 OF PB) FURTHER THE SUPPLEMENTARY TRUST DEED IS DATED 07.11.1989 (PAGE 68 - 71 OF PB) AND ASSESSEE TRUST WAS GRANTED REGISTRATION ONLY ON 31.01.1990 (PAGE 59 OF PB), AS SUCH ASSUMPTION THAT THE SUPPLEMENTARY TRUST DEED WAS NOT AVAILABLE WITH THE COMMISSIONER OF INCOME TAX IS WHOLLY MISCONCEIVED. APART FROM THE AFORESAID, IT IS SUBMITTED THAT SINCE 07.11.1989 (WHEN THE SUPPLEMENTARY DEED WAS EXECUTED), TILL AY 2009 - 10, ASSESSMENT OF THE ASSESSEE TRUST WAS MADE AND NO SUCH ALLEGATION WAS EVEN MADE AND HENC E THE AFORESAID CONTENTION OF THE REVENUE IS MISCONCEIVED ON THIS GROUND ALONE. IN ANY CASE, BY WAY OF THE SUPPLEMENTARY DEED THE OBJECT CLAUSE OF THE ASSESSEE HAS NOT BEEN ALTERED AND BY WAY OF THE AMENDMENT ONLY THE BORROWING POWERS OF THE TRUSTEES TO CA RRY OUT THE OBJECTS STATED IN THE TRUST DEED HAS BEEN EXPENDED ITO V SWAMI OMKARANANAD SARASWATI CHARITABLE TRUST A Y 2010 - 11 ITA 3744 /DEL/2014 & CIO 104/DEL/2015 PAGE | 17 I I I DONATION TO OTHER TRUSTS WERE MADE HAVING COMMON M EMB RS/TRUSTEES. THE ONUS IS ON THE ASSESSEE THAT SUCH TRUSTS HAVE SIMILAR OBJECTS AND SUCH ONUS HAS NOT BEEN DISCHARGED. DETAILED SUBMISSIONS ARE AT PAGE 523 - 529 OF PB IT IS SUBMITTED THAT DURING THE ASSESSMENT YEAR, ASSESSEE TRUST HAS GRANTED DONATIONS OF RS. 42,83,5877 - TO FOLLOWING FOUR CHARITABLE INSTITUTIONS IN FURTHERANCE TO THE OBJECTS OF THE TRUST AND DURING THE COURSE OF THE ASSESSMENT, ASSESSEE NOT ONLY PROVIDED THE DETAILS OF DONATIONS MADE TO SUCH TRUST BUT ALSO PROVIDED COPY OF THE TRUST DEED, LIST OF TRUSTEES AND ALSO THE COPY OF THE REGISTRATION GRANTED U/S 12 A OF THE ACT WHICH ARE DETAILED AS UNDER: IT WOULD BE SEEN T HAT FROM THE PERUSAL OF THE AFORESAID, IT WOULD BE SEEN THAT ALL THE AFORESAID TRUSTS ARE HAVING CHARITABLE OBJECTS AND ARE ALSO DULY REGISTERED U/S 12A OF THE ACT. AS SUCH, THE CONTENTION THAT ASSESSEE TRUST HAS GRANTED DONATIONS TO TRUSTS HAVING COMMON T RUSTEES IS WHOLLY MISCONCEIVED AND IGNORING THAT ALL THE AFORESAID TRUSTS HAVE CHARITABLE OBJECTS AND ALSO DULY REGISTERED U/S 12AOFTHEACT. IT IS FURTHER SUBMITTED THAT DONATION HAS NOT BEEN GRANTED FOR THE BENEFIT OF THE TRUSTEES BUT DONATIONS HAS BEEN GR ANTED TO THE TRUSTS TOWARDS THE FURTHERANCE OF ITS CHARITABLE OBJECTS. IT IS SUBMITTED THAT THE DONATIONS GRANTED TO THE TRUSTS HAVE BEEN APPLIED BY SUCH TRUSTS TOWARDS THEIR OBJECTS STATED IN THEIR TRUST DEED AND THERE IS NOT EVEN ANY ALLEGATION THAT SUCH TRUST HAVE UTILIZED THE SUM FOR THE BENEFIT OF THE TRUSTEES. LASTLY IT IS SUBMITTED THAT ASSESSEE TRUST WAS ALSO GRANTING DONATIONS TO SUCH TRUST IN EARLIER AYS SINCE WHEN SUCH TRUST CAME INTO EXISTENCE AND SUCH DONATIONS MADE IN EARLIER YEARS HAVE BEEN A CCEPTED TO HAVE BEEN MADE FOR CHARITABLE PURPOSES. RELIANCE IS PLACED ON THE FOLLOWING JUDGMENTS: I. CIT V. SHRI RAM MEMORIAL FOUNDATION (2004) 269ITR35(DEL) II. DIT(E) VS. M/S BAGRI FOUNDATION (ITA NO. 19/2010 DATED 2ND JULY, 2010) I II. JK CHARITABLE TRUST [1992] 196 ITR 31 (ALL.); IV. NIRMALA BAKUBHAI FOUNDATION [1997] 226 ITR 394 (GUJ.) V. CBDT I.E. INSTRUCTION : NO. 1132, DATED 5 - 1 - 1978 I V . ASSESSEE IS RECEIVING RENTAL FROM SO CALLED DHARMASHALAS. NO SEPARATE BOOKS OF ACCOUNT HAVE BEEN MAINTAINED WHICH IS MANDATORY U/S 11 (4A) OF THE ACT. IT IS SUBMITTED THAT ASSESSEE HAS NOT CHARGED ANY RENTAL FROM THE DHARMASHALAS AND AS SUCH, SECTION 11(4A) IS INAPPLICABLE AS SECTION 11(4A) IS APPLICABLE ONLY IN A CASE WHERE A TRUST IS CARRY ING OUT AN ACTIVITY FOR PROFIT, AND THE BUSINESS IS INCIDENTAL TO THE ATTAINMENT OF MAIN OBJECTS, ONLY THEN AS PER AFORESAID PROVISION, AN ASSESSEE IS REQUIRED TO MAINTAIN SEPARATE BOOKS OF ACCOUNTS IN RESPECT OF SUCH BUSINESS ACTIVITY. IT IS SUBMITTED THA T SINCE THE ASSESSEE IS NOT RUNNING ANY BUSINESS AND NO RENTAL HAS BEEN CHARGED FROM THE PILGRIMS STAYING IN THE DHARMASHALA, AS SUCH, SECTION 11 (4A) IS INAPPLICABLE. V . 6 OUT OF 9 VEHICLES HAVE BEEN PURCHASED AND REGISTERED IN THE NAME OF INDIVIDUAL TR USTEES/ MANAGER. DETAILED SUBMISSIONS ARE AT PAGE 521 - 522 OF PB IT IS SUBMITTED THAT THOUGH THE ASSESSEE HAS PURCHASED FEW VEHICLES IN THE NAME OF THE TRUSTEES, HOWEVER SUCH VEHICLES ARE SOLELY USED FOR THE PURPOSES OF THE TRUSTS AND ARE NOT BEING USED FOR THE BENEFITS OF THE PERSONS MENTIONED IN SECTION 13(3)(E) OF THE ACT AND AS SUCH SECTION 13(2)(G) OF THE ACT HAS NO APPLICATION. THERE IS NOT EVEN ANY ALLEGATION THAT SUCH VEHICLES HAVE BEEN USED FOR THE PERSONAL BENEFIT OF THE TRU STEES AND IN ANY CASE, NONE OF THE VEHICLES HAVE BEEN PURCHASED DURING THE INSTANT ASSESSMENT YEAR AS SUCH NO ADVERSE INFERENCE CAN BE DRAWN (SEE PAGE 36 OF PB). ITO V SWAMI OMKARANANAD SARASWATI CHARITABLE TRUST A Y 2010 - 11 ITA 3744 /DEL/2014 & CIO 104/DEL/2015 PAGE | 18 V I . THE ASSESSEE HAS NOT MAINTAINED PROPER ADDRESS OF THE DONORS/ MONEY GIVERS THAT THE AFOR ESAID FINDING/CONTENTION IS FACTUALLY INCORRECT AND CONTRARY TO MATERIAL ON RECORD AS APPELLANT HAD DULY MAINTAINED THE COMPLETE LIST OF THE DONORS, GIVING COMPLETE PARTICULARS OF THE DONORS AND SUCH LIST IS PLACED AT PAGES 286 TO 340 OF THE PAPER BOOK. V I I CAUTION MONEY HAS NOT BEEN REFUNDED. THE ASSESSEE IS CHARGING T&D, ENROLLMENT FEE, DEVELOPMENT FEE, WELFARE FEE, PROSPECTUS FEE, SPORTS FEE, EXAMINATION FEE, BUS CHARGES, INSURANCE, SECURITY, SALE OF MAT FORM DETAILED SUBMISSIONS ARE AT PAGE 514 - 518 OF PB IT IS SUBMITTED THAT THE CAUTION MONEY WAS CHARGED FROM THE STUDENTS NOT WITH THE PROFIT MOTIVE BUT IS SECURITY DEPOSITS AND IS BEING CHARGED FROM THE STUDENTS TO CREATE DISCIPLINE AMONG THE STUDENTS, AND BUT FOR THE SECURITY DEPOSIT, ASSESSEE WOULD NOT BE ABLE TO SAVE THE TRUST PROPERTIES FROM ANY LOSS/DAMAGE CAUSED BY SUCH STUDENTS. IT IS FURTHER SUBMITTED THAT UNREFUNDED MONEY BY THE APPELLANT IS NOT THE INCOME OF THE APPELLANT BUT HAS BEEN KEPT BY THE APPELLANT IN TRUST, AND WHENEVER A STUDENT DEMAND S FOR THE SAME, SAME IS REFUNDED TO THE STUDENT. APPELLANT HAS ALSO PROVIDED THE DETAILS OF THE CAUTION MONEY WHICH HAS BEEN PLACED AT PAGES 193 TO 215 AND 235 TO 264 OF THE PAPER BOOK. FROM THE PERUSAL OF THE AFORESAID, IT WOULD BE SEEN THAT CAUTION MONEY COLLECTED BY THE APPELLANT HAS ALSO BEEN REFUNDED TO THE STUDENTS WHENEVER THE SAME IS DEMANDED BY THE STUDENTS AND THERE IS NOT EVEN ANY ALLEGATION THAT CAUTION MONEY THOUGH HAVE BEEN DEMANDED BY THE STUDENTS BUT HAS NOT BEEN REFUNDED BY THE ASSESSEE. FU RTHER, CHARGING OF FEE IN RESPECT OF T&D, ENROLLMENT, DEVELOPMENT, WELFARE, PROSPECTUS, SPORTS, EXAMINATION , BUS CHARGES, INSURANCE, SECURITY, MAT FORM IS PURELY INCIDENTAL TO THE PROVIDING OF THE EDUCATION AND SUCH FEE HAS NOT BEEN CHARGED WITH PROFIT MO TIVE AND ALL SUCH RECEIPTS HAVE BEEN UTILIZED TOWARDS THE OBJECTS OF THE TRUST V I I I IT IS RUNNING ONLY PROFESSIONAL COURSES. IT IS SUBMITTED THAT PROVIDING EDUCATION BY WAY OF PROFESSIONAL COURSES IS ALSO EDUCATION WITHIN THE MEANING OF SECTION 2(15) OF THE ACT. RELIANCE IS PLACED ON THE FOLLOWING JUDGMENTS: A) MUDRA FOUNDATION FOR COMMUNICATIONS RESEARCH & EDUCATION VS. CCIT [2016] 287 CTR 135 (GUJARAT) B) ADIT(E) VS. BIRD EDUCATION SOCIETY FOR TRAVEL & TOURISM [2016] 181 TTJ 782 (DELHI - TRI B.) C) DIT VS. SRI BELIMATHA MAHASAMSTHANA SOCIO CULTURAL AND EDUCATIONAL TRUST [2011] 336 ITR 694 (KARNATAKA) I X THE ASSESSEE IS CHARGING FEE AT THE RATE PRESCRIBED BY THE GOVERNMENT WITHOUT ANY DISCOUNT IT IS SUBMITTED THAT ASSESSEE TRUST IS NOT CHARGING ANY FEE OVER AND ABOVE THE FEE PRESCRIBED BY THE GOVERNMENT AND ALL THE RECEIPTS OF THE EDUCATIONAL INSTITUTION HAS BEEN UTILIZED TOWARDS THE OBJECTS OF THE TRUST (ACIT VS. GRAPHIC ERA EDUCATIONAL SOCIETY 108 TTJ 608 (DELHI)) X RENTAL RECEIVED FR OM THE DHARMASHALA HAS BEEN SHOWN AS DONATION. IT IS FACTUALLY INCORRECT AND NO RENTAL HAS BEEN RECEIVED FROM THE DHARMASHALA. (SEE PARA B ABOVE). X I . IN THE DETAILS OF EXPENDITURE INCURRED, ASSESSEE HAS IT IS SUBMITTED THAT DURING THE COURSE OF THE ASSESSMENT, LEARNED AO ISSUED A NOTICE DATED 09.08.2012 (SEE PAGE 64 - 67 OF PB) AND VIDE QUESTION NO (XV) (PAGE 66) REQUIRED THE ASSESSEE TO PROVIDE DETAIL OF EXPENDITURE INCURRED IN A MANNER STATED IN THE NOTICE AND IN RESPONSE TO THE AFORESAID NOTICE ASSESSEE FURNISHED THE DETAIL IN THE ITO V SWAMI OMKARANANAD SARASWATI CHARITABLE TRUST A Y 2010 - 11 ITA 3744 /DEL/2014 & CIO 104/DEL/2015 PAGE | 19 ITSELF MENTIONED THAT IT IS CARRYING ON THE ACTIVI TY OF GENERAL PUBLIC UTILITY. SAME MANNER (SEE PAGE 92 - 93) DETAILING THE EXPENDITURE INCURRED WAS TOWARDS T HE OBJECTS OF THE TRUST. IT IS SUBMITTED THAT IN THE AFORESAID CHART ASSESSEE HAS NOT ADMITTED THAT PREDOMINANT OBJECT OF THE ASSESSEE IS OBJECT OF GENERAL PUBLIC UTILITY BUT IT HAS MERELY STATED THAT EXPENDITURE INCURRED ON DHARMASHALA IS TOWARDS ITS OBJE CT 5(IV) WHICH IS IN THE NATURE OF GENERAL PUBLIC UTILITY. AND HENCE INFERENCE DRAWN ON THE BASIS OF THE AFORESAID TABLE OF EXPENDITURE INCURRED IS WHOLLY MISCONCEIVED. D . FURTHER THE JUDGMENTS RELIED BY THE REVENUE IS DISTINGUISHABLE. IT IS SUBMITTED TH AT DECISION IS AN AUTHORITY FOR WHAT IT DECIDES AND NOT WHAT CAN BE LOGICALLY DEDUCED THEREFROM AS HAS BEEN HELD IN THE CASE OF GOODYEAR INDIA LTD VS STATE OF HARYANA AND ANOTHER 188 ITR 402 (SC). THE SUBMISSION OF THE ASSESSEE IN RESPECT OF THE SAME ARE A S UNDER E . INFORMATION SYSTEMS AUDIT & CONTROL ASSOCIATION VS. DDIT [2016] IN THIS CASE, ASSESSEE TRUST WAS CONDUCTING SEMINARS AND COURSES FOR THE PREPARATION OF FOREIGN CERTIFICATION COURSES AND AS SUCH IT WAS HELD THAT SAME IS NOT EDUCATION WHEREAS IN THE CASE OF THE ASSESSEE IT IS PROVIDING PROFESSIONAL EDUCATION BY NORMAL SCHOOLING WHICH COMES WITHIN THE DEFINITION OF 'EDUCATION' AS PROVIDED IN SECTION 2(15) AS HAS BEEN HELD IN THE CASE OF SOLE TRUSTEE, LOKA SHIKSHANA TRUST VS. CIT REPORTED IN 101 ITR234, (SC). F . DESHPANDE EDUCATION TRUST VS. ACIT (ITA NO. 1422 & 1423/BANG/2016 DATED 13.10.2016) IN THE INSTANT CASE, ASSESSEE WAS RUNNING COACHING CLASSES BY CHARGING HEFTY FEES AND WAS NOT PROVIDING EDUCATION THROUGH NORMAL SCHOOLING, AS SUCH, FACTS OF THIS CASE IS DISTINGUISHABLE. G MATRU KARMADHARA TRUST VS. ITO (ITA NO. 2053/MDS/2016 DATED 31.01.2017) IN THIS CASE, ASSESSEE HAS NOT ESTABLISHED ANY EDUCATIONAL INSTITUTION AND WAS MERELY PROMOTING THE PREACHING OF SHRI. AUROBINDO AS SUCH, IT WAS HELD THAT ACQUISITION OF ALL KIND OF KNOWLEDGE CANNOT BE CONSTRUED AS EDUCATION. IN FACT, AFORESAID ORDER SUPPORTS THE CASE OF THE ASSESSEE WHEREIN IT WAS HELD THAT 'EDUCATION IS A FORMAL SCHOOLING WHICH RESULTS IN CONFIRMATION OF A DEGREE OR DIPLOMA BY GOVERNMENT OR A GOVERNMENT AGENCY OR A UNIVERSITY ESTABLISHED UNDER LAW. IN THE INSTANT CASE, PROFESSIONAL COURSE RUN BY THE ASSESSEE ARE DULY APPROVED BY GOVERNMENT OR A GOVERNMENT AGENCY OR A UNIVERSITY ESTABLISHED UNDER LAW AS SU CH AFORESAID ORDER IS INAPPLICABLE H DAYA NAND PUSHPA DEVI CHARITABLE TRUST VS. ADDL. CIT (ITA NO. 4238/DEL/2015 DATED 21.09.2016) IN THIS CASE, THE ASSESSEE WAS PROVIDING HOSTEL TO THE STUDENTS, WHICH WAS TREATED BY THE HON'BLE TRIBUNAL AS BUSINESS AND N O SEPARATE BOOKS OF ACCOUNT WAS MAINTAINED IN RESPECT OF THE SAME AS SUCH, IN RESPECT OF THE HOSTEL ACTIVITIES, EXEMPTION WAS DENIED. IN ANY CASE, IN THE INSTANT CASE, HOSTEL FACILITIES HAS NOT BEEN PROVIDED WITH PROFIT MOTIVE AND IS NOT THE BUSINESS OF TH E ASSESSEE AND AS SUCH PROVISIONS OF SECTION 11 (4A) IS INAPPLICABLE. RELIANCE IS PLACED ON THE FOLLOWING JUDGMENTS: CIT VS. KARNATAKA LINGAYAT SOCIETY (KAR) [2015] 371 ITR 249 (KARNATAKA) ITO VS. LOKMANYA SHIKSHAN SAMITI (2008) 115 TTJ 135(IND) I VODITHALA EDUCATION SOCIETY V. ASSISTANT DIRECTOR OF INCOME - TAX 20 SOT 353 IT IS SUBMITTED THAT WHOLLY SUPPORTS THE ASSESSEE AS IN THE INSTANT CASE, IT HAS BEEN HELD THAT EDUCATION WOULD REMAIN AS A CHARITY IN A CASE WHERE EDUCATION IS IMPARTED SYSTEMATICALLY FOR A FEE PRESCRIBED BY GOVERNMENT AND WAS ALSO HELD THAT A PRIVATE AID ED OR UNAIDED PROFESSIONAL INSTITUTION OR ANY OTHER EDUCATIONAL INSTITUTION OF A STATE IS CAN COLLECT FEES WITH REGARD TO INFRASTRUCTURE AND BENEFIT OF STUDENTS OF THAT EDUCATIONAL INSTITUTION AND SAME WILL NOT AFFECT THE CHARITABLE STATUS OF THE INSTITUTI ON. HOWEVER VODITHALA EDUCATION ITO V SWAMI OMKARANANAD SARASWATI CHARITABLE TRUST A Y 2010 - 11 ITA 3744 /DEL/2014 & CIO 104/DEL/2015 PAGE | 20 16 SOCIETY WAS COLLECTED MONEY OVER AND ABOVE PRESCRIBED BY CONCERNED AUTHORITY FOR ADMISSION OF STUDENT, SUCH AN AMOUNT WAS CLASSIFIED AS CAPITATION FEE AND HENCE IT WAS HELD THAT ASSESSEE'S CASE WAS A CLEAR CASE OF SALE OF ED UCATION BY ASSESSEE AND, THEREFORE, SAME WAS NOT BE CONSIDERED AS CHARITABLE INSTITUTION UNDER SECTION 2(15). J CIT VS. NATIONAL INSTITUTE OF AERONAUTICAL ENGINEERING EDUCATIONAL SOCIETY 315ITR428 IN THE INSTANT CASE, THE HIGH COURT HELD THAT ASSESSE E WAS PROVIDING EDUCATION TO EARN PROFIT, WHEREAS IN THE INSTANT CASE, ASSESSEE IS NOT PROVIDING EDUCATION TO EARN PROFIT BUT IS UNDERTAKING EDUCATIONAL ACTIVITIES TO CARRY OUT CHARITABLE OBJECTS. K . CIT VS. QUEENS EDUCATIONAL SOCIETY REPORTED IN 319 ITR 160 THIS JUDGMENT OF THE HON'BLE HIGH COURT OF UTTARAKHAND HAS BEEN REVERSED BY THE HON'BLE APEX COURT IN [20151 372 ITR 699 (SO. WHEREIN IT WAS HELD THAT WHERE A SURPLUS WAS MADE BY EDUCATIONAL INSTITUTION WHICH WAS PLOUGHED BACK FOR EDUCATIONAL PURPOSES, SAID INSTITUTION WAS TO BE HELD TO BE EXISTED SOLELY FOR EDUCATIONAL PURPOSE AND NOT FOR PURPOSE OF PROFIT. L DIT VS. CHARANJIV CHARITABLE TRUST [2014] 267 CTR 305 (DELHI) IN THE INSTANT CASE, ASSESSEE HAS ADVANCED THE SUM TO A COMPANY I.E. M/S. ANSAL PROPERTIES AND INDUSTRIES LTD. (APIL) WHICH WAS A PROHIBITED PERSON, IT WAS HELD THAT ASSESSEE TRUST HAS VIOLATED PROVISIONS OF SECTION 13(L)(C), AS SUCH, EXEMPTION U/S 11 WAS DENIED. IT IS SUBMITTED THAT IN THE INSTANT CASE, ASSESSES HAS NOT INFRI NGED THE PROVISIONS OF SECTION 13(L)(C) OF THE ACT AS DONATIONS WERE GIVEN TO THE TRUSTS HAVING COMMON TRUSTEES, AND SUCH DONATIONS WERE NOT UTILIZED FOR THE BENEFIT OF THE TRUSTEES BUT WERE UTILIZED TOWARDS THE ATTAINMENT OF ITS OBJECTS AND SUCH TRUSTS HA VE ALSO UTILIZED THE SUM TOWARDS THE CHARITABLE OBJECTS AS SUCH, PROVISIONS OF SECTION 13(L)(C) IS INAPPLICABLE. FURTHER IN RESPECT OF PURCHASE OF VEHICLES, IT IS SUBMITTED THAT VEHICLES HAVE BEEN UTILIZED TOWARDS THE PURPOSES OF THE TRUST AND THERE IS NO EVEN ANY ALLEGATION THAT SUCH VEHICLES HAVE BEEN USED FOR THE BENEFIT OF THE TRUSTEES, AS SUCH, AFORESAID JUDGMENT IS INAPPLICABLE M ACIT VS. GRAPHIC ERA EDUCATIONAL SOCIETY 108 TTJ 608 (DELHI). IT IS SUBMITTED THAT AFORESAID ORDER FULLY SUPPORTS THE CASE OF THE ASSESSEE AND IN FACT, APPEAL OF THE REVENUE WAS DISMISSED. IN THIS CASE, AO DENIED EXEMPTION HOLDING THAT, ASSESSEE WAS CHARGING HEFTY FEE FROM STUDENTS AND IMPARTING EDUCATION IN RETURN, AND, THUS, IT WAS EARNING PROFIT AND NOT DOING ANY CHARITY. IT WAS HOWEVER FOUND THAT ASSESSEE WAS DULY RECOGNIZED BY HNB GARHWAL UNIVERSITY AND STRICTLY FOLLOWING UNIVERSITY REGULATIONS WITH REGARD TO ADMISSION CHARGING OF FEES AND COURSE CURRICULUM AND H AD ON ITS GOVERNING BODY NOMINEE OF STATE GOVERNMENT, HNB UNIVERSITY AND AICTE FUNCTIONING UNDER HUMAN RESOURCES MINISTRY AND, THUS, IN FACT GOVERNMENT MANAGED AND MOREOVER, ANY SURPLUS ARISING TO SOCIETY WAS UTILIZED INTO ACTIVITIES OF SOCIETY AND DID NOT FIND ITS WAY TO POCKET OF PERSONS WHO WERE RUNNING SOCIETY/INSTITUTION AS SUCH, EXEMPTION WAS ALLOWED TO THE ASSESSEE. THE FACTS OF THE INSTANT CASE ARE IDENTICAL TO THE AFORESAID CASE 4. IT IS SUBMITTED THAT IN THE WRITTEN SUBMISSION FILED BY THE REVENUE ON 02.05.2017, IT IS SEEKING TO RELY UPON THE JUDGMENT OF HON'BLE HIGH COURT OF UTTARAKHAND IN THE CASE OF CIT VS. QUEENS ITO V SWAMI OMKARANANAD SARASWATI CHARITABLE TRUST A Y 2010 - 11 ITA 3744 /DEL/2014 & CIO 104/DEL/2015 PAGE | 21 EDUCATIONAL SOCIETY REPORTED IN 319 ITR 160 HAS BEEN REVERSED BY T HE SC IN [2015] 372 ITR 699 (SO, IT IS THUS APPARENT THAT THE REVENUE IS TRYING TO SUPPORT AN UNSUPPORTABLE CASE OF THE AO AND DESPITE THE FACT THAT THE PRINCIPLES LAID DOWN BY THE HON'BLE HIGH COURT OF UTTARAKHAND HAS BEEN REVERSED BY APEX COURT, AN ATTEM PT HAS BEEN MADE HERETO TO JUSTIFY THE DENIAL OF EXEMPTION AND ON THE GROUND THAT SINCE THERE IS AN EXCESS OF RECEIPT OVER EXPENDITURE THE ASSESSEE TRUST IS ENGAGED WITH PROFIT MOTIVE FAILING TO APPRECIATE THAT HON'BLE APEX COURT IN [2015] 372 ITR 699 (SC) REVERSING THE AFORESAID JUDGMENT HAS HELD THAT WHERE A SURPLUS WAS MADE BY EDUCATIONAL INSTITUTION WHICH WAS PLOUGHED BACK FOR EDUCATIONAL PURPOSES, SAID INSTITUTION WAS TO BE HELD TO BE EXISTED SOLELY FOR EDUCATIONAL PURPOSE AND NOT FOR PURPOSE OF PROFIT . 5. IT IS SUBMITTED THAT IT IS REITERATED THAT ACTIVITIES OF THE ASSESSEE REMAIN SAME SINCE ITS INCEPTION AND IN ALL THE PRECEDING ASSESSMENT YEARS, EXEMPTION CLAIMED BY THE ' ASSESSEE HAS BEEN ALLOWED. THE RESPONDENT SEEKS TO RELY UPON THE JUDGMENT OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF MOOL CHAND KHAIRATI RAM TRUST VS. DIT (EXEMPTIONS) REPORTED IN 377 ITR 650. WHEREIN THE ASSESSEE HAD BEEN ENJOYING EXEMPTION U/S 11 OF THE INCOME TAX ACT SINCE THE INCEPTION OF THE TRUST. HOWEVER, IN THE AY 2 006 - 07 THE SAME WAS DISALLOWED ON THE GROUND THAT THE ASSESSEE WAS RUNNING AN ALLOPATHIC HOSPITAL; WHEREAS UNDER THE DEED OF TRUST IT WAS SET UP WITH OBJECT TO IMPART EDUCATION IN AND TO IMPROVE AYURVEDIC SYSTEM OF MEDICINE. IN FACT THE IT AT UPHELD THE CO NTENTION OF THE REVENUE. THIS CONTENTION OF THE REVENUE WAS REJECTED BY THE HIGH COURT ON THE GROUND THAT IT IS IMPERMISSIBLE TO DO SO. THE COURT HELD AT PAGE 671 PARA 43 THAT, 'IT IS NOT POSSIBLE TO ACCEPT THAT THE GRANT OF EXEMPTION TO THE ASSESSEE FOR T HE PAST SEVERAL DECADES WAS PALPABLY ERRONEOUS AND SUCCESSIVE ASSESSING OFFICER WERE WRONG IN ACCEPTING THAT THE ACTIVITIES OF THE ASSESSEE WERE IN FURTHERANCE OF ITS CHARITABLE OBJECTS, ENTITLING THE ASSESSEE TO ESCAPE THE LEVY OF INCOME TAX'. THE HON'BLE HIGH COURT ALLOWED THE APPEAL OF THE ASSESSEE BY GIVING OTHER REASONS AS WELL HOWEVER, PRIMARILY IT HELD THAT IF AN EXEMPTION IS BEING GRANTED SINCE SEVERAL YEARS, THE SAME CANNOT BE DENIED, THE FACTS REMAINING THE SAME. 6. IN THE INSTANT CASE, IT I S SUBMITTED THAT THE FACTS CONTINUE TO REMAIN THE SAME SINCE INCEPTION. THE ACTIVITIES CARRIED ON BY THE ASSESSEE CONTINUE TO REMAIN THE SAME. THE SOURCES OF RECEIPTS REMAIN IDENTICAL. IT HAS BEEN EARNING INCOME FROM PROPERTY HELD UNDER TRUST. IT HAS NOT B EEN HELD THAT ASSESSEE WAS ENGAGED IN ANY BUSINESS WHEN IT CARRIED ON IDENTICAL ACTIVITIES. THUS IT IS SUBMITTED THE REVENUE'S CONTENTION THAT THERE IS SINCE CHANGE IN LAW AND THAT TOO NOT IN THE INSTANT YEAR BUT IN THE PRECEDING YEAR COULD NOT BE A GROUND AT ALL TO HOLD THAT THE ASSESSEE IS NOT ELIGIBLE TO THE CLAIM OF EXEMPTION U/S 11 OF THE ACT. 7. IT IS REITERATED THAT ASSESSEE IS NOT INVOLVED IN THE CARRYING ON ANY ACTIVITY IN THE NATURE OF TRADE, COMMERCE AND BUSINESS OR ANY ACTIVITY OF RENDERING ANY SERVICE IN RELATION TO ANY TRADE, COMMERCE ITO V SWAMI OMKARANANAD SARASWATI CHARITABLE TRUST A Y 2010 - 11 ITA 3744 /DEL/2014 & CIO 104/DEL/2015 PAGE | 22 AND BUSINESS. IT IS MERELY RECEIVING INCOME BY WAY OF RENT FROM PROPERTIES HELD UNDER TRUST OR VOLUNTARY CONTRIBUTIONS OR BY WAY OF EXCESS OF RECEIPTS OVER EXPENDITURE ON RUNNING THE EDUCATIONAL INSTITUTION W HICH HAS BEEN AGAIN FULLY AND WHOLLY APPLIED FOR EDUCATIONAL PURPOSES. HENCE IT IS PRAYED THAT IT BE HELD THAT EXEMPTION DENIED BY THE LEARNED AO IS UNSUSTAINABLE IN LAW. IN THE MATTER OF: SWAMI OMKARANANDA SARASWATI CHARITABLE TRUST THE COMPUTATION AS PER ORDER OF ASSESSMENT (SEE PG. 36) IS AS UNDER: SURPLUS AS SHOWN BY THE ASSESSEE AGAINST GROSS RECEIPTS OF RS. 4,1 8,36,4217 - 56,48,5267 - DEPRECIATION CLAIMED IN OIMT BEING BROUGHT THE FIGURE OF 44,07,5617 - AFTER DEDUCTION DEPRECIATION OF RS. 16,68,3177 - 16,68,3177 - INTER ORGANIZATION DONATION TO BE DISALLOWED 42,83,6877 - ADDITION ON ACCOUNT OF FIXED ASSETS AS CLAIMED APPLICATION IS BEING ADDED BEING CAPITAL NATURE EXPENSES (32, 1 1 ,5 1 0 + 32,60,237) 64,71,7477 - TOTAL INCOME 1,80,72,2777 - FIRSTLY AT PAGE 33 OF PAPER BOOK SHOWS SURPLUS OF THE TRUST INCLUDING SURPLUS FROM OIMT, (AS PROPERTY HELD UNDER TRUST) - RS. 56,48,5267 - AND THUS THERE IS NO DISPUTE ABOUT THE FIGURE AS STATED ABOVE. HOWEVER, SINCE OUT OF THE SAID SUM, THE AMOUNT 'APPLIED TOWARDS FIXED ASSETS' (PG. 36) IS OF RS. 32,11,5107 - AND TOWARDS MOVABLE ASSETS RS. 34,69,0327 - (WHICH AGGREGATES TO RS. 66,80,5427 - ) THERE IS A NEGATIVE SUM OF RS. 10,32,0167 - AND THERE IS NO SURPLUS . IN OTHER WORDS, SINCE THE SURPLUS AS STATED ABOVE IS WITHOUT CONSIDERING THE SUM AS HAS BEEN APPLIED FOR CHARITABLE PURPOSES, THE AO HAD WRONGLY INCLUDED OF RS. 56.48.5267 - WHILE COMPUTING THE TOTAL INCOME AT RS. 1,80,72,2777 - ; WHEREAS THERE IS NO SURPLU S, INSTEAD OF THERE BEING EXCESS OF EXPENDITURE OVER RECEIPTS. SECONDLY THE LEARNED AO AGAIN ERRED IN MAKING ADDITION OF RS. 42,83,6877 - BEING INTER ORGANIZATION DONATION; WHEREAS SAID SUM REPRESENTED DONATION TO THE TRUST WHOSE OBJECTS ARE IDENTICAL I.E. RUNNING OF SCHOOLS. THUS THE ADDITION MADE OF RS. 42,83,6877 - HAD INCORRECTLY BEEN MADE. THIRDLY THE AO AGAIN MADE AN ADDITION OF THE TWO SUMS I.E. RS. 32,11,5107 - AND RS. 32,60,2377 - , DESPITE THE SAME WAS NOT CONSIDERED WHILE ADOPTING SURPLUS OF RS. 56,48 ,5267 - , WHICH IS EVIDENTLY A DOUBLE ADDITION. IT IS STATED THAT RS. 56,48,5267 - WHEN WAS ADOPTED AS SURPLUS INCLUDED THE SAID SUM. ITO V SWAMI OMKARANANAD SARASWATI CHARITABLE TRUST A Y 2010 - 11 ITA 3744 /DEL/2014 & CIO 104/DEL/2015 PAGE | 23 LASTLY DEPRECIATION WHICH IS ALLOWABLE HAS BEEN ADDED I.E. RS. 16,68,3177 - , WHICH HAS TO BE ALLOWED WHILE COMPUTING TOTAL INCO ME, (SEE DELHI HIGH COURT IN DIT VS. INDRAPRASTHA CANCER SOCIETY, 229 TAXMAN 93) 9. COUNTERING THE CLAIM OF THE LD. AUTHORISED REPRESENTATIVE, LD. DEPARTMENTAL REPRESENTATIVE I N REJOINDER SUBMITTED THAT FOLLOWING DECISIONS MAY BE CONSIDERED: - A. CIT VS. VIJETA EDUCATIONAL SOCIETY (2011 - TIOL - 591 - HON'BLE HIGH COURT - ALL - IT B. CIT VS. AUDH ED UCATIONAL SOCIETY (2011) 15 TAX M AN.COM 235 (ALLAHABAD) (2011) TAXMANN 166 (ALLHABAD) C. DY DIT VS. INDIA CEMENTS EDUCATIONAL SOCIETY (157 ITD 1008/ 46 ITR 80) 10. WE HAVE CAREFULLY CONSI DERED THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITY. THE UNDISPUTED FACTS IN THIS CASE ARE THAT THE ASSESSEE TRUST IS REGISTERED U/S 12A OF THE ACT AS WELL AS U/S 80G(5) OF THE ACT. IT WAS FORMED 31.03.19 89. THE MAIN OBJECTS OF THE TR UST AS ENSHRINED IN CLAUSE NO. 5 OF THAT TRUST DEED SHOWS THAT IT IS FORMED FOR THE PURPOSE OF EDUCATION AND OTHER ACTIVITIES WHICH ARE CHARITABLE IN NATURE. SUBSEQUENTLY, THE SUPPLEMENTARY DEED WAS EXECUTED ON 07.11.1989, WHEREIN, THE CLAUSES OF THE DEED WERE AMENDED WITH RESPECT TO BORROWINGS. MAINLY, THE OBJECT OF THE TRUST ARE AS UNDER: - I. OMKARNANADA INSTITUTE OF MANAGE AND TECHNOLOGY HAS BEEN ESTABLISHED TO EXPAND MANAGEMENT AND TECHNICAL EDUCATION IN THIS AREA, WHICH WAS LACKING IN THE FIELD OF VOCATIO NAL AND TECHNICAL EDUCATION. THE INSTITUTE IS APPROVED BY ALL INDIA COUNSEL OF TECHNICAL EDUCATION (AECTE), NEW DELHI, TO RUN MBA COURSES. THE INSTITUTE IS ALSO AFFILIATED TO THE UTTARAKHAND TECHNICAL UNIVERSITY, DEHRADUN, AND HN BAHUGUNA GARHWAL UNIVERSIT Y SHRINAGAR TO RUN BBA, BCA AND VARIOUS OTHER COURSES. THE INSTITUTE HAS WELL FURNISHED COMPUTER LABORATORY AND GOOD LIBRARIES. EXPERIENCED FACULTY MEMBERS FOR TEACHING AND ADMINISTRATION LOOK AFTER THE SMOOTH RUNNING OF THE INSTITUTE, WHICH IS UNIQUE IN THIS AREA. ITO V SWAMI OMKARANANAD SARASWATI CHARITABLE TRUST A Y 2010 - 11 ITA 3744 /DEL/2014 & CIO 104/DEL/2015 PAGE | 24 II. OMLARMANDA SOCIAL PALACE AND OMKARNANDA SHIVALAYA HOUSE THE HOSTELS FOR STUDENTS OF OMKARNANADA INSTITUTE OF MANAGEMENT AND TECHNOLOGY, TO PROVIDE ACCOMMODATION TO STUDENTS FROM REMOTE TOWNS AND STATIONS. III. THE TRUST HAS IN FINANCIALLY SUPPORTING MORE THAN 40 PRIMARY AND JUNIOR HIGH SCHOOLS IN THE GARHWAL REGION. THESE SCHOOLS PROVIDE EDUCATION TO STUDENTS OF THE MOST BACKWARD AREAS OF GARHWAL, WHERE EDUCATION IS NEEDED MOST. IV. IN THE HEARD OF MUNI KI RETI THE TRUST HAS SPONSORED A BUILDING FOR THE CHARITABLE GOVERNMENT HOMEOPATHIC HOSPITAL. V. OMKARANAND PUBLIC LIBRARY AND THE OMKARANANDA RAM ASHRAM LIBRARY ARE TOW PUBLIC LIBRARIES RUN BY THE TRUST IN THE AREA OF MUNI KI RETI. VI. THE TRUST RUNS THREE DHARMASHALAS IN MUNI KE RETI AND RISHIKESH, WHERE PILGRIMS TO THE HOLY SHRINES OF GARHWAL CAN STAY. VII. THE TRUST IS FINANCIALLY SUPPORTING RESEARCH INTO ORGANIC FARMING AND THE BENEFIT OF AGNIHOTRA ON AGRICULTURE AND ENVIRONMENT. 11. DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS THE LD ASSESSING OFFICER HAS HELD THAT ASSESSEE IS NOT ENTITLED FOR SPECIAL TREATMENT OF SECTION 11 AND 12 FOR THE REASON THAT IT IS CARRYING ON ACTIVITIES IN THE NATURE OF BUSINESS, AS GIVEN A DONATION TO OTHER TRUST AND ALSO THE PROPERTIES OF THE TRUST WERE HELD BY THE TRUSTEES. ACCORDINGLY, THE ASSESSMENT ORDER WAS FRAMED U/S 143(3) OF THE ACT ON 31.03.2012 WHERE THE INCOME OF THE ASSESSEE IS ASSESSED WITHOUT GIVING BENEFIT OF SECTION 11 AND 12 OF THE ACT. 12. BASED O N THE ABOVE IT IS APPARENT THAT LD ASSESSING OFFICER HAS HELD THAT APPELLANT IS ENGAGED IN THE BUSINESS OF EDUCATION AND THEREFORE, NOT ELIGIBLE FOR BENEFIT U/S 11. HE WAS FURTHER O THE VIEW THAT THE PROPERTIES OF THE TRUST ARE HELD FOR COMMERCIAL PURPOSES TO EARN THE PROFIT SUCH AS RENTAL INCOME FROM DHARAMSHALA AS WELL AS RENTAL INCOME FROM OTHER COMMERCIAL ASSETS AND THEREFORE, THE OBJECTS OF THE ASSESSEE ARE ADVANCEMENT OF ANY OTHER OBJECT OF GENERAL PUBLIC UTILITY HIT BY THE FIRST ITO V SWAMI OMKARANANAD SARASWATI CHARITABLE TRUST A Y 2010 - 11 ITA 3744 /DEL/2014 & CIO 104/DEL/2015 PAGE | 25 PROVISO TO SECTION 2 (15) OF THE ACT. THE LD AO WAS FURTHER OF THE VIEW DONATION OF RS. 4283687/ - TO ANOTHER TRUST VIOLATES THE PROVISION OF SECTION 13(3)(E) OF THE ACT AND FURTHER AS THE ASSESSEE HAS INFRINGE THE PROVISIONS OF SECTION 13(2)(G) AS SIX VEHICLES ARE PURCHASES IN THE NAME OF THE TRUSTEES. 13. ON APPEAL BEFORE THE LD CIT(A) HE DECIDED THE ISSUE AS UNDER: - 4.1 THE FINDINGS OF ID.AO AND THE AVERMENTS OF ID.ARS HAVE BEEN CAREFULLY PERUSED. AN DENIABLE FACT THAT EMERGES FROM A READING OF THE IMPUGNED ORDER IS THAT THE AC TIVITY OF EDUCATION IS NOT DENIED. IN FACT THIS ACTIVITY IS SEEN TO ACCOUNT FOR MOST OF THE OUTGOING. THUS THE TOTAL OF RECEIPTS (RS.2,34,68,378 + 1,83,68,043 = 4,18,36,4217 - ) RS.4,18,36,421/ - ARE APPLIED IN A MAJOR WAY TOWARDS SUPPORTING EDUCATIONAL ACTIV ITIES EITHER IN THE SHAPE OF DIRECT EXPENDITURE ON THE SAME OR THROUGH SUPPORT OF OTHER TRUSTS ENGAGED IN PROVIDING EDUCATION. THUS UNDOUBTEDLY THE PRIMARY FOCUS OF THE APPELLANT TRUST IS ON EDUCATION, MORE SO BECAUSE CONSIDERABLE INDIRECT EXPENSES (REPAIR S, AND INVESTMENT ON FIXED ASSETS) COULD ALSO BE ATTRIBUTED TO EDUCATIONAL ACTIVITIES OF THE TRUST. THIS EXPENDITURE ON EDUCATION IS ALSO SUPPORTED BY THE OBJECTS INCLUDED IN THE TRUST DEED WHICH ARE OVERWHELMINGLY FOCUSED ON EDUCATIONAL ACTIVITIES. THUS, PRIMA FACIE, NO CASE IS MADE OUT FOR THIS TRUST TO BE COVERED UNDER THE 'OTHER OBJECTS' CLAUSE IN SECTION 2(15) OF THE ACT. ALSO, IT IS SEEN THAT THOUGH THERE ARE SOME SURPLUSES BUT THE OVERALL APPLICATION OF FUNDS INDICATES THAT THE SURPLUS IS WITHIN LEG ALLY PERMISSIBLE LIMITS AND MOST CERTAINLY DOES NOT INDICATE ANY PROFIT MOTIVE. SECONDLY, IN KEEPING WITH OTHER OBJECTS IN THE TRUST DEED THE RUNNING OF A DHARAMSHALA, ALSO CANNOT BE SEEN TO BE A BUSINESS VENTURE SINCE THE DONATIONS RECEIVED ARE NOT CONSIS TENT SO AS TO GIVE AN IMPRESSION THAT THERE ARE SPECIFIED ROOM RENTALS ON PER DIEM BASIS. THIS ALSO CANNOT BE TERMED AS A BUSINESS ACTIVITY FOR THE SAKE OF EARNING PROFITS. LASTLY, THE TRUST PROPERTY OR ASSETS BELONGING TO THE APPELLANT ARE NOT SEEN TO BE USED - - IN SUCH A MANNER THAT THEY COULD BE BROUGHT WITHIN THE MISCHIEF OF ANY OF THE CLAUSES OF SECTION 13 OF THE ACT ALSO BECAUSE MERELY REGISTERING VEHICLES IN THE NAME OF ANY TRUSTEE COULD BE UNDERSTOOD AS A MATTER OF CONVENIENCE AND NOT AS A METHOD FOR EXPLOITING TRUST ASSETS FOR PERSONAL USE. IN CONCLUSION IT NEEDS TO BE DIRECTED TO THE AO TO ALLOW THE BENEFITS OF SECTION 11 OF THE ACT TO THE APPELLANT. THESE 4 GROUNDS ARE ACCORDINGLY ALLOWED. 5. GROUND NUMBER 5 CHALLENGES THE DISALLOWANCE OF RS. 42,83,6877 - GIVEN TO OTHER CHARITABLE TRUSTS BY INVOKING SECTIONS 13(1)(C)(II) R/W 13(3)(C) OF THE ACT. THE ID.ARS HAVE AVERRED AS UNDER ON THIS ISSUE: - ITO V SWAMI OMKARANANAD SARASWATI CHARITABLE TRUST A Y 2010 - 11 ITA 3744 /DEL/2014 & CIO 104/DEL/2015 PAGE | 26 1.1 IT IS SUBMITTED THAT EXCEPT FOR THE INSTANT ASSESSMENT YEAR, IN NONE OF THE AFORESAID ASSESSMENT YEARS, DONATION MADE TO THE OTHER ORGANISATIONS WERE DISALLOWED BY THE REVENUE. 1.2 IT IS SUBMITTED THAT WHILE MAKING THE ADDITION OF THE AFORESAID SUM, LEARNED A O HAS HELD THAT SINCE IN THE DONEE TRUST, SOME OF THE TRUSTEES ARE COMMON AS SUCH, BY GIVIN G DONATIONS TO THE TRUST, APPELLANT HAS INFRINGED THE PROVISIONS OF SECTION !3(L)(C) R - 'W SECTION 13(3)(E) OF THE ACT AND THUS NOT ELIGIBLE FOR CLAIMING EXEMPTION. FURTHER, WHILE MAKING THE ADDITION OF THE AFORESAID SUM. LEARNED AO ALSO PLACED RELIANCE ON THE ORDER OF (HE TRIBUNAL IN THE CASE OF AUROLAB TRUST VS. CIT REPORTED IN 121TR (TRIB) 74. 1.3 AT THE OUTSET, IT IS ALSO RELEVANT TO MENTION THAT IN AY 2002 - 2003, ASSESSEE MADE DONATIONS OF RS. 57,73,168! - TO SIX ORGANISATIONS/INSTITUTIONS (INCLUDING TH REE TRUSTS TO WHOM DONATIONS HAS BEEN MADE IN THE INSTANT ASSESSMENT YEAR) (SEE PAGE 466 OF THE PAPER BOOK) AND IN THE ORDER OF THE ASSESSMENT, LEARNED AO MADE ADDITION OF THE AFORESAID SUM BY INVOKING SECTION I3(L)(C) R/W SECTION 13(3) OF THE ACT (SEE PAG E 465 - 467 OF THE PB). IN THE APPEAL FILED BY THE ASSESSEE, ID. CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE (SEE PAGE 472 - 482 OF THE PAPER BOOK). THAT AFORESAID ORDER OF THE ID CIT (A) HAS BEEN UPHELD BY THE HON'BLE TRIBUNAL (SEE PAGE 483 - 487 OFTHE PB) AND AP PEAL FILED BY THE REVENUE WAS ALSO DISMISSED BY THE HON'BLE HIGH COURT. IT IS SUBMITTED THAT AFTER THE AFORESAID ASSESSMENT YEAR 2002 - 2003, IT IS MOST RESPECTFULLY SUBMITTED THAT FROM THE PERUSAL OF THE AFORESAID TABLE, IT IS EVIDENT THAT IN NONE OF THE AF ORESAID PRECEDING ASSESSMENT YEARS, DONATION MADE TO THE AFORESAID TRUSTS HAS BEEN SUBJECTED TO THE ADDITION. 1.4 APART FROM THE AFORESAID, IT IS SUBMITTED TH AT THE PROVISIONS OF SECTION 13(1 ) ( C)(II) R WS SECTION 13(3)( E) OF THE ACT CANNOT HE APPLIED IN RESPECT OF THE DONATIONS MADE TO OTHER _ CHARITABLE INSTITUTIONS . IT IS SUBMITTED THAT SECTION J3(J)(C)(II) OF THE ACT PROVIDES THAT IF AN Y PART OF THE INCOME OF THE TRUST IS APPLIED DIRECTLY OR INDIRECTLY FOR THE BENEFIT OF ANY PERSON REFERRED IN SUB - SECTI ON 13(3) OF THE ACT EXEMPTION U/S 11/12 CANNOT BE ALLOWED. FURTHER, SECTION 13(3) OF THE ACT SPECIFIES THE PERSON REFERRED IN SECTION 13(1 )(C) OF THE ACT. IT IS _ SUBMITTED THAT PERSON REFERRED IN CLAUSES (A) TO (D) OF SUB SECTION (3) OF SECTION 13 ARE IN DIVIDUALS, HOWEVER CLAUSE (E) PROVIDES THAT ANY CONCERN IN WHICH ANY OF THE PERSONS REFERRED TO IN CLAUSE (A) TO (D) HAS SUBSTANTIAL INTEREST FURTHER EXPLANATION 3 TO THIS SECTION PROVIDES THAT WHEN A PERSON CAN ITO V SWAMI OMKARANANAD SARASWATI CHARITABLE TRUST A Y 2010 - 11 ITA 3744 /DEL/2014 & CIO 104/DEL/2015 PAGE | 27 HE SAID TO H AVE SUBSTANTIAL INTEREST IN A CO NCERN, FOR THE SAKE OF CONVENIENCE. EXPLANATION 3 TO S ECTION 13 IS EXTRACTED HEREIN BELOW: 1.5 FROM THE PERUSAL OF THE AFORESAID PROVISION, IT WOULD BE SEEN THAT CLAUSE OF THE AFORESAID APPLICABLE ONLY__ IN RESPECT OF A COMPANY AND CLAUSE (II) IS APPLICABLE ONLY IN RESPECT OF A CONCERN, WHICH EXISTS FOR THE PROFIT AND IS NOT APPLICABLE IN RESPECT OF CONCERN, WHICH DOE S NOT EXIST FOR PROFIT AS SUCH, SINCE THE CH ARITABLE INSTITUTIONS DOES NOT EXIST FOR PROFIT AS SUCH CHARITABLE TRUSTS/INSTITUTIONS ARE NOT COVERED BY THE AFORESAID PROVISION. IT IS SUBMITTED THAT IF THE PROVISIONS OF SECTION 13( 1 ) RWS 1 3(3}(A)...(E) AND EXPLANATION (3) ARE READ TOGETHER, THEN IT WOULD BE ABUNDANTLY CLEAR THAT DONATIONS MADE BY A TRUST TO ANOTHER TRUST IS NOT HIT B Y RIGOURS OF SECTION L3 OF THE ACT AND THEREFORE FINDINGS OF THE LEARNED AO IN MAKING ADDITION OF THE AFORESAID, SUM IS AGAINST THE STATUTORY PROVISIONS AN D THEREFORE LIABLE TO BE DELETED. 1.6 THAT LEARNED INCOME TAX OFFICER HAS ERRED IN HOLDING THAT T HE DONATIONS OF RS. 42,83,687 / - TO 10 OTHER ORGANIZATIONS WHICH ARE ALSO CHARITABLE TRUSTS, IS NOT THE APPLICATION OF INCOME AS HE HAS FAILED TO APPRECIATE THAT THE MOMENT THE DONATION IS EFFECT ED IN FAVOUR OF THE DONEE TRUST WHICH IS ALSO A CHARITABLE TRUST, APPLICATION OF THE INCOME FOR CHARITABLE OR RELIGIOUS PURPOSES IS COMPLETE. 1.7 IF IS SUBMITTED THAT IF THE ASSESSEE EITHER ITSELF USES ANY PART OF ITS INCOME FOR CHARITABLE PURPOSES OR DON ATES THE SAME TO ANY OTHER CHARITABLE TRUST, SUCH INCOME IS EXEMPT FROM INCLUSION IN THE TOTAL INCOME OF THE ASSESSEE FOR THE RELEVANT YEAR, AS THE SAME ALSO AMOUNTS TO APPLICATION OF INCOME BY THE DONOR TRUST. THAT HON'BLE HIGH COURT OF DELHI IN THE CASE OF COMMISSIONER OF INCOME - TAX V. SHRI RAM MEMORIAL FOUNDATION (2004) 269 ITR 35 HAS HELD THAT WHEN A DONOR TRUST WHICH IS ITSELF A CHARITABLE AND RELIGIOUS TRUST DONATES ITS INCOME TO ANOTHER TRUST, IHE PROVISIONS OF SECTION LL(L)(A) CAN BE SAID TO HAVE BEEN MET BY SUCH DONOR TRUST AND THE DONOR TRUST CAN BE SAID TO HAVE APPLIED ITS INCOME FOR RELIGIOUS AND CHARITABLE PURPOSES. FURTHER RELIANCE IS PLACED ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS: I. D1T(E) VS. M/SBAGRI FOUNDATION (ITA NO. 19/2010 DATED 2ND JULY, 2010) II JK CHARITABLE TRUST [1992] 196 ITR 31 (ALL.); III. NIRMALA BAKUBHAI FOUNDATION [1997] 226 ITR 394 (GUJ.) 1.8 THAT AFORESAID SUBMISSION IS FURTHER SUPPORTED BY THE INSTRUCTION ISSUED BY CBDT I.E. INSTRUCTION : NO, 1132, DATED 5 - 1 - 1978, WHE REIN CBDT HAS ISSUED FOLLOWING INSTRUCTIONS: ITO V SWAMI OMKARANANAD SARASWATI CHARITABLE TRUST A Y 2010 - 11 ITA 3744 /DEL/2014 & CIO 104/DEL/2015 PAGE | 28 'THE ISSUE HAS BEEN CONSIDERED BY THE BOARD AND IT HAS BEEN DECIDED THAT AS THE LAW STANDS AT PRESENT, THE PAYMENT OF A SUM BY ONE CHARITABLE TRUST TO ANOTHER FOR UTILISATION BY THE DONEE TRUST TOWARDS ITS CHAR ITABLE OBJECTS IS PROPER APPLICATION OF INCOME FOR CHARITABLE PURPOSE IN THE HANDS OF THE DONEE TRUST; AND THE DONOR TRUST WILL NOT LOSE EXEMPTION UNDER SECTION 11 OF THE INCOME - TAX ACT, 1961, MERELY BECAUSE THE DONEE TRUST DID NOT SPEND THE DONATION DURIN G THE YEAR OF RECEIPT ITSELF 5.1 THE FINDINGS OF THE ID.AO AND THE AVERMENTS OF THE ID.ARS HAVE BEEN CAREFULLY CONSIDERED. THE MAIN FINDING OF THE ID.AO ON THIS ISSUE REVOLVES AROUND THE FACTS THAT THE DONATIONS HAVE BEEN GIVEN TO TRUSTS IN WHICH THE TRUSTEE OF THE APPELLANT ARE ALSO MEMBERS. THE MERE FACT THAT SUCH AN ARRANGEMENT EXITS IS NOT IN ITSELF SUFFICIENT TO INVOKE THE RELEVANT CLAUSES OF SECTION 13, AS HAS BEEN DONE BY THE ID.AO. THERE IS NO FINDING INDICATING ANY COLLUSIVE ARRANGEMENT WHEREBY THE DONATED FUNDS ARE BEING SIPHONED OFF FOR ACTIVITIES OTHER THAN CHARITABLE. IN THE ABSENCE OF SUCH A FINDINGS THE ACTION OF ID.AO CANNOT BE SUPPORTED. BEFORE PARTING WITH THIS ISSUE IT WOULD BE IN THE FITNESS OF THINGS TO RECORD A NOTE OF DISSENT ON THE STRESS LAID BY THE ID.ARS ON FOLLOWING THE 'RULE OF CONSISTENCY' IN AS MUCH AS IN PREVIOUS YEARS THE RETURNED INCOME HAS BEEN ACCEPTED BY THE DEPARTMENT [MOSTLY, IT IS SEEN, U/S 143(1)(A) BUT ALSO U/S 143(3) OF THE ACT]. ONE OF THE FOUNDATIONAL PRINCIPLES OF TAXATION IS THAT THE P RINCIPLE OF RESJUDICATA DOES NOT APPLY TO TAX PROCEEDINGS AND THAT THERE CAN BE NO ESTOPPELS ON THAT BASIS. IN, THIS CASE NO RELIEF IS DUE ONLY ON THE BASIS OF THE FACT THAT ONCE THE RETURNED INCOME HAS BEEN ACCEPTED IN THE PAST THEN THE DEPARTMENT CANNOT TAMPER WITH THE ASSESSE'S CLAIM UNTIL AND UNLESS SOME NEW FACTS ARE BROUGHT TO LIGHT. WHILE IT WOULD BE DESIRABLE TO HAVE A CERTAIN FINALITY IN LEGAL PROCEEDINGS, NOTHING PREVENTS AN AO FROM A REAPPRAISAL OF EXISTING FACTS AND THEREAFTER ARRIVING AT A DIFF ERENT CONCLUSION VIS - A - VIS EARLIER YEARS. AN ILLUMINATING PASSAGE CONTAINED IN THE CASE OF KRISHAK BHARTI COOPERATIVE LTD. VS DCIT REPORTED IN 350 ITR 24 (DELHI) MAY BE REPRODUCED: - IT IS NOW NECESSARY TO TAKE UP THE SUBMISSION THAT THE TRIBUNAL ERRED IN DEPARTING FROM THE CONSISTENCY RULE. THIS IS BASED ON THE FACT THAT FOR A PERIOD OF ABOUT 15 YEAR,, THE INCOME - TAX AUTHORITIES HAD ACCEPTED THE ASSESSEE'S SUBMISSIONS AND PERMITTED ANNUAL AMORTIZATION OF THE INITIAL LEASE CONSIDERATION AS ADVANCE RENT. THE RE CANNOT BE A WIDE APPLICATION OF THE RULE OF CONSISTENCY. IN RADHASOAMI SATSANG V. CIT [1992] 60 TAXMAN 248 THE SUPREME COURT ITO V SWAMI OMKARANANAD SARASWATI CHARITABLE TRUST A Y 2010 - 11 ITA 3744 /DEL/2014 & CIO 104/DEL/2015 PAGE | 29 ACKNOWLEDGED THAT THERE IS NO RES - JUDICATA AS REGARDS ASSESSMENT ORDERS. AND ASSESSMENTS FOR ONE YEAR MAY NOT BIND THE OFFICER F OR THE NEXT YEAR. THIS IS CONSISTENT WITH THE VIEW THAT 'THERE IS NO SUCH THING AS RES - JUDICATA IN INCOME - TAX MATTER'. SIMILARLY, ERRONEOUS OR MISTAKEN VIEWS CANNOT FETTER THE AUTHORITIES INTO REPEATING THEM. BY APPLICATION OF RULE SUCH AS ESTOPPELS. FOR T HE REASON THAT BEING AN EQUITABLE PRINCIPLE. IT HAS TO BE YIELD TO THE MANDATE OF LAW. A DEEPER REFLECTION WOULD SHOW THAT BLIND ADHERENCE TO THE RULE OF CONSISTENCY WOULD LEAD TO ANOMALOUS RESULTS. FOR THE REASON THAT IT WOULD ENGENDER THE UNEQUAL APPLICA TION OF LAWS. AND DIRECT THE TAX AUTHORITIES TO ADOPT VARIED INTERPRETATIONS. TO SUIT INDIVIDUAL ASSESSEE'S. SUBJECTIVE TO THEIR CONVENIENCE A RESULT AT ONCE DEBILITATING AND DESTRUCTIVE RULE OF LAW. A PREVIOUS DIVISION BENCH OF THIS COURT, IN ROHITASAVA C HAND V. CLT/2008/306 ITR 242 171 TAXMAN 147 HAD HELD THAT THE RULE OF CONSISTENCY CANNOT BE OF INFLEXIBLE APPLICATION. THUS, WHILE THIS GROUND IS ALLOWED BASED ON THE PECULIAR FACTS OF THIS CASE, IT IS CERTAINLY NOT ALLOWED ON THE GROUND THAT THE RULE OF CONSISTENCY SHOULD OVERPOWER ALL OTHER CONSIDERATIONS. 6. GROUND NUMBERS CHALLENGES THE DISALLOWANCE OF DEPRECIATION OF RS.16,68,3177 - . THE ID.AO HAS HELD THAT SUCH A CLAIM AMOUNTS TO A DOUBLE DEDUCTION IN AS MUCH AS ON THE ONE HAND ENTIRE INVESTMENT IN F IXED ASSETS IS CLAIMED AS A DEDUCTION ON ONE HAND - AND THEREAFTER DEPRECIATION IS ALSO CLAIMED ON THE SAME INSPITE OF FULL WRITE BACK OF VALUE. THE ID.ARS HAVE ARGUED AT LENGTH THAT HAD SUCH A CLAIM BEEN TENDERED, IT WOULD STILL BE LEGAL BUT IT HAS BEEN ST ATED (AND SEEN AS CORRECT) THAT NO DEPRECIATION HAS BEEN CLAIMED IN THE COMPUTATION OF INCOME. SINCE THIS FACT IS VERIFIED FROM THE DOCUMENTS, THIS GROUND IS ALLOWED WITHOUT GOING INTO THE ARGUMENTS ABOUT THEORETICAL ALLOWABILITY AS THAT WOULD BE MERELY AN EXERCISE IN SEMANTICS. 7. GROUNDS 7 TO 7.2 CHALLENGES THE ADDITION OF RS.64,71,747/ - BEING ADDITION ON FIXED ASSETS. THE ID. AO HAS STATED IN THE IMPUGNED ORDER THAT SINCE THE APPELLANT WAS HIT BY THE PROVISO TO SECTION 2(15) OF THE ACT AND NOT ELIGIBLE FOR ANY RELIEF U/S 11 OF THE ACT, THERE COULD BE NO ALLOWANCE FOR ANY INVESTMENT ON FIXED ASSETS. THE ID.ARS HAVE ADVANCED LENGTHY ARGUMENTS AFTER RELYING ON A NUMBER OF AUTHORITIES TO AVER THAT THE LD.AO'S FINDINGS ARE NOT IN CONSONANCE WITH THE LAW. HOWE VER, AT THIS STAGE IT WOULD BE SUFFICIENT TO ALLOW THESE GROUNDS ON THE BASIS OF FINDINGS RECORDED EARLIER THROUGH WHICH THE APPELLANT HAS BEEN ALLOWED THE BENEFIT OF SECTION 11 OF THE ACT. ' - ITO V SWAMI OMKARANANAD SARASWATI CHARITABLE TRUST A Y 2010 - 11 ITA 3744 /DEL/2014 & CIO 104/DEL/2015 PAGE | 30 8. GROUND 8 CHALLENGING LEVY OF INTEREST U/S 234A, 234B, 234C, 234D OF THE ACT IS DISPOSED OFF AS BEING CONSEQUENTIAL TO THE SUBSTANTIVE FINDINGS. 9. GROUND 9 CHALLENGES THE INITIATION OF PENALTY U/S 271(1)(C) OF THE ACT. THIS GROUND IS DISMISSED SINCE MERE INITIATION ITSELF IS NOT AN APPEALABLE O RDER U/S 246A OF THE ACT. 10. IN RESULT THIS APPEAL IS PARTLY ALLOWED. IN THIS BACKGROUND WE PROCEED TO DECIDE THE GROUNDS RAISED BY THE REVENUE. 14. THE FIRST GROUND IS THAT THE ASSESSEE HAS RENTED OUT VARIOUS COMMERCIAL PROPERTIES AND REPORTED COMMERCIAL RECEIPTS IN THE FORM OF RENTAL INCOME OF RS. 6317202/ - WHICH IS SEPARATE ACTIVITY PURELY COMMERCIAL IN NATURE AND DOES NOT HAVE ANY RELATION BETWEEN EDUCATIONAL ACTIVITIES AND THUS COVERED UNDER THE AMENDED PROVISIONS OF 2(15) OF THE ACT. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS . THE RECEIPT OF THE ASSESSEE OF THE INCOME OF RS. 63 LAKHS FROM 55 PROPERTIES, WHICH ALSO INCLUDES VARIOUS HOSTELS AND GUESTHOUSES . IT IS RENTED OUT IN PART TO 82 PERSONS AND EARNED A RENTAL INCOME OF RS. 6317202/ - . THE TENANTS INCLUDE SMALL BUSINESSPERSON AS WELL AS GOVT. OF INDIA AND BANKS. IT IS CLAIMED BY THE ASSESSEE THAT MOST OF THE TENANTS WERE PREEXISTING EVEN BEFORE THE PROPERTY WAS PURCHASED BY THE TRUST. HOWEVER, THE AO HAS ALSO STATED THAT ASSESSEE HAS PURCHASED 30 FLATS IN TWO APARTMENTS JUST TO CARRY THE BUSINESS OF LETTING OUT THE FLATS AND EARNED THE INCOME . THE LD CIT(A) HAS HELD THAT THIS IS NOT THE CRITERIA FOR DISALLOWING RELIEF TO THE ASSESSEE. IT IS TRUE THAT ASSESSEE HAS EARNED RENT FROM THOSE PROPERTIES . IT IS NOT THE CASE OF THE REVENUE THAT WHOLE OF THE PROPERTY PURCHASED BY THE TRUST WAS NOT USE D FOR THE PURPOSES OF THE OBJECT OF THE TRUST BUT IS SOLELY RENTED OUT. WE ALSO COULD NOT FIND SUCH CASE AND LD DR COULD NOT POINT OUT ANY SUCH INSTANCES BEFORE US. THEREFORE IT IS APPARENT THAT ASSESSEE HAS PRIMARILY PURCHASED PROPERTIES FOR ITS OB JECTS AND USES IT FOR ITS OBJECT BUT SOME PART OF THOSE PROPERTIES WHICH ARE NOT IN USE ARE RENTED OUT OR IF THE REQUIREMENT OF SUCH FACILITIES IS FELT IN THOSE ITO V SWAMI OMKARANANAD SARASWATI CHARITABLE TRUST A Y 2010 - 11 ITA 3744 /DEL/2014 & CIO 104/DEL/2015 PAGE | 31 BUILDINGS THAN THEY ARE RENTED OUT TO BANKS, POST OFFICE OR INSURANCE COMPANIES. ANYWAY THE FUNDS REALIZED FROM THE RENTAL INCOME ARE PART OF FUNDS OF THE TRUST TO BE UTILISED FOR THE PURPOSES OF THE OBJECT OF THE TRUST. THE CONTENTION OF THE ASSESSEE WAS ALSO THAT MANY A TIMES THE PROPERTIES RENTED OUT WAS PRIOR TO ACQUISITION OF THESE PROPER TIES . THEREFORE, IT IS NOT CORRECT TO SAY THAT ASSESSEE HAS GIVEN THOSE PROPERTIES ON RENT TO THEM AFTER PURCHASING THOSE PROPERTIES. MERELY BECAUSE THE TENANTS ARE CARRYING OUT BUSINESS IN THOSE PREMISES CANNOT BE USED AGAINST THE ASSESSEE THAT ASSESSEE I S ALSO NOT CARRYING ON CHARITABLE ACTIVITIES BUT BUSINESS. IT IS NOT THE CASE OF THE REVENUE THAT ASSESSEE HAS EXPLOITED THE OWNERSHIP OF THE PROPERTY IN A COMMERCIAL MANNER. THIS WOULD BE APPARENT WHEN WE LOOK AT THE TENANTS AND ANNUAL RENT RECEIVED FROM THEM SUCH AS FROM THE INSURANCE COMPANY ASSESSEE IS RECEIVING THE ANNUAL RENT OF RS. 75000/ - AND WHEREAS FROM POST OFFICE IT IS RECEIVING RS. 4800/ - . IT IS UNDISPUTED THAT PRIMARILY PROPERTIES PURCHASED WERE USED FOR THE CHARITABLE ACTIVITIES ONLY. IT IS ALSO NOT THE CASE OF THE REVENUE THAT TRUST HAS PURCHASED PROPERT IES AND EXPLOITED THEM COMPLETELY FOR EARNING RENTAL INCOME WITHOUT HAVING ANY DOMINANT OBJECT OF SERVING THE MAIN OBJECTS OF THE TRUST. THE PROVISO TO SECTION 2(15) OF THE ACT SPEAKS ABOUT THE ACTIVITIES CARRIED OUT BY THE ASSESSEE IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. FURTHER THE CONTENTION OF THE REVENUE IS THAT THE ASSESSEE IS RECEIVING RENTAL OF RS.63,17,202 / - FROM SO CALLED DHARAMSHALAS FROM OTHER PARTIES . IT IS ALSO THE ARGUMENTS OF THE REVENUE THAT N O SEPARATE BOOKS OF ACCOUNT HAVE BEEN MAINTAINED FOR DHARAMSHALAS WHICH IS MANDATORY AS PER PROVISIONS OF SECTION 11 (4A). THE IDENTICAL ISSUE HAS BEEN DECIDED BY COORDINATE BENCH IN ACIT VS. SHRI PANCHAYATI DHARSHALA FOR AY 2010 - 11 ON 01.01.2016 IN ITA NO. 809/JAIPUR/2013 AFTER ANALYSIS THE TRUST DEED WHERE IT IS STATED THAT IN THE EVENTUALITY OF DISSOLUTION THE TRUST PROPERTY IS VEST IN ANOTHER TRUST OR TO THE STATE GOVERNMENT AND INCOME ARISING FROM SUCH ACTIVITIES SHALL O NLY BE SPENT CHARITABLE ACTIVITIES THE COORDINATE BENCH HAS HELD THAT SUCH ACTIVITIES OF DHARMASHALA CANNOT BE SAID TO BE CARRIED OUT IN THE NATURE OF TRADE, COMMERCE OR BUSINESS. THE ITO V SWAMI OMKARANANAD SARASWATI CHARITABLE TRUST A Y 2010 - 11 ITA 3744 /DEL/2014 & CIO 104/DEL/2015 PAGE | 32 COORDINATE BENCH IN THAT JUDGMENT RELIED UPON THE DECISION OF THE HON'BL E DELHI HIGH COURT IN 133 ITR 470 AND HON'BLE SUPREME COURT IN 121 ITR 1 . IT HAS FURTHER BEEN HELD IN ICAI VS. DGIT (EXEMPTION) 202 TAXMANN1 (DEL) THAT A VERY BROAD AND EXTENDED DEFINITION OF THE TERM BUSINESS IS NOT INTENDED FOR THE PURPOSE OF INTERPRET ING AND APPLYING THE FIRST PROVISO TO SECTION 2(15) GENERALLY AN ACTIVITY WOULD BE CONSIDER A BUSINESS IF IT IS UNDERTAKEN WITH A PROFIT MOTIVE BUT IT IS NOT ALWAYS DETERMINATIVE. NORMALLY THE PROFIT MOTIVE TEST SHOULD BE SATISFIED BUT EVEN OTHERWISE THERE SHOULD BE AN EVIDENCE AND MATERIAL TO SHOW THAT THE ACTIVITY HAS CONTINUED ON SOUND AND RECOGNIZED BUSINESS PRINCIPLES AND PURSUED WITH REGIONAL CONTINUITY. IN THE PRESENT CASE THE REVENUE HAS BROUGHT NO SUCH EVIDENCE OR MATERIAL ON RECORD EXCEPT THAT THE ASSESSEE HAS EARNED RENTAL INCOME. FURTHER THE ALLEGATION AGAINST THE ASSESSEE THAT IT IS GIVING THE DHARMSHAL ON RENT TO ITS INMATES AND CHARGES ROOM RENT FROM THEM IS DEVOID OF ANY MERIT BECAUSE THE AMOUNT OF DONATION RECEIVED BY THE ASSESSEE IS NOT CLASSIFIED BASED ON THE ROOM USED BY SUCH GUEST. FURTHER THE ACTUAL RECEIPT OF THE MONEY AT DHARMSHALA IS ALSO STATED TO BE THE VOLUNTARY CONTRIBUTION. IT IS NOT THE CASE OF THE REVENUE THAT THE ROOMS USED BY THE INMATES FOR THE YEAR SHOWS THE ACTUAL RECEIPTS BASED ON SOME PRE DECIDED ROOM TARIFFS OR BASED ON CERTAIN FACILITIES. FURTHER MERELY BECAUSE THE LD AO HAS FOUND SOME ENTRIES OF THE VOLUNTARY DONATION / CONTRIBUTIONS CORRELATED WITH THEIR STAY IN GUEST HOUSE CANNOT LEAD TO THE CONCLUSION THAT ASSESSEE ARE CHARGING GUESTHOUSE/ DHARMSHALA ON COMMERCIAL BASIS. IN FACT IT IS TRADITION WHENEVER THE PEOPLE STAY IN THE DHARMSHALA ETC, THEY CONTRIBUTE ACCORDING TO THEIR CAPACITY TO CONTRIBUTE AND NOT IN ACCORDANCE WITH THE PRE FIXED TARIFF RATES. IN VIEW OF THIS WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD CIT(A) IN HOLDING THAT THE RENTAL INCOME RECEIVED BY THE TRUST I S NOT HIT BY THE PROVISO TO SECTION 2(15) OF THE INCOME TAX ACT. IN THE RESULT GROUND NO 1 OF THE APPE AL OF THE REVENUE IS DISMISSED. 15. THE SECOND AND THIRD GROUND OF APPEAL IS THAT THE APPELLANT IS ENGAGED IN THE BUSINESS OF SELLING EDUCATION AND LD ASSESSING OFFICER HAS RELIED ITO V SWAMI OMKARANANAD SARASWATI CHARITABLE TRUST A Y 2010 - 11 ITA 3744 /DEL/2014 & CIO 104/DEL/2015 PAGE | 33 ON THE DECISION OF CIT VS. QUEENS EDUCATIONAL SOCIETY 319 ITR 160 (UTTARAKH AND). THE DECISION RELIED UPON BY THE LD ASSESSING OFFICER IS REVERSED BY THE HON'BLE SUPREME COURT IN 372 ITR 699 (SC) WHEREIN IT HAS BEEN HELD THAT IF THE TRUST MAKES SURPLUS IT CANNOT LEAD TO A CONCLUSION THAT IT CEASES TO EXIST SOLELY FOR EDUCATIONAL PURPOSES AND BECOMES AN INSTITUTION FOR THE PURPOSE OF PROFIT. THE PREDOMINANT OBJECT MUST BE APPLIED AND THE PURPOSE OF EDUCATION SHOULD NOT BE SUBMERGED BY A PROFIT MAKING MOTIVE. IF AFTER MEETING OF EXPENDITURE A SURPLUS ARISES INCIDENTALLY IT CANNOT BE SAID THAT THE INSTITUTE IS NOT EXIST SOLELY FOR EDUCATION PURPOSES. FURTHERMORE THE VARIOUS RECEIPTS STATED BE BASED ON THE BUSINESS MOTIVE ARE ALL RELATED TO EDUCATIONAL ACIDITIES OF THE TRUST THEREFORE THEY CANNOT BE LOOKED IN TO ISOLATION WITHOUT LOOKING THE PREDOMINANT OBJECTIVE OF THE TRUST FOR WHICH IT EXISTS. FURTHER THE COURSES OFFERED BY THE TRUST INSTITUTE ARE RECOGNIZED COURSES OF VARIOUS UNIVERSITIES AND IT IS NOT PRIVATE COACHING CL ASSES BUT RECOGNIZED COURSES. THEREFORE THE OBJECTION OF THE REVENUE THAT IT IS FEES RECEIVED FOR PROFESSIONAL COACHING DOES NOT SUSTAIN. FURTHER THE FEES CHARGED BY THE ASSESSEE IT IS ALLEGED THAT DOES NOT OFFER ANY DISCOUNT TO NEEDY PEOPLE. THE CLAIM OF THE REVENUE IS THAT ASSESSEE HAS TO DEMONSTRATE THAT IT EXITS FOR THE POOR AND NEEDY PEOPLE. WE DO NOT SUBSCRIBE TO THAT VIEW AS WHILE READING THE PROVISION OF SECTION 2 (15) NO SUCH CONDITION IS AVAILABLE. ACCORDING TO THAT SECTION CHARITABLE PURPOSES INCLUDES EDUCATION IN ITS LITERAL MEANING. IF THE TRUST IS PROVIDING EDUCATION IT CARRIES ON CHARITABLE ACTIVITY, HENCE WE REJECT THIS ARGUMENT OF THE REVENUE. IN VIEW OF THIS, THE RELIANCE PLACED UPON BY THE LD ASSESSING OFFICER ON THE DECISION OF THE UTT ARAKHAND HIGH COURT IS INCORRECT. THE NEXT ISSUE RAISED BY THE LD AO IS THAT ASSESSEE TRUST WHEN AMENDED THE TRUST DEED DID NOT INITIATE THE SAME TO THE LD AO/ REVENUE. IT IS REQUIRED TO BE NOTED THAT ASSESSEE HAS AMENDED THE DEED BUT IT HAS NOT AMENDE D ANY OF THE OBJECTS OF THE DEED. ONLY AMENDMENT WAS WITH RESPECT TO THE BORROWINGS POWERS OF THE TRUST FOR LOAN. THEREFORE, IT IS IRRELEVANT THAT SUCH AMENDMENT WAS NOT INTIMATED TO THE ASSESSING OFFICER. AS WE HAVE ALREADY HELD THAT THE ASSESSEE IS NOT H IT BY THE FIRST PROVISO TO SECTION 2(15) OF THE ACT THE ISSUE ITO V SWAMI OMKARANANAD SARASWATI CHARITABLE TRUST A Y 2010 - 11 ITA 3744 /DEL/2014 & CIO 104/DEL/2015 PAGE | 34 OF RECEIPTS OF THE ACTIVITIES EXCEEDING THE SPECIFIED LIMIT DOES NOT APPLY. IN VIEW OF THIS GROUND NOS 2 AND 3 OF THE APPEAL OF THE REVENUE IS DISMISSED. 16. GROUND NO 4 OF THE APPEAL OF REVENUE I S WITH RESPECT TO THE DONATION OF RS. 4283687/ - GIVEN TO ANOTHER TRUST WHO IS NOT ELIGIBLE. DURING THE YEAR ASSESSEE HAS GIVEN DONATION TO FOUR TRUSTS AMOUNTING TO RS. 4283687/ - . THE CONTENTION OF THE ASSESSEE IS THAT DONATIONS ARE GIVEN TO THE TRUST THAT ARE HAVING SIMILAR OBJECT OF EDUCATION . THE ASSESSEE HAS SUBMITTED THE TRUST DEED OF ALL THOSE TRUSTS. THE CLAIM OF THE LD ASSESSING OFFICER IS THAT DONATION TO OTHER TRUST VIOLATES THE PROVISION OF SECTION 13(1)(C) OF THE ACT. THE LD CIT(A) HAS REJECTED THE STAND OF THE ASSESSING OFFICER. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS . THE PROVISION OF SECTION 13(1)(C) PROVIDES THAT IF ANY INCOME OF THE TRUST ELIGIBLE FOR COMPUTATION OF INCOME U/S 11 AND 12 USES OR APPLIES IT INCOME DIRECTLY OR INDIR ECTLY FOR THE BENEFIT OF ANY PERSON SPECIFIED UNDER SUB - SECTION 3 THEN IT LOSES THE EXEMPTION. IN THE PRESENT CASE WE DO NOT FIND THAT ASSESSEE HAS VIOLATED ANY SUCH CONDITION. THE ASSESSEE HAS GIVEN DONATION TO THE TRUST HAVING THE OBJECT OF EDUCATION, WH ICH IS ALSO ONE OF OBJECT OF THE ASSESSEE TRUST. IN VIEW OF THIS ACCORDING TO US ASSESSEE HAS UTILIZED ITS INCOME FOR THE PURPOSES OF ITS OWN OBJECT BY DONATING TO THAT TRUST . IT IS NOT THE CASE OF THE REVENUE THAT SUCH DONATIONS ARE GIVEN TO THE TRUST, WH ICH DOES NOT HAVE THE OBJECTS OF EDUCATION. THE LD ASSESSING OFFICER HAS RELIED U PON THE DECISION OF AUROLAB TRUST VS. CIT THE FACTS OF WHICH ARE ENTIRELY DIFFERENT. IN VIEW OF THIS GROUND NO 4 OF THE APPEAL OF THE REVENUE IS DISMISSED. 17. GROUND NO 5 OF THE APPEAL OF THE REVENUE IS THAT SINCE SIX VEHICLES HAVE BEEN PURCHASED IN THE NAME OF THE TRUSTEES , IT VIOLATED THE PROVISO CONTAINED IN SECTION 13(2)(G) READ WITH SECTION 13(3)(E) OF THE ACT AND THEREFORE, THE TRUST LOSES THE EXEMPTION OF ITS INCOME IN ITS ENTIRETY . IT IS AN CLAIMED BY ASSESSEE THAT IT HAS 9 VEHICLES OUT OF WHICH SIX VEHICLES ARE REGISTERED IN THE NAME OF THE TRUSTEES OR MANAGERS OF THE TRUST OR ITS VARIOUS BRANCHES. THREE OF THEM ARE THE SCOOTERS; ALL OF THEM ARE PURCHASE D IN THE EARLIER YEAR. THE LD ASSESSING OFFICER HAS APPLIED THE ITO V SWAMI OMKARANANAD SARASWATI CHARITABLE TRUST A Y 2010 - 11 ITA 3744 /DEL/2014 & CIO 104/DEL/2015 PAGE | 35 PROVISIONS OF SECTION 13(2)(G) OF THE ACT TO SAY THAT ANY INCOME OR PROPERTY OF THE TRUST SHALL BE DEEMED TO HAVE BEEN USED OR APPLIED FOR A BENEFIT OF A PERSON IT INCOME OR PROPERTY OF THE TRU ST OR INSTITUTION IS DIVERTED DURING THE PREVIOUS YEAR IN FAVOUR OF ANY PERSON REFERRED TO IN SUB - SECTION (3). WE HAVE CAREFULLY CONSIDERED THE CLAIM OF THE ASSESSEE AS WELL AS THE REASONS GIVEN BY THE LD AO. ACCORDING TO PROVISION OF SECTION 13 OF T HE ACT PROVIDES THAT PROVISION OF SECTION 11 DOES NOT APPLY IN THOSE SITUATIONS. THE CLAIM OF THE REVENUE IN THE PRESENT CASE IS THAT IN THIS CASE ACCORDING TO PROVISION OF SECTION 13(2) (G) IF ANY INCOME OR PROPERTY OF THE TRUST IS DIVERTED DURING T HE PREVIOUS YEAR IN FAVOUR OF ANY PERSON REFERRED TO IN SECTION 13 (3) THAN SUCH INCOME OR PROPERTY OF THE TRUST SHALL BE DEEMED TO HAVE BEEN APPLIED FOR THE BENEFIT OF SUCH PERSON. REVENUE CLAIMS THAT AS THE ASSESSEE IS HAVING SIX VEHICLES REGISTER ED IN THE NAME OF OTHER PERSONS OTHER THAN TRUST TH EREFORE TRUST HAS APPLIED ITS INCOME FOR THE PURPOSES OF THE BENEFIT O F THOSE PERSONS AND CONSEQUENTLY ASSESSEE IS NOT ELIGIBLE FOR PREFERENTIAL TAX REGIME APPLICABLE TO TRUST U/S 11 AND 12 OF THE ACT . FOR APPLYING THE ABOVE PROVISION THE REVENUE MUST FIRST ESTABLISH THAT INCOME OR THE PROPERTY OF THE TRUST IS DIVERTED DURING THE PREVIOUS YEAR IN FAVOUR OF SPECIFIED PERSONS. THE VEHICLES ARE STATED TO BE PURCHASED IN EARLIER YEARS AND NOT IN THIS YEAR. THEREFORE IT IS APPARENT THAT DURING THE YEAR ASSESSEE TRUST HAS NOT DIVERTED ANY INCOME FOR PURCHASING SUCH VEHICLES DURING THE YEAR. HOWEVER IT IS THE CLAIM OF THE REVENUE THAT A S SESSEE IS PAYING INTEREST ON LOANS TAKEN FOR VARIOUS VEHICLES. IN THE ORDER OF THE LD AO IT HAS NOT BEEN ESTABLISHED THAT HOW THE AMOUNT OF INTEREST PAID AMOUNTS TO THE APPLICATION OF INCOME IS DIVERTED IN FAVOUR OF THE SPECIFIED PERSONS. LD AO HAS O NLY ESTABLISHED THAT SIX OUT OF NONE VEHICLES HAVE BEEN REGISTERED IN THE NAME OF SPECIFIED PERSONS BUT IT HAS NOT BEEN ESTABLISHED THAT HOW THE INCOME IS DIVERTED BY THE ASSESSEE IN FAVOUR OF THE SPECIFIED PERSONS. THEREFORE AS THE FULL FACTS OF T HE ISSUE ARE NOT AVAILABLE ON RECORD TH IS ISSUE IS SET ASIDE TO THE FILE OF LD AO TO FIRST ESTABLISH THAT THERE IS ANY DIVERSION OF INCOME OF THE TRUST DURING THE YEAR IN FAVOUR OF THE PERSONS SPECIFIED WHEN THE VEHICLES ARE ITO V SWAMI OMKARANANAD SARASWATI CHARITABLE TRUST A Y 2010 - 11 ITA 3744 /DEL/2014 & CIO 104/DEL/2015 PAGE | 36 REGISTERED IN THE NAME OF PE RSONS OTHER THAN THE ASSESSEE. UNLESS IT I S ESTABLISHED THAT THE INCOME OF THE TRUST IS DIVERTED IN FAVOUR OF THOSE PERSONS THE PROVISION OF SECTION 13 (2) (G) CANNOT BE INVOKED. NEEDLESS TO SAY THAT , LD AO WILL PROVIDE ADEQUATE OPPORTUNITY TO ESTAB LISH BEFORE THE LD AO THAT NO INCOME IS DIVERTED IN FAVOUR OF THE SPECIFIED PERSONS. IN VIEW OF THIS GROUND NO 5 IS SET ASIDE TO THE FILE OF THE LD AO ONLY WITH RESPECT TO THE ISSUES OF DIVERSION OF INCOME IN FAVOUR OF THE SPECI FIED PERSONS WITH RESPECT TO SIX VEHICLES ONLY. 18. T HE GROUND NO 6 OF THE APPEAL OF THE REVENUE IS RELATED TO THE ANONYMOUS DONATION RECEIVED BY THE TRUST OF RS 40,81,528/ - . CLAIM OF THE REVENUE IS THAT THE GUESTHOUSE INCOME SHOWN BY THE ASSESSEE WHICH IS STATED TO BE VOLUNTARY CONTRIBUTION BY THE ASSESSEE APPELLANT, IS AN ANONYMOUS DONATION AS THE RECEIPT DOES NOT SHOW THE COMPLETE NAME AND ADDRESS OF THE DONOR. THE LD AR H AS STATED THAT THE COMPLETE NAME AND ADDRESS OF THE DONORS IS PLACED AT PAGE NO 286 TO 340. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION OF THIS ASPECT AND PERUSED THE RELEVANT DOCUMENTS PLACED AT PAGE NO 286 TO 340 OF THE PAPER BOOK. IN THESE PAPERS, ASSESSEE HAS TABULATED THE NAME, ADDRESS, DATE, AND AMOUNT OF DONATION RECEIVED. IN VIEW OF THIS WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD CIT (A) IN HOLDING THAT SUCH VOLUNTARY CONTRIBUTION CANNOT BE SAID TO BE ANONYMOUS DONATION. HOWEVER ON VERIFICATION OF THE DETAILS SUBMITTED BY THE ASSESSEE IT SHOWS SUCH TOTAL DONATION AT RS. 39,68,455/ - WHERE AS THE LD AO HAS COMPUTED SUCH DONATION AT RS 4081528/ - . IN VIEW OF IT, THIS GROUND IS SET ASIDE TO THE FILE OF THE LD AO TO RECONCILE DIFFERENCE OF RS. 113073/ - WITH THE DONATION LIST GIVEN BY THE ASSESSEE AND AMOUNT OF DONATION COMPUTED BY HIM. IN THE RESULT GROUND NO 6 TO THE EXTENT OF ONLY RS 113073/ - IS SET ASIDE TO VERIFY WHETHER THE ASSESSEE HAS NAME AND ADDRESS OF SUCH DONORS AVAILABLE WIT H IT OR NOT. THE LD AO IS DIRECTED TO PROVIDE PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE BEFORE DECIDING THE ISSUE. 19. THE LAST ISSUE IN THE APPEAL OF THE REVENUE IS THAT WHEN THE ASSESSEE LOSSES EXEMPTION U/S 11 & 12 OF THE ACT BECAUSE OF VARIOUS SITUA TIONS STATED IN SECTION 13 OF THE ACT, WHETHER THE TRUST LOSES THE EXEMPTION ON ITO V SWAMI OMKARANANAD SARASWATI CHARITABLE TRUST A Y 2010 - 11 ITA 3744 /DEL/2014 & CIO 104/DEL/2015 PAGE | 37 WHOLE OF ITS INCOME OR ONLY PART OF THE INCOME TO THE EXTENT OF VIOLATION. THE LD DR HAS PLACED PLETHORA OF CASES BEFORE US TO PLEAD THAT WHOLE OF THE INCOME OF THE TRUST LOSSES THE EXEMPTION. HOWEVER IN VIEW OF THE DECISION OF T HE HON SUPREME COURT WHERE THE SLP OF REVENUE IN CIT V. FR. MULLERS CHARITABLE INSTITUTIONS [2014] 51 TAXMANN.COM 378/227 TAXMAN 369 (SC) REJECTED BY AFFIRMING THE VIEW TAKEN BY THE KARNATAKA HIGH COURT WHEREIN IT WAS SAID THAT IN THE EVENT OF VIOLATION O F SECTION 13(1)(D) IT WAS ONLY THE INCOME OR INVESTMENT OR DEPOSIT WHICH HAS BEEN MADE IN VIOLATION OF SECTION 11(5) THAT WILL BE LIABLE TO TAX. THIS BEING A LATTER JUDGMENT OF THE APEX COURT, BY RESPECTFULLY FOLLOWING THE SAME, THE WE DO NOT AGREE WITH TH E CONTENTION OF THE REVENUE THAT THE TRUST LOSSES EXEMPTION ON WHOLE OF ITS INCOME , WE AGREE WITH THE VIEW OF THE LD AR THAT THE DENIAL OF EXEMPTION UNDER SECTION 11 SHOULD BE LIMITED TO THE AMOUNT WHICH WAS DIVERTED IN VIOLATION OF SECTION 13 OF THE ACT. 20. IN THE RESULT APPEAL OF THE REVENUE IS PARTLY ALLOWED WITH ABOVE DIRECTION FOR STATISTICAL PURPOSES. 21. NOW WE COME TO THE CROSS OBJECTION FILED BY THE ASSESSEE . IN THE CO ASSESSEE HAS RAISED OBJECTION ABOUT THE ISSUES THAT LD CIT (A) HAS FAILED TO RECORD THE FINDING ABOUT THE APPLICABILITY OF CONSISTENCY AND NOT HOLDING EXPLICITLY THAT THE ASSESSEE TRUST IS EXISTING SOLELY FOR EDUCATION PURPOSES. WE DO NOT FIND ANY MERIT IN THE ABOVE ARGUMENT AS WE HAVE ALREADY DECIDED THE ISSUES ON MERIT IN THE APPEAL OF THE REVENUE. THEREFORE WE DISMISS THE CO OF THE ASSESSEE. 22. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND CO OF THE ASSESSEE IS DISMISSED. 23. ORDER PRO NOUNCED IN THE OPEN COURT ON 0 4 / 0 8 / 2017 . - S D / - - S D / - ( H.S.SIDHU ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 0 4 / 08 / 2017 A K KEOT COPY FORWARDED TO ITO V SWAMI OMKARANANAD SARASWATI CHARITABLE TRUST A Y 2010 - 11 ITA 3744 /DEL/2014 & CIO 104/DEL/2015 PAGE | 38 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI
Other Referred Cases
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Laws Referred To
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Expert Summary
"Where assessee, an educational trust, purchased property for promoting trust activities, only because some unused parts were given on rent, assessee would not become a non-charitable trust.
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Guide to Charitable Trusts: Formation, Benefits, and Compliance
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Master The Pitch-Deck Game
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