DDIT (E) 1(2), MUMBAI V. SUMAN RAMESH TULSIANI CHARITABLE TRUST, MUMBAI

ITA 4683/MUM/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59779 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 16-01-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 04-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHANTAM BOSE
• Assessee Lawyers: APURVA R SHAH
• Keywords: Charitable institution; Earning of tax free income
• Section: 63; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH F, MUMBAI BEFORE SHRI N.V.VASUDEVAN(J.M) & SHRI R.K.PANDA (A .M) ITA NO.4683/MUM/2010(A.Y. 2003-04) ITA NO.4684/MUM/2010(A.Y.2005-06) THE DY.DIRECTOR OF INCOME TAX (1)1(2) R.NO.504, PIRAMAL CHAMBERS, 5 TH FLOOR, PAREL, MUMBAI 12. (APPELLANT) VS. SUMAN RAMESH TULSIANI CHARITABLE TRUST, 1103/4, TULSIANI CHAMBERS, 212, NARIMAN POINT, MUMBAI 400 021. PAN:AACTS 1565J (RESPONDENT) APPELLANT BY : SHRI SHANTAM BOSE, RESPONDENT BY : SHRI APURVA R. SHAH DATE OF HEARING : 16/01/2012 DATE OF PRONOUNCEMENT : / 01/2012 ORDER PER N.V.VASUDEVAN, J.M: ITA NO.4683/M/10 IS AN APPEAL BY THE REVENUE AGAI NST THE ORDER DATED 18/12/2009 OF CIT(A)-1, MUMBAI RELATING TO A. Y2003-04. THE GROUND NO.1 RAISED BY THE REVENUE READS AS FOLLOWS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, AND IN LAW, THE LD.CIT(A) ERRED IN NOT APPRECIATING THE FACTS BROUG HT OUT BY THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER SUCH AS I T WAS REVEALED THAT THE DONATIONS ON BEING CREDITED TO BANK ACCOUNT ARE SUBSEQUENTLY UTILIZED FOR GENERAL EXPENSES AND ACTIVITIES OF THE TRUST ARE CORPUS DONATIONS. 2. ASSESSEE IS A CHARITABLE TRUST. ITS OBJECTS ARE DOING CHARITABLE ACTIVITIES LIKE EDUCATION, MEDICAL AID, RELIEF TO T HE POOR AND SUPPORT FOR CULTURAL ACTIVITIES ETC. DURING THE PREVIOUS YEAR THE ASSESSEE HAD RECEIVED DONATIONS WHICH WERE CLAIMED TO BE DONATIONS GIVEN TOWARDS CORPUS FUNDS. ITA NO.4683/MUM/2010(A.Y. 2003-04) ITA NO.4684/MUM/2010(A.Y.2005-06) 2 THESE DONATIONS WERE TO THE EXTENT OF RS. 1,64,07,4 10/-. THE DONORS IN THEIR LETTERS HAVE CONFIRMED THAT THE DONATIONS WERE TOWA RDS CORPUS FUNDS. ACCORDING TO THE AO ONLY INCOME FROM CORPUS FUNDS C OULD BE UTILIZED FOR THE OBJECTS OF THE TRUST. THE AO FOUND THAT THESE DON ATIONS HAVE BEEN CREDITED IN THE BANK ACCOUNT AND SUBSEQUENTLY THEY WERE DEBI TED IN THE BANK ACCOUNT SHOWING EXPENSES INCURRED FOR THE OBJECTS O F THE TRUST. HE WAS THEREFORE, OF THE VIEW THAT CORPUS DONATIONS WERE U TILIZED FOR THE OBJECTS OF THE TRUST AND, THEREFORE, TO THAT EXTENT THE ASSESS EE WAS NOT ENTITLED TO EXEMPTION UNDER SECTION 11 OF THE ACT. THE AO ALSO EXPRESSED CERTAIN DOUBTS ABOUT THE LETTERS OF THE DONORS, WHEREIN TH E DONORS HAD CONFIRMED THAT THE DONATIONS HAVE TO BE TREATED AS PART OF C ORPUS FUNDS. 3. ON APPEAL BY THE ASSESSEE THE CIT(A) HELD THAT T HE DONATIONS WERE TOWARDS CORPUS FUNDS. IN THIS REGARD THE CIT(A) HE LD THAT IF THE AO HAD ENTERTAINED ANY DOUBTS ON THE CONFIRMATION LETTERS OF THE DONORS HE SHOULD HAVE VERIFIED THE SAME WITH THE DONORS. IN THE LIG HT OF THE CONFIRMATION LETTERS OF THE DONORS HE SHOULD HAVE VERIFIED THE S AME WITH THE DONORS. IN THE LIGHT OF THE CONFIRMATION LETTERS OF THE DONORS THE CIT(A) HELD THAT DONATIONS IN QUESTION WERE TOWARDS CORPUS FUNDS. W ITH REGARD TO THE ADDITION MADE BY AO THE CIT(A) RELIED ON THE DECISI ON OF THE HONBLE ITAT DLEHI BENCH IN THE CASE OF DHARMA PRASTHANAM VS. IT O 11 ITD 40(DEL), WHEREIN IT WAS HELD THAT CORPUS DONATION IS SPENT B Y THE TRUST FOR MEETING ITS RUNNING EXPENSES WILL NOT RESULT IN THE TRUST LOSIN G EXEMPTION U/S.11 OF THE ACT. THE ADDITION MADE BY THE AO WAS DELETED BY THE CIT(A) FOLLOWING THE AFORESAID DECISION. THE REVENUE IS IN APPEAL AGAI NST THE ORDER OF THE CIT(A) BEFORE THE TRIBUNAL 4. BEFORE US LD. D.R RELIED ON THE ORDER OF THE AO. WE ARE OF THE VIEW THAT IN THE LIGHT OF THE JUDICIAL PRONOUNCEMENTS OF THE ITAT DELHI IN THE CASE OF ITA NO.4683/MUM/2010(A.Y. 2003-04) ITA NO.4684/MUM/2010(A.Y.2005-06) 3 DHARMA PRASTHANAM(SUPRA) THE ADDITION WAS RIGHTLY D ELETED BY THE CIT(A). THE FACTS OF THE CASE BEFORE THE TRIBUNAL WERE THAT THE ASSESSEE-TRUST WAS A REGISTERED SOCIETY AND IT WAS A CHARITABLE INSTITUT ION WHOSE INCOME WAS EXEMPT UNDER SECTION 11. DURING THE RELEVANT ACCOUN T YEAR, IT RECEIVED CERTAIN DONATIONS FROM ABROAD AND CLAIMED EXEMPTION FROM TAX ON THESE DONATIONS ON THE GROUND THAT THEY DID NOT PARTAKE T HE CHARACTER OF INCOME UNDER THE PROVISIONS OF SECTION 2(24)(IIA) AND ALSO UNDER SECTION 12. THE ITO ALLOWED EXEMPTION IN RESPECT OF DONATIONS TOWARDS T HE CORPUS OF THE ASSESSEE AND HELD THE BALANCE OF THE DONATIONS TO B E TAXABLE ON THE GROUND THAT SUCH DONATIONS WERE RECEIVED FOR GENERAL AND R UNNING EXPENSES OF THE ASSESSEE. BEFORE THE COMMISSIONER (APPEALS), THE AS SESSEE PRODUCED LETTERS OBTAINED FROM THE DONORS SHOWING THAT THOSE AMOUNTS WERE DONATED TOWARDS CORPUS. HOWEVER, THE COMMISSIONER HELD THAT THE VOL UNTARY CONTRIBUTIONS, THOUGH RECEIVED TOWARDS THE CORPUS, WERE USED TOWAR DS RUNNING EXPENSES OF THE TRUST AND AS THEY WERE UTILIZED OTHERWISE THAN FOR THE PURPOSE OF CREATING A CORPUS, THEY WOULD LOSE THE EXEMPTION. ON FURTHER APPEAL, THE ASSESSEE CONTENDED (I) THAT SINCE THE CONTRIBUTIONS WERE SPE CIFIED TO FORM PART OF THE CORPUS, THEY DID NOT CONSTITUTE INCOME WITHIN THE M EANING OF SECTION 2(24) (IF A) EVEN IF THEY WERE SPENT FOR MEETING THE RUNNING EXPENSES OF THE TRUST, AND (II) THAT EVEN IF THE ENTIRE AMOUNT OF DONATIONS WA S TAKEN AS INCOME WITHIN THE MEANING OF SECTION 2(24)(IIA), STILL THE AMOUNT HAVING BEEN SPENT SATISFIED THE REQUIREMENTS OF SECTION 11 AND VIEWED FROM THAT ANGLE ALSO, THE CONTRIBUTIONS HAD TO BE EXEMPTED. THE TRIBUNAL HEL D AS FOLLOWS: IT, THEREFORE, FOLLOWS BY A COMBINED READING OF SE CTION 2(24)(IIA) AND SECTION 12 THAT VOLUNTARY CONTRIBUTIONS RECEIVED BY A TRUST CREATED WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES OTHER T HAN CONTRIBUTIONS MADE TOWARDS THE CORPUS WILL BE DEEMED TO BE THE IN COME DERIVED FROM THE PROPERTY HELD UNDER TRUST AND THE PROVISIONS OF SECTION 11 AND SECTION 13 ARE MADE TO APPLY. NOW EVEN IF VOLUNTARY CONTRIBUTIONS ARE RECEIVED BY A TRUST WHICH ARE NOT SPECIFICALLY EARM ARKED FOR THE ITA NO.4683/MUM/2010(A.Y. 2003-04) ITA NO.4684/MUM/2010(A.Y.2005-06) 4 CORPUS, IF THEY SATISFY THE REQUIREMENTS OF SECTION 11, THEY CONTINUE TO ENJOY THE EXEMPTION PROVIDED FOR UNDER SECTION 11. TO PUT IT SIMPLY, A VOLUNTARY CONTRIBUTION RECEIVED BY A CHARITABLE O R RELIGIOUS TRUST WILL EARN EXEMPTION (A) IF IT IS RECEIVED WITH A SP ECIFIC DIRECTION THAT IT FORMS PART OF THE CORPUS OF THE TRUST, OR ( B) IT SATISFIES THE REQUIREMENTS OF SECTION 11. IF EITHER OF THESE COND ITIONS ARE SATISFIED, THE EXEMPTION FROM THE LEVY OF TAX IS AV AILABLE. AS THE DEPARTMENT IN THIS CASE HAS, AS WE SEE FROM THE ORD ERS PASSED BY THE AUTHORITIES BELOW, APPROACHED THE PROBLEM ONLY FROM THE POINT OF VIEW AS TO WHETHER THE CONTRIBUTIONS RECEIVED WERE TOWAR DS CORPUS OR NOT AND NOT FROM THE STANDPOINT WHETHER, EVEN IF THEY A RE TO BE TAKEN AS INCOME WITHIN THE MEANING OF SECTION 2(24)(IIA), IT STILL SATISFIES THE REQUIREMENTS OF SECTION 11. IF ASSUMING FOR THE SAKE OF ARGUMENT THAT THE AMOUNTS RECEIVED BY THE ASSESSEE ARE VOLUNTARY CONTRIBUTIONS NOT WITH A SPE CIFIC DIRECTION THAT THEY SHALL FORM PART OF THE CORPUS, THEN IT BECOMES THE INCOME LIABLE TO BE PROCESSED UNDER SECTION 11. SECTION 11 SAYS THAT SUBJECT TO THE PROVISIONS OF SECTIONS 60 TO 63 OF THE ACT, THE INC OME DERIVED FROM PROPERTY HELD UNDER TRUST, TO THE EXTENT TO WHICH S UCH INCOME IS APPLIED TO SUCH PURPOSES IN INDIA OR ANY SUCH INCOM E IS ACCUMULATED OR SET APART FOR APPLICATION TO SUCH PURPOSES IN IN DIA, TO THE EXTENT TO WHICH THE INCOME SO ACCUMULATED OR SET APART IS NOT IN EXCESS OF TWENTY-FIVE PER CENT OF THE INCOME FROM SUCH PROPER TY, WILL NOT BE INCLUDED IN THE TOTAL INCOME OF THE PERSON. NOW THE VOLUNTARY DONATION, WHICH IS TO BE TREATED AS INCOME WITHIN T HE MEANING OF SECTION 2(24)(IIA) BY THE INJUNCTION OF SECTION 12, IS TO BE TREATED AS INCOME DERIVED FROM THE PROPERTY HELD UNDER TRUS T WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES FOR THE PURPOSES O F SECTION 11 AND IF WE APPLY SECTION 11, WE FIND THAT THAT INCOME WA S SPENT FOR THE PURPOSES FOR WHICH THE TRUST IS ESTABLISHED AND THI S IS AN ADMITTED FACT. THEREFORE, THE ENTIRE CONTRIBUTIONS, THOUGH R EGARDED AS INCOME, BECOMES ELIGIBLE FOR EXEMPTION AND NO PART OF IT CAN BE SAID TO BE INCOME WHICH FORFEITED THE CLAIM OF EXEM PTION. THIS IS THE CLEAR OUTCOME OF READING OF SECTION 2(24)(IIA), SECTION 12 AND SECTION 11 TOGETHER AS APPLIED TO THE FACTS OF THE PRESENT CASE. 7 8. THAT LEAVES US WITH THE QUESTION WHETHER ANY AMO UNT RECEIVED TOWARDS CORPUS CAN BE SPENT FOR RUNNING EXPENSES AN D IF SO SPENT, WHETHER IT LOSES THE EXEMPTION FROM THE LEVY OF TAX . WE HAVE READ THE RELEVANT SECTIONS CAREFULLY AND WE FIND NOTHING IN THOSE SECTIONS EVEN REMOTELY SUGGESTING THE ABOVE VIEW. SECTION 2(24)(IIA) WHEN IT PROVIDED THAT THE VOLUNTARY CONTRIBUTIONS SHOULD BE MADE WITH A ITA NO.4683/MUM/2010(A.Y. 2003-04) ITA NO.4684/MUM/2010(A.Y.2005-06) 5 SPECIFIC DIRECTION THAT THEY SHALL FORM PART OF THE CORPUS OF THE TRUST OR INSTITUTION, IN ORDER THAT IT IS NOT TO BE TREATED AS INCOME, IT WAS LAYING EMPHASIS ON THE WISH, WILL AND DESIRE OF THE DONOR. THE DONOR MUST GRANT IT WITH A DIRECTION THAT IT SH ALL FORM PART OF THE CORPUS. THE SECTION DID NOT EITHER BY IMPLICATI ON, OR OVERTLY OR OTHERWISE, ENJOIN UPON THE TRUST THAT THE TRUSTE E SHALL RETAIN IT FOREVER AS CORPUS, EVEN IF WHEN AN OCCASION ARISES THAT IN ORDER TO KEEP THE TRUST ALIVE AND TO PREVENT IT FROM FAILURE , IT SHOULD NOT SPEND ANY AMOUNT OUT OF IT. IF A DONOR DONATES MONEY WITH A SPECIFIC DIRECTION THAT IT SHALL FORM PART OF THE CORPUS, TH E TRUSTEE IS EXPECTED TO HONOUR THE WISH OF THE DONOR. BUT IF THE TRUSTEE UTILISES IT FOR A DIFFERENT PURPOSE, THEN IT IS A SIMPLE CASE OF BREA CH OF TRUST FOR WHICH DELINQUENCY, THE TRUSTEE CAN BE PROCEEDED AGAINST U NDER THE INDIAN TRUSTS ACT, 1882, OR OTHER APPROPRIATE LEGISLATION BUT THAT IS NOT TO SAY THAT FOR THE MISBEHAVIOUR OF THE TRUSTEE, THE TRUST LOSES EXEMPTION UNDER THE ACT. (UNDERLINING BY US FOR EMPHASIS) 5. IN THE LIGHT OF THE FACT THAT THERE WAS UTILIZA TION OF FUNDS FOR THE OBJECTS OF THE TRUST THE ACTION OF THE AO IN TAXING THE DONATI ONS RECEIVED WAS NOT PROPER. WE, THEREFORE, CONFIRM THE ORDER OF THE CI T(A) AND DISMISS GROUND NO.1 RAISED BY THE REVENUE. 6. GROUND NO.2 & 3 RAISED BY THE REVENUE READ AS FO LLOWS: 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, AND IN LAW, THE LD. CIT(APPEALS) ERRED IN HOLDING THAT EXPENDITURE ON CULTURAL ACTIVITIES LIKE SHOWS RATH YATRA, ART FESTIVALS ET C. ARE APPLICATION OF INCOME IN ACCORDANCE WITH THE OBJECTS OF THE TRUST. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT T HE TRUST DEED DID NOT ELABORATE THE CULTURAL PURPOSE AND MOREOVER THE ASS ESSEE COULD NOT PRODUCE ENTIRE DETAILS IN SUPPORT OF THE CLAIM OF E XPENDITURE IN THIS REGARD. 7. DURING THE PREVIOUS YEAR THE ASSESSEE HAD MADE V ARIOUS DONATIONS ON ACCOUNT OF MEDICAL AID, EDUCATION INCLUDING DONATIO NS FOR CULTURAL ACTIVITIES TO THE EXTENT OF RS. 5,44,186/-. IT IS NOT IN DISP UTE THAT UNDER CLAUSE (3)(A) ITA NO.4683/MUM/2010(A.Y. 2003-04) ITA NO.4684/MUM/2010(A.Y.2005-06) 6 OF THE TRUST DEED THE TRUST WAS ENTITLED TO MAKE DO NATIONS FOR OTHER SOCIETIES WHICH ARE ENGAGED IN PROMOTION AND ADVANC EMENT EDUCATION, LITERATURE, ARTS, SCIENCE AND CULTURE. ACCORDING T O THE ASSESSEE THE DONATIONS WERE GIVEN TO INSTITUTIONS TO MEET EXPENS ES ON CULTURAL ACTIVITIES, CULTURAL SHOWS ETC. AND HAVE TO BE CONSIDERED AS AP PLICATION OF INCOME FOR CHARITABLE PURPOSES. THE AO DID NOT ACCEPT THE SAM E AND HE HELD THAT THE DONATIONS WERE MADE TO INSTITUTIONS WHICH WERE NOT RELATED WITH THE CULTURAL ACTIVITIES OR FOR PROMOTION AND ADVANCEMENT OF CULT URE. A SUM OF RS.5,44,186/- WAS ACCORDINGLY ADDED TO THE TOTAL IN COME OF THE ASSESSEE. 8. ON APPEAL BY THE ASSESSEE THE CIT(A) DELETED TH E ADDITION MADE BY THE AO FOR THE FOLLOWING REASONS: 5.2 AS CONFIRMED BY THE OFFICER, THE TRUST DEED P ROVIDES FOR APPLICATION OF MONEY TOWARDS DONATIONS TO SOCIETIE S AND INSTITUTIONS OR ORGANIZATIONS FOR PROMOTION OR ADVANCEMENT OF ED UCATION, LITERATURE, ARTS, SCIENCE OF CULTURE. WHILE THE APP ELLANT FILED A LISTING OF ALL THE DONATIONS GIVEN, THEY HAVE FILED AN EXPLANA TORY CHART WITH THE SPECIFIC PURPOSE FOR RS.4,78,075/-. I OBSERVE THA T THE SAME ARE VARIOUS DONATIONS GIVEN TO ORGANIZATIONS WHICH HAV E ORGANIZED EVENTS FOR CELEBRATION OF FESTIVALS AND FOR ARTS FESTIVALS ETC. IN MY VIEW THIS IS NOTHING BUT AN EXPENDITURE FOR PROMOTION OF ARTS, C ULTURE AND LITERATURE. HENCE TO THE EXTENT OF THE DETAILS PROD UCED FOR RS.4,78,0751- I FIND THAT THE OFFICER HAS ERRED IN COMING TO THE CONCLUSION THAT THIS IS NOT AN APPLICATION OF INCOM E TOWARDS ITS OBJECTIVES. HENCE TO THIS EXTENT THE ADDITION IS DE LETED AND THE GROUND IS PARTLY ALLOWED. 9. BEFORE US LD. D.R RELIED ON THE ORDER OF THE AO. WE ARE OF THE VIEW THAT THE ORDER OF THE CIT(A) ON THIS ISSUE HAS TO BE UPH ELD. STATEMENT OF DONATIONS GIVEN FOR CULTURAL ACTIVITIES ARE AVAILAB LE AT PAGES 15 TO 19 OF THE ASSESSEES PAPER BOOK. PRIMA FACIE THE EXPENDITURE TO THE TUNE OF RS. 4,78,075/- ARE DONATIONS GIVEN FOR CULTURAL ACTIVIT IES AS CAN BEEN SEEN FROM ITA NO.4683/MUM/2010(A.Y. 2003-04) ITA NO.4684/MUM/2010(A.Y.2005-06) 7 THE TABLE AT PAGES 18 & 19 OF THE PAPER BOOK. WE, THEREFORE, CONFIRM THE ORDER OF THE CIT(A) AND DISMISS GROUND NO.2 &3 RAIS ED BY THE REVENUE. ITA NO.4684/M/10: 10. THIS IS AN APPEAL BY THE REVENUE AGAINST THE OR DER DATED 18/12/2009 OF CIT(A)-1, MUMBAI RELATING TO ASSESSMENT YEAR 200 5-06. THE GROUNDS OF APPEAL RAISED BY THE REVENUE READS AS FOLLOWS: 1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, AND IN LAW, THE LD. CIT(A) ERRED IN IGNORING THE FACT THAT THE ASSE SSEE HAS INVESTED DONATIONS IN A MANNER CONTRARY TO SEC.11(5) THEREB Y VIOLATING THE PROVISIONS OF SEC.1 1(5). 2. THE A5FELLANT PRAYS THAT THE ORDER OF THE COMMI SSIONER OF INCOME- TAX (APPEALS)-XXXII, MUMBAI BE SET ASIDE AND THAT O F THE ASSESSING OFFICER BE RESTORED. 11. DURING THE PREVIOUS YEAR THE ASSESSEE RECEIVED DONATIONS TO THE TUNE OF RS. 65,25,000/-. THESE DONATIONS WERE RECEIVED BY THE ASSESSEE ON 31/3/2005. THESE DONATIONS WERE RECEIVED WITH THE DIRECTIONS THAT THEY SHALL FORM PART OF THE CORPUS FUNDS. THE AO HELD T HAT THESE WERE GENERAL DONATIONS AND NOT CORPUS DONATIONS AND SINCE THESE SUMS WERE NOTED INVESTED IN THE MANNER REQUIRED UNDER SECTION 11(5) OF THE ACT BEFORE THE END OF THE PREVIOUS YEAR, THEY WERE REQUIRED TO BE TREATED AS TAXABLE INCOME NOT ELIGIBLE FOR EXEMPTION. 12. ON APPEAL BY THE ASSESSEE THE CIT(A) HELD AS FO LLOWS: 4.4 I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE APPELLANT AS WELL AS THE FINDINGS OF THE ASSESSING OFFICER. I FIND T HAT THE ASSESSING OFFICER HAS NOT DISPUTED THAT THE DONATIONS WERE GI VEN WITH AN INTENTION THAT THEY ARE TOWARDS CORPUS. HIS ONLY F INDING IS THAT THESE WERE NOT INVESTED IN THE MANNER PRESCRIBED U/S. 11( 5) AND HENCE COULD NOT BE TREATED AS EXEMPT INCOME. ITA NO.4683/MUM/2010(A.Y. 2003-04) ITA NO.4684/MUM/2010(A.Y.2005-06) 8 4.5 I HAVE PERUSED THE PROVISIONS OF THE INCOME TAX ACT, 1961. SECTION 12(1) PROVIDES THAT VOLUNTARY CONTRIBUTIONS RECEIVE D BY A TRUST ARE DEEMED TO BE INCOME RECEIVED FROM THE PROPERTY OF T HE TRUST UNLESS THEY ARE RECEIVED WITH A SPECIFIC DIRECTION THAT TH EY SHALL FORM PART OF THE CORPUS OF THE TRUST OR INSTITUTION. SECTION 13( L)(D) PROVIDES THAT THE BENEFITS OF TAX EXEMPTION U/S 11 OR SECTION 12 SHAL L NOT BE AVAILABLE TO A TRUST IF ANY FUNDS OF THE TRUST ARE INVESTED OR D EPOSITED IN A MODE OTHER THAN THAT PROVIDED U/S 11(5) OF THE ACT. THER E HOWEVER APPEARS NO PROVISION WHICH SAYS THAT FOR A DONATION TO BE T REATED AS BEING EXEMPT U/S 12(1), THE SAME NEEDS TO BE INVESTED IMM EDIATELY IN A MODE PRESCRIBED BY SECTION 11(5). HOWEVER IF THESE DONATIONS ARE INVESTED IN A MODE OTHER THAN THAT PRESCRIBED BY SE CTION 11(5) THEN THE TRUST WOULD LOSE THE TAX EXEMPTION GIVEN TO THE SE DONATIONS. 4.6 EVIDENTLY THE SAID DONATIONS HAVE BEEN RECEIVED AND BANKED ON THE LAST FEW DAYS OF THE YEAR. THE SAME HAVE ALSO B EEN INVESTED IN A PRESCRIBED INVESTMENT IN THE SUBSEQUENT MONTH I.E. APRIL 2005. THEREFORE THERE APPEARS TO BE NO REASON TO DENY THE APPELLANT THE BENEFIT PROVIDED BY SECTION 12(1) FOR THE REASONS G IVEN BY THE ASSESSING OFFICER. 4.7 THE APPELLANT HAS RECEIVED DONATIONS DURING THE YEAR AS CORPUS DONATION-AND THE MONEY SO RECEIVED HAS NOT BEEN INV ESTED IN A MANNER CONTRARY TO SECTION 11(5). IN FACT THE MONEY WAS NOT EVEN INVESTED DURING THE YEAR BUT WAS INVESTED SUBSEQUEN TLY. THAT BEING THE CASE I DO NOT SEE ANY REASON WHY THE EXEMPTION U/S 12(1) SHOULD BE DENIED TO THE APPELLANT. I ALSO FIND THAT MERELY BECAUSE DONATIONS ARE RECEIVED FROM TRUSTEES OR THEIR GROUP CONCERNS AND MERELY BECAUSE THEY ARE RECEIVED TOWARDS THE END OF THE YEAR CANNO T BE REASON ENOUGH TO TREAT THESE DONATIONS AS GENERAL DONATIONS AS AG AINST CORPUS DONATIONS OF THE KIND PROVIDED IN SECTION 12(1). A LSO, MERELY BECAUSE THE SAID INVESTMENT WAS MADE NOT DURING THE YEAR EN DED 3 MARCH 2005 BUT THEREAFTER WOULD NOT, IN MY OPINION, CHANG E THE CHARACTER OF THE SAID DONATIONS. ACCORDINGLY I HOLD THAT THE SAI D DONATIONS CANNOT BE DISENTITLED FROM THE TAX EXEMPTION PROVIDED U/S 12(1) FOR THE REASONS MENTIONED BY THE ASSESSING OFFICER AND ACCO RDINGLY GROUNDS 1 AND 2 ARE ALLOWED. 13. AGGRIEVED BY THE ORDER OF THE CIT(A) THE REVENU E HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. ITA NO.4683/MUM/2010(A.Y. 2003-04) ITA NO.4684/MUM/2010(A.Y.2005-06) 9 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE A RE OF THE VIEW THAT THE ORDER OF THE CIT(A) DOES NOT CALL FOR ANY INTERFERE NCE. THE DONATIONS HAVE BEEN RECEIVED AS CORPUS DONATION TOWARDS THE END OF THE PREVIOUS YEAR. THEY WERE INVESTED IN THE MANNER PRESCRIBED IN THE SUBSE QUENT MONTH I.E. APRIL 2005. AS RIGHTLY HELD BY THE CIT(A) THERE IS NO PR OVISION WHICH CONTEMPLATES MAKING OF INVESTMENT OF DONATION WITHIN ANY PARTIC ULAR PERIOD OR A PROVISION WHICH SAYS THAT ABSENCE OF MAKING INVESTMENT WILL R ESULT IN THE TRUST LOSING EXEMPTION U/S.11 OF THE ACT. APART FROM THE ABOVE, FACTUALLY, THESE DONATIONS HAVE BEEN INVESTED IN THE MANNER REQUIRED IN THE MONTH OF APRIL, 2005. IN THESE CIRCUMSTANCES WE ARE OF THE VIEW TH AT THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE BY THE AO. THE ORDER OF THE CIT(A) IS UPHELD AND THE APPEAL BY THE REVENUE IS DISMISSED. 15. IN THE RESULT, BOTH THE APPEALS BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 20 TH DAY OF JAN. 2012. SD/- SD/- (R.K.PANDA ) (N.V.VASUDEVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED. 20 TH JAN.2012 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3 . THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.RF BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM. ITA NO.4683/MUM/2010(A.Y. 2003-04) ITA NO.4684/MUM/2010(A.Y.2005-06) 10 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 16/1/2012 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 17/1/2012 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER