TMI Blog1981 (3) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... tax for the relevant assessment years 1971-72 and 1972-73. It was also stated that the Andhra Pradesh Welfare Fund was granted an exemption certificate under s. 88 of the I.T. Act by the Commissioner of Income-tax and the assessee, being only a branch of the parent body, was also entitled to such exemption. The ITO held that the assessee was not a branch of the Andhra Pradesh Welfare Fund. He also held that the assessee could not rely upon s. 12 of the I.T. Act as the contributions received by the fund were not voluntary, and, secondly, they were not wholly for religious or charitable purposes. He, therefore, negatived the claim for exemption and fixed the taxable income at Rs. 5,03,080 for the assessment year 1971-72 and at Rs. 7,91,770 fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeding Rs. 500. It was also provided that 5% of the collections made by the Fund in the district should be paid over to the Andhra Pradesh Welfare Fund, Hyderabad. It was found as a fact that these two conditions were not satisfied and the entire amounts so collected in the district were kept by the Andhra Pradesh Welfare Fund, Eluru. However, the Andhra Pradesh Welfare Fund, Eluru, was registered separately under the Societies' Registration Act as a separate body. It was, therefore, clear from these facts that it cannot be considered as branch of the Andhra Pradesh Welfare Fund, Hyderabad, or forms part of the parent organisation. It was, however, sought to be argued that the Andhra Pradesh Welfare Fund, Hyderabad, was regarding this as br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charitable or religious purposes by the institution concerned. The Tribunal again found, after considering all the facts of the case, that all the contributions were not being used for charitable and religious purposes. In the order it is stated that a large amount of Rs. 31,000 was spent for the internal telephone system of the Collector's office and the Zilla Parishad office; that a sum of Rs. 3,900 was spent for fans to public offices; and another sum of Rs. 2,775 was given to the marketing federation. These amounts so spent have nothing to do with the objects and purposes of the welfare fund and cannot by any term be regarded as for charitable or religious purposes. As pointed out by the Tribunal, the internal telephone system was insta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal income of the trustees or the institution, as the case may be. (2) Notwithstanding anything contained in sub-section (1), where any such contributions as are referred to in sub-section (1) are made to a trust or a charitable or religious institution by a trust or a charitable or religious institution to which the provisions of section 11 apply, such contributions shall, in the hands of the trust or institution receiving the contributions, be deemed to be income derived from property for the purposes of that section and the provisions of that section shall apply accordingly." He submitted that, under the terms of this section, all voluntary contributions are unconditionally exempt from tax as they do not constitute income at all but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e kind of income, namely, income from property held under trust, would nullify the conditions and limitations placed by section I 1, because under section 12(1) such income is unconditionally exempt from being included in the total income. This will create an impasse in the working of the Act. A construction which creates serious difficulties and, anomalies in the working of inter-linked provisions of a statute is to be avoided. This is an unfortunate case where a public welfare fund, which has been constituted for the purpose of utilising the funds collected for the welfare of the people in different spheres, has been made to pay tax on the voluntary contributions received by it because the persons concerned with the administration of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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