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2018 (8) TMI 596 - AT - Income TaxExemption u/s 11 - Application of income for charitable purposes - deduction of donations paid to various charitable institutions registered u/s 12A - CIT (A) went step further in analysing each and every heads of expenses so as to conclude that most of these expenditures incurred cannot be held to be spent for charitable activities at all and hence would not fall within the utilisation limit of 85% as provided in section 11(1). Held that:- We are unable to fathom as to how giving of such donations to schools and colleges for scholarship of students; amount given for activities like marathon race, tree plantation; distribution of prizes to the students; donations given in kind like donating of school furniture, school buses, solar water heating system / solar street lights, rain water harvesting systems, RO system etc. to schools; motor car to mobile crèches; donation of sweaters to Schools; to literacy India; donation to Mumbai Mobile Creches etc.; can be held for noncharitable activities. Where in the law has it been provided that a trust has to incur expenditure on its own and cannot give donation in kind to institutions who in turn have given to the needy which otherwise are for charitable purposes? The contention of Ld. CIT (A) that donations made in kind or in cheques to charitable organisation which are registered u/s 12A are deemed to not allowable as per section 13(3)(d) is completely misunderstanding of the said provision, because disallowance under this clause can only be of the payment made to another charitable institution out of accumulated funds and there is no embargo of payment / application of current year income. All will fall within the category of advancement of general public utility and we were unable to appreciate that how these expenditures can be held to be for noncharitable purposes. Hence, we allow such expenditures as application of income for charitable purposes. Regarding administrative expenses - Held that:- these are being incurred for day to day activities for the assessee trust and running of the trust and without such expenditure no charitable trust can carry out these activities. The entire addition and disallowance made by the Ld. CIT (A) is deleted - Decided in favor of assessee.
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