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2021 (12) TMI 1068 - ITAT BANGALOREExemption u/s 11 - Expenditure on distributing prize, Honorarium to jury, Event management expenses and Employee benefits - Whether expenditure incurred directly or indirectly in connection with the objects of the Trust? - sole objective of the Trust is the running of Infosys Prize annual award to honor outstanding achievements to scholars / scientists - HELD THAT:- The objects of the Trust has also been accepted by the Ld.AO which is to institute prizes which are meant to achievers in various fields and endeavors to elevate the prestige of scientific research in India and inspire young Indians to choose a vocation in scientific research. Since its inception, the assessee focused solely on the governance and running of Infosys Prize, annual award to honor outstanding achievements to scholars / scientists. The contention of the Ld.AO that the expenses are routine expenses incurred for the day to day activities of the Trust is not correct. The expenditure comprised of Honorarium to Juries for selection of prize winners, event management expenses incurred for Infosys Prize ceremony, travelling and conveyance expenses, memento and souvenir expenses, professional charges and service tax thereon, employee benefits and other expenses. These expenses were incurred in connection with the Infosys Prize ceremony held during the year. During the previous year 2015-16 relevant to AY 2016-17, the Infosys Prize was announced on 16.11.2015 and the awards ceremony was held at New Delhi on 13.2.2016. Thus, there is no merit in the contention of the Ld.AO that the expenditure was held towards the routine activities of the trust and hence the same cannot be considered as utilised from the amounts accumulated u/s 11(2) towards a specific activity. The application of income for charitable purpose includes any expenditure incurred directly or indirectly in connection with the objects of the Trust. To treat only direct expenditure incurred as application for objects of the Trust would be too narrow a view. In the present case, the sole objective of the Trust is the running of Infosys Prize annual award to honor outstanding achievements to scholars / scientists. There is no other objectives for which the Trust carried on its activities. Thus, the entire expenditure incurred during the year was towards the purpose of carrying on the aforesaid charitable activity. Income of the current year and income accumulated u/s 11(2) are parked in deposits and SB account with scheduled banks which are permitted as per section 11(5). The maturity proceeds are again reinvested in deposits. Thus, the identity of monies as current year's income and income accumulated u/s 11(2) is not possible. Consequently, the expenditure of ₹ 5,31,43,622 incurred towards the objectives of the Trust should be treated as application of income out of earlier years’ accumulation of income as declared by the assessee. We are of the opinion that when the expenditure can be treated as application of amount from current year's income, there is no reason as to why the same should not be treated as spent out of earlier years’ accumulation - no justifiable reason for separating and treating expenditure of ₹ 5,31,43,622 differently from the Prize Money expenditure - Decided in favour of assessee.
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