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2018 (6) TMI 1054 - GUJARAT HIGH COURTApproval u/s. 80G(5) - entitlement to benefit of exemption u/s. 11 - Whether the assessee Trust had fulfilled the terms of section 80G(5C)(iv) by depositing 1 crore of rupees in Prime Minister's National Relief Fund on 31.12.2004 - whether the amount was not applied for the earthquake relief - Held that:- The principal requirement of section 80G(5C) is the donations made to the Trust are applied for providing relief to the earthquake victims of Gujarat before 31.03.2004. The legislature has advisedly used the expression “applied” and “not actually spent” - relying upon the judgement in case of commissioner of Income Tax vs. Thanti Trust [1996 (3) TMI 10 - SUPREME COURT] Supreme Court approved the judgement of the High Court in which it was held that the assessee having made the credit entry in favour of educational institution had not retained any control over the monies and thus funds were made available to the institution by the Trust. The Supreme Court therefore held that the assessee could claim benefit of exemption u/s. 11 of the Act. The record would suggest that the assessee having committed to spend total of ₹ 3.19 crores for construction of the school buildings ended up paying ₹ 1 crore short to the contractor for the reasons which are neither clear nor very important for us. Had the assessee retained such amount, a serious question of its taxability would have arisen. However, the assessee almost, as soon as it becomes clear that the amount is not to be actually paid, transferred the same to the Prime Minister's National Relief Fund - this was done on 31.12.204 as against the prescribed deadline of 31.03.2004 contained in section 80G(5C) - It was not possible for the assessee to foresee and transfer any part of such amount in the Prime Minister's National Relief Fund. In such a situation, the deadline on 31.03.2004 contained in section 80G(5C)(iv) must be held to be directory and not mandatory. Hence Tribunal committed an error in holding that sum of ₹ 1 crore was not applied for earthquake relief before 31.03.2004 and in view of the fact that such sum remained unspent after 31.03.2004 was also transferred by the assessee to the Prime Minister's National Relief Fund though after 31.03.2004, the adverse consequence of section 12(3) would not apply - Decided in favor of assessee.
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