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TMI Blog2012 (12) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... owards corpus funds. These donations were to the extent of Rs. 1,64,07,410/-. The donors in their letters have confirmed that the donations were towards corpus funds. According to the AO only income from corpus funds could be utilized for the objects of the Trust. The AO found that these donations have been credited in the bank account and subsequently they were debited in the bank account showing expenses incurred for the objects of the Trust. He was therefore, of the view that corpus donations were utilized for the objects of the Trust and, therefore, to that extent the assessee was not entitled to exemption under section 11 of the Act. The AO also expressed certain doubts about the letters of the donors, wherein the donors had confirmed that the donations have to be treated as part of corpus funds. 3. On appeal by the assessee the CIT(A) held that the donations were towards corpus funds. In this regard the CIT(A) held 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 light of the confirmation letters of the donors he should have verified the same with the donors. In the light of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons had to be exempted. The Tribunal held as follows: "It, therefore, follows by a combined reading of section 2(24)(iia) and section 12 that voluntary contributions received by a trust created wholly for charitable or religious purposes other than contributions made towards the corpus will be deemed to be the income 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 earmarked for the 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 or religious trust will earn exemption (a) if it is received with a specific direction that it forms part of the corpus of the trust, or (b) it satisfies the requirements of section 11. If either of these conditions are satisfied, the exemption from the levy of tax is available. As the department in this case has, as we see from the orders passed by the authorities below, approached the problem only from the point of view as to whether the contributions received were t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation, or overtly or otherwise, enjoin upon the trust that the trustee 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, the 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 breach of trust for which delinquency, the trustee can be proceeded against under 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 utilization of funds for the objects of the Trust the action of the AO in taxing the donations received was not proper. We, therefore, confirm the order of the CIT(A) and dismiss ground No.1 raised by the revenue. 6. Ground No.2 & 3 raised by the revenue read as follows: 2. "On the facts and in the circumstances of the case, and in law, the Ld. CIT(Appeals) erred in holding that expend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on this issue has to be upheld. Statement of donations given for cultural activities are available at pages 15 to 19 of the assessee's paper book. Prima facie the expenditure to the tune of Rs. 4,78,075/- are donations given for cultural activities as can been seen from 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 raised by the revenue. ITA No.4684/M/10: 10. This is an appeal by the revenue against the order dated 18/12/2009 of CIT(A)-1, Mumbai relating to assessment year 2005-06. The grounds of appeal raised by the revenue reads as follows: 1."On the facts and in the circumstances of the case, and in law, the Ld. CIT(A) erred in ignoring the fact that the assessee has invested donations in a manner contrary to sec.11(5) thereby violating the provisions of sec.1 1(5). 2. "The Appellant prays that the order of the Commissioner of Income tax (Appeals)-XXXII, Mumbai be set aside and that of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 cannot be reason enough to treat these donations as general donations as against corpus donations of the kind provided in Section 12(1). Also, merely because the said investment was made not during the year ended 3 March 2005 but thereafter would not, in my opinion, change the character of the said donations. Accordingly I hold that the said donations cannot be disentitled from the tax exemption provided u/s 12(1) for the reasons mentioned by the Assessing Officer and accordingly grounds 1 and 2 are allowed. 13. Aggrieved by the order of the CIT(A) the revenue has preferred the present appeal before the Tribunal. 14. We have considered the rival submissions. We are of the view that the order of the CIT(A) does not call for any interference. The donations have been received as corpus donation towards the end of the previous year. They were invested in the manner prescribed in the subsequent month i.e. April 2005. As rightly held by the CIT(A) there is no provision which contemplates making of investment of donation within any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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