9911796707
TMI Blog2013 (2) TMI 579X X X X Extracts X X X X X X X X Extracts X X X X ..... Education, Social Cultural, Finance, Industrial, Medical, Arts and Sports. (3) To collect funds for the various objects of the trusts to issue publications, to hold seminars/debates etc. (4) To chalk out programmes for organizing the groups of people of progressive thoughts for all out development of Indian, especially rural people. (5) To arrange cultural programmes, to issue souvenirs etc. to collect the funds for implementing the programmes of the trust. (6) To give financial help to needy persons for medical, educational and religious purposes. (7) To create organizations for rural development and for agricultural development and to help them. 2.1 The Trust was entitled to exemption u/s.11 of the I.T. Act. A search and seizure action was conducted on 20-07-2005 in the case of Sri Ramachandra Dada Shinde at his office premises at Bharati Vidya Bhavan as well as at his residence at "Ashirwad", Bharti Nagar, Paud Road, Kothrud. Sri Ramachandra Dada Shinde is the trusted employee of Bharati Vidyapeeth, Pune and is also working as Accounts Officer looking after the accounts of variou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is claimed to have been received by the trust. The same did not even bear the signature of the person who has collected the donation on behalf of the trust nor any date is available on the said coupon. He, therefore, came to the conclusion that in absence of signature of the receiver and in absence of full details of the donor etc. verification of the same is not possible. The AO further noted that not only the assessee trust but the various other trusts of the group have also received similar donations running into lakhs of rupees from different villagers in rural areas in the similar manner by way of unnamed, unsigned coupon collection of small donations. He further noted that there is some difference between the collection of donation as submitted by the assessee and the entries appearing in the books of account. In view of all these defects, the AO held the donations through coupons and credited to development fund as not genuine. 4.2 The AO further noted that the donors who have given donation through coupons are neither aware of the nature nor the purpose of donation claimed in their names, therefore, these donations are dubious and cannot par-take the character of corpus do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 298 held that the assessee is not entitled to any benefit of deduction u/s.11 and 12 of the Income Tax Act. 4.4 The AO further noted from the balance sheet of the assessee trust that the assessee has defaulted in application of the accumulated fund strictly in accordance with the provisions contained in the Income Tax Act. He noted that the assessee has invested the surplus fund in violation of section 11(2) r.w. 11(5), the details of which are as under : Assessment Year Nature of violation 99-2000 * Deposit with Bharati Vidyapith Rs. 55,00,000/- 2001-02 * Investment in shares Rs. 1,00,000 * Deposit with Bharati Vidyapith Rs. 55,00,000 2002-03 * Investment in shares Rs. 3,10,000/- * Deposit with Bharati Vidyapith Rs. 55,00,000/- 2003-04 * Investment in shares Rs. 5,00,000/- * Deposit with Bharati Vidyapith Rs. 55,00,000/- 2004-05 * Investment in shares Rs. 5,00,000/- * Deposit with Bharati Vidyapith Rs. 55,00,000/- 2005-06 * Investment in shares Rs. 5,00,000/- * Deposit with Bharati Vidyapith Rs. 55,00,000/- * Deposit with Sonhira Sakhar Karkhana Rs. 1,25,00,000/- 2006-07 * Investment in shares Rs. 5,00,000/- * Deposit with Bharati Vidyapith Rs. 55, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es taxable in the hands of the assessee. (2) Without conceding the above point the said collection cannot fall under the provisions of section 11(d) of the IT act 1961 which deal with the voluntary donations specifically for the purpose of corpus. No proof of any kind has come before me to categories the above donations as those falling under the provisions of section 11(d) of IT Act 1961. (3) The belated Form No.10 filed before me cannot be entertained for the reasons explained above and therefore the accumulated amount is required to be brought to tax. (4) The amount spent by the assessee trust during the year under consideration does not go to prove that the assessee is really engaged in the charitable activities and therefore in view of the decision of Hon'ble Bombay High Court discussed above the assessee is not entitled even for exemption of income to the extent of 25% as envisages u/s.11(1)(a) of the IT Act 1961. (5) Finally by investing the funds in the modes other than those mentioned in section 11(5) the assessee has forfeited the right to claim any exemption u/s.11 & 12 of the IT Act 1961. 10.1 In view of the fact that no benefit of section 11 & 12 is being all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in 14 ITD 330 he upheld the finding of the AO that the donations shown in the statement of account of the assessee received through issue of coupons is taxable being revenue receipts. He accordingly held that donations received through issue of coupons are revenue receipts and taxable as income of the trust and cannot be considered as exempt u/s.11(1)(2) of the Income Tax Act. 6. So far as the action of the AO in disallowing the deduction on account of accumulation of income u/s.11(2) r.w. 11(5) for non filing of Form No.10 he upheld the same by relying on various decisions. Rejecting the submission of the assessee that donations received through issue of coupons are corpus donation and there is no requirement in the section that in the resolution for accumulation, specific purposes should be mentioned and that Form No.10 can be submitted during assessment proceedings the learned CIT(A) relied on various decisions and held that since donations are not genuine, therefore, they cannot be considered as voluntary contribution. According to him as per the provisions of section 11(1) of the I.T. Act only that income qualifies for exemption which is derived from the property held under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esolution in accordance with the provisions of section 11(2) and Form No.10 under Rule 17 of I.T. Rules for A.Y. 1999-00. He accordingly upheld the action of the AO in holding that the resolution for accumulation of funds passed by the trustees was not a valid resolution for the purpose of section 11(2) r.w.s.11(5) since it was not passed at the time of finalisation of accounts of the relevant period or at the time when decision regarding appropriation of surplus income of the relevant period was taken. He also rejected the submission of the assessee that in view of the treatment given to the donations through coupons by its corpus donations, it did not have the occasion to file Form No.10 and the moment it came to know that these donations are to be treated as its income, it filed Form No.10. 7. The learned CIT(A) further held that since the assessee trust has purchased shares of Krishna Verala Sahakari Soot Girni Ltd. & Sagareshwar Sahakari Soot Girni Ltd which the same has resulted in violation of section 11(5) and hence the provisions of section 13(1)(d) were clearly attracted. So far as the action of the AO in holding that the assessee had violated the provisions of section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the return of income. 3.1 The learned CIT(A) erred in holding that Form No.10 filed by the assessee was not valid since it was accompanied by a resolution dated 03-05-2006 for application of the income and he held that the resolution should have been passed by the appellant before the date for filing the return for the relevant year. 3.2 The learned CIT(A) further erred in holding that the assessee trust was not permitted to file Form No.10 in the reassessment proceedings u/s.147 or 153C and hence, the Form No.10 filed by the assessee in the reassessment proceedings was not as per law and the learned AO had rightly denied the exemption to the assessee trust. 3.3 The learned CIT(A) erred in holding that the decision of Supreme Court in the case of Nagpur Hotel Owners' Association [247 ITR 201] was not applicable to the facts of the present case and hence, the exemption u/s.11 was rightly denied by the AO on account of failure to file Form No.10 along with the return of income. 3.4 The learned CIT(A) failed to appreciate that : (a) In the original return of income, the assessee had treated certain donations received as a capital receipt and thereby the expenditure inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the investment was not made in order to gain the control over the organisation. (d) In the assessments completed u/s.143(3) prior to the search in the cases of other trusts of the same group, the department did not raise any objection on this issue and had granted the exemption u/s.11. 4.3 Accordingly, the learned CIT(A) was not justified in holding that the appellant trust had made any investments in violation of section 13(1)(d) r.w.s. 11(5). 4.4 Without prejudice to the above Grounds, the learned CIT(A) ought to have taxed only the income arising from investments made in violation of section 11(5) and not the entire income of the assessee trust. 5. The learned CIT(A) erred in holding that the loan given to Sonhira Sakhar Karkhana (a cooperative society) amounting to Rs. 1,25,00,000/- were in violation of the provisions of section 11(5). 5.1 The learned CIT(A) failed to appreciate that the loan advanced to Sonhira Sakhar Karkhana constituted application of income for the appellant trust on its objects and hence, it did not result in violation of section 11 and section 13. 5.2 Without prejudice, the learned CIT(A) erred in not appreciating that on the loans given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "deposit for building construction". The said deposit was with Bharati Vidyapeeth. According to the AO the assessee, by giving the amount of Rs. 55 lakhs to Bharati Vidyapeeth, has violated the provisions of section 13(1)(d). He rejected the contention of the assessee that it has received interest on this deposit and therefore provisions of section 13 do not attract. He held that by giving the loan to Bharati Vidyapeeth the assessee has violated the provisions of section 13(1)(d). 9.2 In appeal the learned CIT(A) following his order for A.Y. 99-00, which has been followed in A.Y. 2005-06, held that the amount of Rs. 55 lakhs given by the assessee to Bharati Vidyapeeth was a loan and was not an investment or a deposit and therefore there is no violation of provisions of section 13(1)(d). He also accepted the contention of the assessee that a loan given by one charitable trust to another with similar objects is an application of income and it will not attract the provisions of section 13(1)(d) of the I.T. Act. Aggrieved with such order of the CIT(A) the revenue is in appeal before us. 9.3 The learned DR submitted that the assessee trust had violated the provisions of section 13(1)( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court) v. Vidya Pratisthan Vs. DCIT 133 TTJ (Pune) 472 9.5 We have considered the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. There is no dispute to the fact that the assessee trust had given loan to Bharati Vidyapeeth amounting to Rs. 55 lakhs which is being shown in the balance sheet since 1993-94 onwards as deposit for building construction under the head "investment". There is also no dispute to the fact that Bharati Vidyapeeth is also a charitable trust and basically engaged in the field of education. There is also no dispute to the fact that the AO at Para 9.2 of the assessment order has mentioned the submissions of the assessee that they have received interest on such deposit and therefore provisions of section 13 are not attracted. 9.6 It is the case of the revenue that by advancing such loan/deposit to Bharati Vidyapeeth the assessee trust has invested the funds in modes other than those specified u/s.11(5) of the I.T. Act and therefore there was violation of provisions of section 13(1)(d) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew to obtain an income or profit. Deposit, on the other hand, means that which is placed anywhere, as in any one's hands for safe-keeping, something entrusted to the care of another. These two expressions have been used in a cognate sense and have to be understood as such. In order to constitute an investment the amount laid down should be capable of any result of any income, return or profit to the investor and in every case of investment, the intention and positive act on the part of the investor should be to earn such income, returns, profit in order to constitute an investment, the monies shall be laid out in such a manner as to acquire some species of property which would bring in an income to the investor. A loan, on the other hand, is granting temporary use of money, or temporary accommodation. The words investment', "deposit" and 'loan' are certainly different. Sec. 11 (5) refers to pattern of investment by the appellant. Sec. 11(5) was introduced by the Finance Act, 1983, w.e.f 1st April, 1983, i.e., for and from asst. yr. 1983-84. It prescribes the forms and modes of investing and depositing money referred to in s. 11 (2)(b). Subsequently, new forms and modes hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he parties at length, we are of the view that the issue that arises for consideration in the present case is whether advancing of an interest-free temporary loan by one society to another society having similar objects is an "investment" or a "deposit" and whether the assessee-society had violated the provisions of s. 13(1)(d)r/w s. 11(5) of Act, 1961 ? 11. Secs. 11(5) and 13(1)(d) of the Act, 1961 are reproduced hereinbelow : "1 1. Income from property held for charitable or religious purposes ........ .. (5) The forms and modes of investing or depositing the money referred to in cl. (b) of subs. (2) shall be the following, namely : (i) investment in savings certificates as defined in cl. (c) of s. 2 of the Government Savings Certificates Act, 1959 (46 of 1959), and any other securities or certificates issued by the Central Government under the Small Savings Schemes of that Government; (ii) deposit in any account with the Post Office Savings Bank; (iii) deposit in any account with a scheduled bank or a co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank or a co-operative land development bank). Explanation : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the main object of carrying on the business of providing longterm finance for urban infrastructure in India. Explanation : For the purposes of this clause,- (a) 'long-term finance' means any loan or advance where the terms under which moneys are loaned or advanced provide for repayment along with interest thereof during a period of not less than five years; (b) 'public company' shall have the meaning assigned to it in s. 3 of the Companies Act, 1956 (1 of 1956); (c) 'urban infrastructure' means a project for providing potable water supply, sanitation and sewerage, drainage, solid waste management, roads, bridges and flyovers or urban transport; (x) investment in immovable property. Explanation : 'Immovable property' does not include any machinery or plant (other than machinery or plant installed in a building for the convenient occupation of the building) even though attached to, or permanently fastened to, anything attached to the earth; (xi) deposits with the Industrial Development Bank of India established under the Industrial Development Bank of India Act, 1964 (18 of 1964); (xii) any other form or mode of investment or deposit as may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r documents as security for loan, deposit of money bills in a bank in the ordinary course of business of current account and deposits of a sum at interest at a fixed deposit in a bank." 13. In Baidya Nath Plastic Industries (P) Ltd. & Ors. vs. K.L. Anand, ITO (1998) 146 CTR (Del) 421 : (1998) 230 ITR 522 (Del) a learned Single Judge of this Court pointed out that the distinction between "loan" and "deposit" is that in the case of the former it is ordinarily the duty of the debtor to seek out the creditor and to repay the money according to the agreement, while in the case of the latter it is generally the duty of the depositor to go to the banker or to the depositee, as the case may be, and make a demand for it. 14.'A Division Bench of this Court in case of Director of IT vs. Pariwar Sewa Sansthan (2002) 254 ITR 268 (Del) has held that no question of law arises from the order of Tribunal holding that there was no violation of provision s. 13(1)(d) of Act, 1961 where loan had been given by one society to another society having similar objects. 15. Keeping in view the aforesaid exposition of law, we are of the opinion that interestfree loan of Rs. 90,50,000 given by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee's income. He states that the amounts have not gone out irretrievably and, therefore, it cannot be considered as an expenditure and hence there is no application of money. This approach of the CIT(A) regarding the application of income is erroneous and not keeping with the decided cases cited by the assessee's representative and even the Board's circular No. 100 dt. 29th Jan., 1973. If the interpretation of the CIT was correct then the Board's instructions to consider the loans, scholarships granted by the educational trusts as application of income would become erroneous and contrary to law. 62. As per the settled legal position, which has been laid down in numerous decisions, it is clear that any amount which is laid out by the charitable trust or institution for achieving its charitable object constitutes an application of income to charitable purposes irrespective of whether the amount in question has been laid out irretrievably or whether the amount continued to belong to the charitable trust or the institution or it is recoverable by it. Consequently if the charitable trust lends and advances money for the purposes which are connected with its basic charitable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . We also agree with the assessee's submissions, which were very fairly accepted by the learned Departmental Representative, that the provisions of s. 11(5) r/w s. 13(1)(d) have no application at all whereas monies or income of the trust have already been applied to the charitable objects of the trust. Consequently, the mischief of s. 13(1)(d) is not attracted to the present case for that reason alone. It was also contended by the assessee's representative that in any event the amounts advanced by NECC to ACIL are neither investments nor deposits as these two terms signify the lending the monies for the purposes of earning income or return in some form such as by way of interest, dividends, rents or capital gains. In the present case, the monies have been advanced to ACIL on interest-free basis and not with the object of earning any income or return therefrom but only in order to further the basic object of NECC. Further in our opinion, the decision of the Andhra Pradesh High Court in the case of Polisetty Somasundaram Charities is of no application. In that case, it was held that the term "investment" implies that there is certain amount of risk involved in the money in question. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee was business income then the Asstt. CIT should have applied the maximum rate to the business income separately computed by him and not to the gross receipts. These observations are only incidental and they would arise only if there was any justification for applying the maximum rate at all. 66. For the reasons given above, we hold that the assessee was entitled to claim exemption under s. 11 for all the years under appeals. We, therefore, set aside the order of the CIT Pune under s. 263 for the asst. yrs. 1984-85 and 1985-86 and of the CIT(A) for the asst. yrs. 1984-85 to 1988-89 and those of the Asstt. CIT for the asst. yrs. 1984-85 to 1988-89. We direct the Asstt. CIT to compute the income of the assessee after allowing the exemption. 67. In the result, the appellant succeeds and all the appeals are allowed." 9.10 We find the Lucknow Bench of the Tribunal in the case of Kanpur Subhash Shiksha Samiti Vs. DCIT reported in 11 ITR 23 has observed that granting of a loan to another society with similar objects is neither an investment nor a deposit and hence, exemption u/s.11 was allowable. 9.11 We find the Hon'ble Delhi High Court in the case of Alarippu reported in 244 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral in nature for which the learned DR has no objection. Accordingly, these grounds are dismissed as not pressed. 11. Grounds of appeal Nos. 3 to 3.6 by the assessee relate to denial of exemption u/s.11 on account of belated filing of Form No.10 by the assessee trust. 11.1 The learned counsel for the assessee submitted that the AO rejected the Form No.10 and thereby the accumulation of income on the ground that Form No.10 has not been filed along with the return of income. He submitted that the assessee has filed the return of income claiming coupon donations as corpus donations not chargeable to tax. However, since the AO during the assessment proceedings was of the opinion that the said donation will be treated as revenue receipt and not corpus, therefore, the assessee without prejudice, submitted the Form No.10 during the assessment proceedings. He submitted that From NO.10 filed before the completion of assessment is valid and should be accepted. Further the limitation for filing Form No.10 is directory and not mandatory like filing of audit report for the purpose of section 80IA as has been held by various judicial decisions. 11.2 Referring to the decision of the Pune Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y submitted that the revenue authorities are not justified in denying the benefits of section 11 for late filing of Form No. 10. 11.6 The learned DR on the other hand heavily relied on the orders of the AO and the CIT(A). He submitted that the learned CIT(A) has exhaustively discussed as to why the belated filing of Form No.10 should not be entertained. Therefore, the same being in accordance with law should be upheld. 12. We have considered the rival arguments made by both the sides, perused the orders of the AO and the CIT(A) and the Paper Book filed on behalf of the assessee. We find the AO treated the application in Form No.10 for accumulation u/s.11(2) as not valid because it was filed late and not along with the return of income and further it was filed before him and not before the CIT. We find the learned CIT(A) upheld the action of the AO on the ground that the Form No.10 was not filed by the assessee along with the return of income. Further, it was accompanied by a resolution dated 03-05-2007 for application of income and the resolution should have been passed before the due date for filing the return of income. He further observed that the assessee has filed such Form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment proceedings." 12.2 We find the Delhi 'F' Bench of the Tribunal in the case of Additional Director of Income Tax (Exemption) Vs. Manav Bharati Child Institute & Child Psychology reported in 20 SOT 517 (Delhi) has observed as under : "4. As regards cross-objection by assessee, it is submitted that the assessee was claiming exemption under s.10(23C)(vi) of the Act but pending the approval by the appropriate authorities, exemption under ss.11 and 12 was claimed. However, since it was not foreseen that the exemption under alternate provision was required to be claimed, in respect of surplus, the assessee could not file Form No.10 for accumulation of surplus income which will result into taxability of surplus fund after exhausting the exemption available under ss.11 and 12 of the Act. Learned counsel for the assessee has submitted that the assessment proceedings pending before the Tribunal is continuation of assessment proceedings and hence, even during such pendency Form No.10 can be filed which may be considered while computing income under the Act. For this purpose, reliance was placed on the decision of Gujarat High Court in the case of CIT VS. Mayur Foundation 92005) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee had filed Form No.10 as required under rule 17 of the Rules alongwith the revised returns filed in respect of all the assessment years under consideration. Thus, admittedly, the forms had been submitted before the assessment came to be completed. At this juncture reference may be made to the decision of the Supreme Court in the case of Commissioner of Income-Tax vs. Nagpur Hotel Owners' Association (supra) on which reliance had been placed by the learned counsel for the revenue, wherein it has been held thus: "6. It is abundantly clear from the wordings of sub-section (2) of Section 11 that it is mandatory for the person claiming the benefit of Section 11 to intimate to the assessing authority the particulars required, under Rule 17 in Form 10 of the Act. If during the assessment proceedings the Assessing Officer does not have the necessary information, question of excluding such income from assessment does not arise at all. As a matter of fact, this benefit of excluding this particular part of the income from the net of taxation arises from Section 11 and is subject to the conditions specified therein. Therefore, it is necessary that the assessing authority must have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... information in respect of the claim of the assessee for giving benefit of section 11 of the Act was furnished after the assessments for the relevant assessment years were completed. Under the circumstances, the present case is squarely covered by the aforesaid decision of the Supreme Court. The assessee was, therefore, entitled to the benefit of section 11 of the Act on the basis of the information supplied by it prior to framing of the assessment orders. 10. It may also be noted that this court in the case of C.I.T. v. Mayur Foundation (supra) has held that the assessment proceedings cannot be said to be complete and are pending till the appeal is heard and disposed of by the Tribunal and accordingly held that the Tribunal was justified in considering a new ground by the assessee claiming benefit under section 11 of the Act during the course of the appeal. As rightly urged by the learned counsel for the assessee, in the present case, the assessee stands on an even stronger footing inasmuch as the particulars in Form No.10 under rule 17 of the Rules had been furnished alongwith the revised return before the assessment came to be completed. 11. In the light of the above discuss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority holding is by the Government of Maharastra. Further, these are the shares of the cooperative societies and not of any Private Ltd. or Public Ltd. Company. He submitted that the principle behind floating the cooperatives is to set up a venture for the benefit of the members in general and not for any individual family or group. Neither the assessee nor any other shareholder has received any dividend from the societies. Accordingly it was not an investment made in shares but expenditure on the objects of the trust. He submitted that the shares were purchased in order to attain the charitable objects of the assessee and therefore the same was not in the nature of investment but application of income. For this proposition, he relied on the following decisions : i. National Engg. Coordination Committee Vs. ACIT 43 ITD 612 ii. Vidya Pratishthan Vs. DCIT 133 TTJ 472 (Pune) iii. CIT Vs. Sarladevi Sarabhai Trust 172 ITR 698 iv. DIT (Exemption) Vs.Alarippu 244 ITR 358 v. DIT Vs. Agrim Charan Foundation 253 ITR 593 (Delhi) 13.2 Referring to the decision in the case of Brahmin Educational ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, the dept. had accepted in the case of Bharati Vidyapeeth Medical Foundation that the purchase of shares was not in violation of section 11(5). Thus, following the decision of Delhi H.C. we submit that assuming without admitting that the shares purchased by the assessee were investments, still the exemption u/s.11 cannot be denied in view of the H.C. decision." 13.4 Referring to the letter addressed by the assessee trust to the charity commissioner (a copy of which is placed at Paper Book Page No.143) and its English Translation in Page No.145 the learned counsel for the assessee drew the attention of the Bench to the request of the assessee seeking permission from the charity commissioner for purchase of shares of the two cooperative societies. Referring to the permission of the charity commissioner on the same application giving permission to the trust the learned counsel for the assessee submitted that the charity commissioner has accorded permission since the transaction is in the interest of the trust. He accordingly submitted that there is no violation of provisions of section 13(1)(d) on account of purchase of shares of the two cooperative societies. 13.5 The learned DR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sel for the assessee that there was no objection by the revenue in the past and only during the assessment proceedings for 1999-2000 to 2006-07 that the revenue has raised objections. It is also the submission of the learned counsel for the assessee that on being pointed out by the AO that there is violation of provisions of section 11(5) the assessee liquidated the shares and got over the alleged objection of violation of provisions of section 11(5). 14.1. The submission of the learned counsel for the assessee that it has liquidated the shares of the co-operative societies and this fact was brought to the notice of the CIT(A) in the written submissions filed before him was not controverted by the Revenue. 14.2 We find the Hon'ble Delhi High Court in the case of Agrim Charan Foundation (Supra) has held as under : "The dispute relates to the assessment year 1995-96 in respect of an assessee, which is a charitable trust. 2. The controversy lies in a very narrow compass. For the assessment year in question, the assessee filed its return of income along with the audit report, balance-sheet, etc. The Assessing Officer noted that for the purpose of claiming exemption under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms of the two concerns, and the act of the assessee in immediately withdrawing the amounts on being made aware that the two concerns were not permitted to receive deposits, allowed the assessee's appeal. 4. Learned counsel for the Revenue submitted that there has been a breach of the statutory provisions and, therefore, the bona fides should not have weighed with the Tribunal. 5. We have considered the submissions made. We find that the Tribunal has referred to various factual aspects as elaborated above in coming to the conclusion that the assessee could not be faulted for the misrepresentation of those two concerns. We do not find any infirmity in the order of the Tribunal to warrant interference. The appeal is accordingly disposed of." Since in the instant case the assessee, on being pointed out by the AO that there is violation of provisions of section 11(5), has liquidated the shares, therefore, respectfully following the decision of the Hon'ble Delhi High Court in the case of Agrim Charan Foundation (Supra) we are of considered opinion that the benefit of exemption u/s.11 cannot be denied to the assessee. 14.3 So far as the decision of Hon'ble Bombay High Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Trustees or his concern with adequate interest & security. The only prohibition is that the loan should not be given to the trustees or his concern without interest or security. Therefore, there is no bar in section 13 that the loan cannot be given by the assessee trust to a co-operative society. Further, the loan is neither an investment nor a deposit, and therefore there is no violation of section 13(1)(d) r.w.s. 11(5). He submitted that the loans were given in order to attain the charitable objects of the assessee trust, therefore, the same was not in the nature of an investment but an application of income. The learned counsel for the assessee relied on the following decisions : i. Baidya Nath Plastic Industries (P) Ltd. & Ors. 230 ITR 522 (Delhi) ii. Pariwar Sewa Sanstha 254 ITR 268 (Delhi) iii. Alarippu 244 ITR 358 iv. Kanpur Subhas Samiti 1 ITR 23 (Lucknow) v. ACME Educational Society 326 ITR 146 (Delhi) He further submitted that the arguments for the appeal filed by the revenue are equally applicable to these grounds. 15.2 The learned DR on the other hand heavily relied on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Nos. 2 to 2.2 the assessee has challenged the order of the CIT(A) in treating the donations received through issue of coupons as income u/s.68 as against towards corpus of the trust as claimed by the assessee. 17.1 The learned counsel for the assessee submitted that there is no justification for making the addition u/s.68 on account of donations. He submitted that if these are not held to be corpus donations, these would be includible in the income of the assessee u/s.11 of the I.T. Act. He submitted that since anonymous donations are being received by the charitable trusts, therefore, the legislature has brought in the provisions of section 115BBC w.e.f.Asst. Year 2007-08. He accordingly submitted that if the donations are not treated as corpus donations they cannot be treated as cash credits but would be donations includible in the income u/s.11 and not exemption u/s.11(1)(d) of the I.T. Act. He submitted that the assessee has received coupon donations wherein it is clearly mentioned that these are towards corpus or building fund. Referring to copies of affidavits of some of the volunteers placed at Paper Book Page Nos. 15 to 47 he submitted that the assessee, during the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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