TMI Blog2009 (7) TMI 1263X X X X Extracts X X X X X X X X Extracts X X X X ..... e of assessment proceedings the Assessing Officer noted that the assessee has shown the above amount as addition to the trust funds. This was the money received by the assessee from advertisement in souvenir. The Assessing Officer observed that the collection of money from advertisement is not for the object of the trust and it is not a voluntary contribution. He accordingly held it as Revenue receipt out of which 85% was required to be applied for charitable purposes and accordingly made the impugned addition. On appeal, the learned CIT(A) deleted the said addition by following the decision of Bombay High Court in CIT v. v. Trustees Of Visha Nima Charity Trust (138 ITR 564) and the decision in CIT v. S.V.Vanik Jain Sangh (260 ITR 367). 5. Before us, the learned DR submitted that there is no specific direction from the contributors that the donation would be for the purpose of corpus of the Trust. In fact the assessee has issued the souvenir giving the advertisement of the parties with which they have derived benefit and hence, contribution made by them for advertisement would be revenue receipt and not capital receipt. Against this, the learned AR of the assessee submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic to whom the appeal was addressed came from comparatively prosperous rural areas and who liked to strengthen the relations already existing amongst the members of the caste and at the same time help a noble cause. In the appeal, there was no reference to the advertisements in the souvenir being likely to contribute to the advancement of the business of the persons from whom the advertisements were sought. It was unlikely on the facts of the case that the persons to whom the appeal for tickets and advertisements was issued would have given an advertisement in the souvenir or purchased tickets for the charity show for any purpose other than the charity, and as a voluntary contribution. Therefore, the contributions made by way of tickets and for advertisements were, on the facts of the case, merely voluntary contributions and were exempt under sub-s. (1) of s. 12, even assuming that the receipts constituted the income of the assessee and not the corpus thereof. Further, the contributions could not be regarded as income derived by the assessee-trust from property held under trust as contemplated under s. 11. In view of the above, we confirm the impugned order of the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pur Pallottine Society [1989] 180 ITR 579 and held that once income is computed in commercial sense then depreciation is to be allowed. The learned AR of the assessee then referred to the decision of Hon ble Bombay High Court in the case of Director of Income Tax (Exemption) v. Frajee Cawasjee Institute [1993) 109 CTR (Bom) 463] and CIT v. Institute of Banking Personnel Selection [(2003) 264 ITR 110 (Bom)] for the same propositon. 11. We have considered the rival submissions of the parties and perused the material available on record. In the case of CIT v. Sheth Manilal Ranchhoddas Vishram Bhavan Trust (198 ITR 598)(Guj), the facts are that the assessee was a trust registered under the Public Trusts' Act., The income of the assessee is mainly from immovable property. In the returns of income filed for the assessment years 1971-72 and 1972-73, the assessee claimed depreciation and calculated its income accordingly. The Income-tax Officer has rejected the claim of the assessee as he was of the view that the income from house property was to be calculated according to sections 22 to 27 of the Act. In appeal, the Appellate Assistant Commissioner held otherwise. The Revenue the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but what is computed for the purposes of taxing u/s.11 is the deficiency between 85% and actual amount applied for charitable purposes. For example - Where a trust applies only, say 60% of its receipts as application to charitable purposes then 25% of the receipts would be treated as deficiency which should be subjected to tax and 15% is allowed to be carried forward. In our considered view, Hon ble Bombay and Gujarat High Court in the above referred cases were concerned with the computation of income of the trust in the normal commercial sense and had not considered whether the amount of depreciation would be considered as application to arrive at 85% of the receipts in addition to investment in the asset already allowed as application in an earlier year. The allowance of depreciation as further application of receipts in subsequent year would apparently be a double application which, in our humble view, would be apparently inconsistent as not so provided in the law and hence untenable apparently illogical. Notwithstanding our view, we respectfully follow the decision of Hon ble High Court in the case of CIT v. Sheth Manilal Ranchhoddas Vishram Bhavan Trust (198 ITR 598), and hol ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
