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M/s. Little Flower Educational Society Versus The Income-tax Officer, Company Ward-I, Coimbatore.

2016 (7) TMI 846 - ITAT CHENNAI

Addition u/s 13(1)(b) - nature of donation - disallowance made on the contribution made by the assessee to Little Flower Monastery - Held that:- The assessee registered as charitable trust and its objective should be solely concentrated to the charitable activities only. The charitable Trust carry on those objects which are enlisted in its object clause could spend its income for that purpose only. Though ld.A.R agreed that the assessee is a charitable trust, he made a plea that religious activi .....

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say herein that any charity donation out of accumulated funds is not possible after 01.04.2002 as it is hit by sec.11(3) (d) of the Act. However, this is not the case herein before us. We are concerned herein about donation out of current income to another institution with religious objects cannot be considered as application of income for charitable purpose. In other words, the charitable trust cannot donate to the trust which is formed for religious purpose. - Decided against assessee - I.T.A .....

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the assessment years 2009-10,2010-11 & 2011-12 respectively. Since issues involved in all these appeals are common in nature, these appeals are clubbed together, heard together, disposed off by this common order for the sake of convenience. 2. First we take up ITA No.2270/Mds./14 (A.Y. 2009-10)(Assessee s Appeal). 3. The assessee raised the grounds in this appeal is that the CIT(A) erred in sustaining the disallowance of the contribution made to M/s.Little Flower Monastery, Coimbatore aggreg .....

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M/s.Little Flower Monastery, Coimbatore carried out the following charitable activities out of the funds received from Lisieux Matriculation Hr Sec. School, Coimbatore. Sl. No. Name of Institution Nature of Activities 1 Karunai Illam, Kavundampalayam, Coimbatore-30. Abandoned Aids Patients and HIV positive persons are given treatment and shelter. 2 Shuruth Bhavan, Ottapalayam, Palakkad, Kerala Street roaming children are given shelter and education 3 Alphonsa Bhava Perunthalmanna, Kerala Orphan .....

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ery is a religious institution. It has not been granted 80G in view of its religious nature. The Assessing Officer in his order stated that the contribution by the assessee Trust, which is a charitable institution to a Trust which is a religious institution takes the character of religious contribution only. Since the contribution are directly hit by Section 13(1)(b) of the Income Tax Act, 1961, which debars the charitable institutions from existing for a particular religious community. Hence, t .....

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ovinces of the Christian Missionary. As submitted in the earlier grounds by the appellant, the Courts have held that any donation by a charitable institution to any other institution with similar objects would be an application of income. CIT(A) further observed that as seen from the details, Little Flower Monastery cannot be classified as a charitable institution. It was mentioned that the Monastery was for charitable purposes. The appellant could not establish that Little Flower Monastery s ac .....

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er Monastery, Coimbatore and the same was utilized by the above institution for the purpose of charitable activities and that itself has constituted for charitable activities in terms of sec.11(1) of the Act. Further, he submitted that the provisions of the section 11(3) of clause(d) is not applicable to the facts of case as the assessee has given donation to other institutions out of the 85% income of assessee as mentioned in sec.11(1) of the Act and it is not out of the accumulated income set .....

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ity carried on by the M/s.Little Flower Monastery, Coimbatore cannot be constituted as charitable activities. He also placed reliance in the case of ITO Vs. Belivers Church India and Others reported in (2015) 37 ITR (Trib) 0495 (Cochin) wherein held that if income is paid or credited to another trust or institution registered under section 12AA or approved under section 10(23C), same has to be treated as income of assessee. 7. We have heard both the parties and perused the material on record. Ad .....

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r charitable purpose or religious purpose for which the Trust was established. Thereafter, this provision also enables the charitable or religious trust to accumulate or set apart only 15% of income for which the assessee shall give a notice to the AO in a prescribed manner indicating the purpose for which the income is accumulated or set apart and the period for which such income is so accumulated or set apart. Such amount has to be deposited in the manner and form as provided in section 11(5) .....

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which such credit was made or paid as the case may be. Section 11(3A) empowers the Assessing Officer to allow the trust to apply the income so accumulated for other charitable or religious purpose other than the one for which the same was accumulated or set apart. However, the proviso to section 11(3A) mandates that the Assessing Officer shall not allow the application of income by way of payment or credit for the purposes referred to in clause (d) of sub-section (3) of section 11 of the Act. Th .....

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applicable to the facts of the case and not sec.11(5) (d) of the Act. In the present case, assessee given donation to M/s.Little Flower Monastery. According to AO, the assessee was hit by provisions of the section 13(1)(b) of the Act. Section 13(1)(b) reads as follows:- Sec.13 : Section 11 not to apply in certain cases -(1) Nothing contained in section 11 or section 12 shall operate so as to exclude from the total income of the previous year of the person in receipt thereof- (a) xxxx (b) in the .....

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at High Court in the case of CIT Vs. Barkate Saifiyah Society , 213 ITR 492 wherein their Lordships held as under:- that the Tribunal had rightly held that section 13(1)(b) applies only to trusts which were purely for charitable purposes and the assessee -trust was charitable as well as religious in nature and the assessee was entitled to exemption u/s.11 of the Act. 7.2 Similar view is taken by Hon ble M.P. High Cour in the case of CIT Vs. Dawoodi Bohra Jamat reported in 317 ITR 342 wherein the .....

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r Lordships of Hon ble Gujarat High Court as well as M.P.High Court have held that section 13(1)(b) would be applicable only to the trusts which is purely for charitable purpose. Even if a trust is for charitable as well as religious purpose, the section 13(1)(b) would not be applicable. Admittedly, the assessee trust is a charitable. Therefore, section 13(1)(b) would be applicable. 7.3 In this case, there is no dispute that the assessee has advanced money in this assessment year at ₹ 50,1 .....

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olely concentrated to the charitable activities only. The charitable Trust carry on those objects which are enlisted in its object clause could spend its income for that purpose only. Though ld.A.R agreed that the assessee is a charitable trust, he made a plea that religious activities is also permitted to be carried on. However, charitable Trust cannot carry on religious activities. As such in our opinion the donation given to activities carried on by the assessee to another Trust, which in tur .....

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nation out of current income to another institution with religious objects cannot be considered as application of income for charitable purpose. In other words, the charitable trust cannot donate to the trust which is formed for religious purpose. With this observation, we dismiss the appeal of assessee. 7.4 In the result, the appeal of assessee in ITA No.2274/Mds./14 stands dismissed. 8. Now we take up ITA No.1222/Mds./14 (A.Y. 2010- 11)(Assessee s Appeal). 9. The assessee raised the grounds in .....

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e computation as per section 11 of the Act without assigning proper reasons and justification. 2. The CIT(A) failed to appreciate that even after rejection of the plea of contribution of ₹ 92,40,000/- as application of income, there was excess application much more than the income/revenue generated thereby vitiating the addition sustained in the impugned order completely. The assessee filed a petition for additional ground explaining the reasons for not raising the ground in earlier occasi .....

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oner of Income-tax (Appeals) takes too narrow a view of the powers of the Appellate Tribunal (vide, e.g., CIT v. Anand Prasad [1981] 128 ITR 388 (Delhi), CIT v. Karamchand Premchand P. Ltd. [1969] 74 ITR 254 (Guj) and CIT v. Cellulose Products of India Ltd. [1985] 151 ITR 499 (Guj) [FB]). Undoubtedly, the Tribunal will have the discretion to allow or not allow a new ground to be raised. But where the Tribunal is only required to consider a question of law arising from the facts which are on reco .....

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r assessment year 2009-10. Accordingly, this ground is dismissed. 10.1 Regarding additional grounds, the main plea of ld.A.R is that the application of income in this assessment year is more than required and as such provisions of the section 13(1)(b) of the Act cannot be applied. In our opinion, this argument of assessee is having no merit. Once there is violation under section 13(1)(b) of the Act, the assessee losses exemption u/s.11 of the Act, though the assessee made excess application of i .....

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