TMI Blog2017 (11) TMI 994X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the provisions of section 11(3). But such expenditure for non-charitable purpose cannot be the basis for denial of exemption u/s.11. Therefore, the observation of the Assessing Officer that the assessee is not expending the set apart incomes of the earlier years in subsequent years for charitable purposes is not borne out of facts. In the assessee’s case under consideration, the assessee trust filed the Form no.10 and made the compliance and there is no any mistake on the part of the assessee. - Decided in favour of assessee. - ITA No.1333/Kol/2014 - - - Dated:- 15-11-2017 - SHRI N. V. VASUDEVAN, JM AND DR. A.L.SAINI, AM For The Appellant : Shri M. K. Biswas, ACIT DR For The Respondent : Shri VigyaneshwarNathDatta, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has raised a multiple grounds of appeal,but, at the time of hearing, the main grievance of the assessee has been confined to the issue that AO was gross unjustified in disallowing the claim of ₹ 54,83,854/- u/s 11(2) of the Act and claim U/s 11(1) (a) of the Act. 4 The brief facts qua the issue ( As per AO order U/s 254/143(3), dated 14.11.2011), are that, in the assessee s case under consideration, the assessment was completed u/s 143(3) on 30.03.2005 wherein assessee s claim of exemption u/s 11(2) for an amount of ₹ 54,83,854/- and another claim of exemption u/s 11(1)(a) for ₹ 18,55,221/- were disallowed. Aggrieved by the said disallowance, the Assessee preferred an appeal before the ld CIT(A). The Ld. CIT(A) allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n section 13(3) or any part of its income or property is applied or used for the benefit of any such interested persons during the previous year. Here, the facts and circumstances of the case as detailed above severely hits the provision u/s. 13(1)(c) of the Act. The AO also relied on the decision of the Hon'ble Bombay High Court in the case of Champa Charitable Trust Vs. CIT reported in 214 ITR 764 (Bombay] wherein it was held that such type of inter trust donation between two trusts are not allowable and provision of Sec 13(1)(c) will be attracted in these cases. It was held by the Hon ble Apex Court in CIT Vs. Rattan Trust (1997) 227 ITR 356 (SC), that any diversion of income other than those authorized by the trust would lead to att ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st by the trustees in exercise of power conferred on them, the first proviso to Section 13(1)(c)(ii), lifting the bar of s. 13 would not apply. The ld DR for the Revenue also relied on the judgment of Trustees of Singhania Charitable Trust, 199 ITR 819 ( Cal), wherein it was held that for purposes of accumulation of income under section 11(2), assessee must specify in the notice in Form 10 the concrete nature of the purpose(s) for which accumulation is being made he ld DR further relied on the judgment of Champa Charitable Trust Vs. CIT [214 ITR 764(Bombay), wherein it was held that Bar of s. 13(1)(ii) applied where the assessee applied its income for the benefit of a trust which was a substantial contributor to the assessee itself. In addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mes of the earlier years in subsequent years for charitable purposes, is not borne out of facts part from this, the ld. Counsel for the assessee has relied on the judgment of Hon ble ITAT in assessee s own case, in ITA No.1822/Kol/1996, A .1995- 96, dated 28.02.2002 wherein it was held that the assessee is a Public Charitable Trust existing since long back and in the earlier years and in subsequent years also, it was allowed the benefits of exemption. During the relevant Assessment Year, the assessee has filed Form No.10 on 27th October, 1995 as per which fund has been accumulated for the purpose of public charitable purpose like Hospital, educational institution and Tirthashram. The Assessing Officer was of the view that the purposes menti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 59 ITR 1) held that the test is what is the predominant object of the society whether it is to carry out a charitable purpose or to earn profit? If the predominant object is to carry out a charitable purpose and not to earn profit, the purpose would not lose its charitable character merely because some profit arises from the activity. 8. Having heard the rival submissions and perused the materials available on record, we are of the view that when the Assessing Officer finds that the income which was set apart in any Assessment Year for future expenditure for charitable purposes has not been utilized for the charitable purpose, then he has to bring such non-charitable expenditure to tax in the year of its expenditure as per the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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