TMI Blog2023 (11) TMI 497X X X X Extracts X X X X X X X X Extracts X X X X ..... has spent a miniscule amount of its income towards purely religious purposes and thus the trust has to be acknowledged as a charitable institution as per the provisions of section 80G(5B) - HELD THAT:- It is not in doubt that Shri Sai Baba had a large number of devotees and was accorded the status of Saint upon his demise on 15th October 1918. The place i.e. Shirdi from where he left for his heavenly abode was converted into a shrine and thousands of devotees would visit his shrine to pay their respects, spread his teachings and celebrate the festivals etc. His devotees are noted to have originally started a trust namely Shirdi Sansthan of Shri Sai Baba which was registered under the Bombay Public Trusts Act, 1950. The legislative intent behind Section 115BBC(2)(a) (b) is to exclude such trusts/ institutions which inter alia exists for religious purposes and not tax the anonymous donations received by them. The Revenue erred in singling out Shri Sai Baba or Hindu Gods in an Ultra-philosophical manner to say that their worship cannot be said to be religious purpose, as neither Sai Baba nor Hinduism is a religion, but a way of life or spirituality. To put it in another way, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7) TMI 2329 - ITAT MUMBAI] relied upon by the Revenue is not relevant as they were rendered in the context of registration under Section 80G of the Act. Even otherwise, addressing the merits of this argument of the Revenue, we note that, the assessee was accorded approval by the Ld. Chief Commissioner of Income-tax, Mumbai under Section 10(23C)(v) of the Act vide order dated 17.03.2008. Undisputedly, the approval u/s 10(23C)(v) is accorded to those trusts which are wholly for public religious purposes and charitable purposes. We agree with the Ld. CIT(A) that this approval carries significant evidentiary value as it shows that the affairs of the assessee Trust had been verified by a superior authority and the assessee was found to exist for both religious and charitable purpose. On query from the Bench, the Revenue was unable to show that this approval granted u/s 10(23C)(v) of the Act has been withdrawn or rescinded by the Ld. CCIT. We further note that this approval u/s 10(23C)(v) of the Act was available on record, when the CIT(E) accorded registration u/s 80G of the Act vide order dated 25.03.2009. This supports the contention put forth by the assessee that, at that materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is difficult to accept that outgoings which are in the nature of application of income are to be excluded. The income available to the assessee before it was applied is directed to be taken - Twenty five per cent of the above income is to be allowed as a deduction. Similar view has also been taken in ParsiZorastrianAnjuman Trust vs. CIT [ 1986 (7) TMI 69 - MADHYA PRADESH HIGH COURT] No reason whatsoever has been given by the Revenue authorities for deducting Rs. 2,17,126 in this case for purposes of s. 11(1)(a) - Thus we hold that the accumulation u/s. 11(1)(a) of the Act should be allowed in the manner as claimed by the assessee and the AO is directed to do so. Denying the benefit of exemption u/s 11(1)(d) of the Act in relation to the interest earned on corpus fund s - HELD THAT:- We find merit in the findings of the lower authorities that the interest earned on corpus funds did not constitute voluntary donation received under the instructions of the donor to be earmarked for specific purpose viz., towards the corpus of the trust. Instead, the proximate source of interest was that, it had been earned from fixed deposits made by the assessee. We are therefore in agreement wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T. Varkey, JM And Shri Om Prakash Kant, AM For the Revenue : Dr Kishor Dhule (CIT-DR), Shri Prakash D Choughule (CIT-DR) For the Assessee : Shri S. Ganesh Sr. Counsel, Deepak Tikekar (CA), Pravesh Advani (CA) Ashwin Shete (Adv) S. P. Lanke (Accounts Officer) ORDER PER ABY T. VARKEY, JM: The Revenue has preferred appeals against the orders of the Ld. CIT(A), NFAC [in short CIT(A) ] dated 06.10.2022 for AY. 2015-16 (ITA. No. 3049/Mum/2022), AY. 2017-18 (ITA No. 3210/Mum/2022) and for AY. 2018-19 (ITA. No.3209/Mum/2022). The assessee has preferred appeal against the order of the Ld. CIT(A), NFAC for AY. 2015-16 (ITA No. 3010/Mum/2022). Since the issues involved across these appeals are common, all of them were heard together. Both the parties also argued them together raising similar arguments on the common issues. Accordingly, for the sake of brevity, we dispose all these appeals together. 2. We first take up AY 2015-16 as the lead case. The decision taken in this AY shall apply mutatis mutandis to the other AYs as well. There are cross appeals for AY 2015-16 in ITA Nos. 3049 3010/Mum/2022. We first take up the appeal filed by the Revenue. Before we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e definition of the term charitable purpose as set out in Explanation 3 to Section 80G of the Act, which provides that charitable purpose does not include any purpose, the whole or substantially the whole of which was religious in nature. The AO also referred to sub-section (5) of Section 80G of the Act which provided that, the eligible institution or trust cannot be for the benefit of any particular religious community or caste or exist for any purpose other than charitable purposes. The AO thus observed that, as the assessee was a charitable organisation registered u/s 80G of the Act having no religious purpose, it was not entitled to avail the benefit of exclusion set out in Section 115BBC(2)(b) of the Act. The AO thus sought to tax the anonymous donations of Rs. 159.12 crores u/s 115BBC of the Act. 5. In response thereto, the assessee is noted to have filed several explanations on 18.12.2017, 21.12.2017, 26.12.2017 and 28.12.2017. To put it briefly, the assessee submitted that, it was both a religious as well as charitable trust and therefore fell within the exception set out in Section 115BBC(2)(b) of the Act. For this, the assessee relied upon the registration granted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us contended that this material fact showed that it did not exist wholly or substantially for religious purposes and that the assessee was in compliance with the conditions set out in Section 80G(5B) of the Act. According to assessee therefore, its holding of certificate u/s 80G of the Act was valid and at the same time since it was existing both for charitable and religious purposes, it was also entitled to avail benefit of exclusion set out in Section 115BBC(2)(b) of the Act. 6. The AO however did not agree with the submissions put forth by the assessee. The AO emphasized that a trust can be registered u/s 80G of the Act only if it is purely charitable in nature and that even after insertion of sub-section (5B), the provisions of Section 80G applies only to a charitable organisation, though some expenditure incurred on religious activities has been allowed. The AO observed that the exclusion set out in Section 115BBC(2)(b) of the Act was meant for the trusts established for both religious and charitable purposes which would suggest that at least one of the objectives of the trust was wholly or substantially religious in nature. Therefore, according to the AO, the bar set out i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it cannot be interpreted in a narrow sense to denote furtherance of only a particular religion but the same has to be interpreted inclusively and in a broad sense. The Ld. CIT(A) observed that, in Indian culture, religion has always been concerned with upliftment of society and humanity and it has to be understood as a righteous way of life. The Ld. CIT(A) thus held that charitable and religious purposes overlap and cannot be considered to be mutually exclusive, as wrongly suggested by the AO. The Ld. CIT(A) relied upon the decision rendered by the Hon ble Bombay High Court in the case of DIT vs Bombay Pinjrapole Trust (59 taxmann.com 364) in which even maintaining and running gaushalas was also considered to be both charitable and religious purpose. Having regard to the objects and activities of the assessee Trust, the Ld. CIT(A) held that the assessee was also existing both for charitable as well as religious purpose. The Ld. CIT(A) also laid emphasis on the approval received by the assessee u/s.10(23C)(v) of the Act from CCIT, Mumbai, which had not been withdrawn so far. The Ld. CIT(A) noted that this approval carried immense evidentiary value as it signified that a superio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the case and in law the Ld. CIT(A) has erred in holding that the assessee trust as an organization established for both charitable and religious purposes, when the facts of the case and the objects of the trust clearly show that the assessee is a charitable organization and therefore the anonymous donations received by it shall be taxed as per the provisions of section 115BBC of the Income-tax Act? 2. Whether on the facts and circumstances of the case and in law the Ld. CIT(A) has erred in not appreciating that the assessee has spent a miniscule amount of its income towards purely religious purposes and thus the trust has to be acknowledged as a charitable institution as per the provisions of section 80G(5B) of the Income-tax Act? 3. Whether on the facts and circumstances of the case and in law the Ld. CIT(A) has erred in interpreting that the charitable activities are a part of religious activities and thus some of the objects of the trust qualify to be of both religious and charitable nature? 4. Whether on the facts and circumstances of the case and in law the Ld. CIT(A) has erred in holding that the activities of assessee trust are charitable and religious in natu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he benefit of exclusion set out in Section 115BBC(2)(b) of the Act to the assessee. Like the AO, the Ld. CIT DR also laid emphasis on the certificate held by the assessee u/s 80G of the Act to support his contention that the assessee was only a charitable organization. The Ld. CIT DR took us through the provisions of Section 80G of the Act and argued that only those trusts which existed solely for charitable purposes was eligible to be registered under 80G of the Act. The Ld. CIT DR laid particular emphasis on the definition of charitable purpose as set out in Explanation (3) to Section 80G. He supported the order of the AO by contending that, even if any one of the several objects of the Trust was wholly or substantially whole of religious nature, then such trusts would automatically not qualify to be engaged for charitable purpose and thus would be debarred from availing the benefit of Section 80G of the Act. According to Ld. DR, the fact that the certificate u/s 80G was still valid and subsisting supported the AO s case that the assessee existed solely for charitable purposes. 10. Assailing the action of the Ld. CIT(A) holding that sub-section (5B) of Section 80G override ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had also erred in relying upon the certificate u/s 10(23)(v) of the Act issued by the Ld. CCIT, Mumbai to hold that the assessee Trust existed both for charitable and religious purposes. He pointed out that, nowhere did the Ld. CCIT, Mumbai had explicitly mentioned in the certificate dated 17.03.2008 that the assessee existed both for charitable and religious purposes. 13. The Ld. DR further submitted that the teachings of Sai Baba were humanitarian in nature and did not have any religious overtone. He also submitted that even if certain Hindu Gods viz., Lord Shiva, Hanuman ji, Goddess Durga were being worshipped in temples within the premises, the same cannot be considered to be religious in nature as according to him, Hinduism is not a religion but a way of life. For this, he relied upon the decision of this Tribunal in the case of Tarehati Charitable Trust Vs CIT in ITA No.7503/Mum/2016. According to him, the objects of the Trust involving preaching the teachings of Sai Baba qualified as object of general public utility . He further submitted that provisions of Section 115BBC of the Act was brought in to curb anonymous donations received by charitable trusts. The Ld. DR expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offerings etc. in the hundi box etc. The Ld.Sr.Counsel also explained that Shri Sai Baba had attained the status of a deity and had a significant number of devotees who followed his teachings. He took us through the background history, which led to promulgation of Shri Sai Baba Sansthan Trust (Shirdi) Act of 2004. The Ld.Sr.Counsel explained that Shri Sai Baba had attained great fame and attracted significant amount of devotees and that he was worshipped as a Saint after his death. Taking into account the manner in which the assessee Sansthan had flourished after his death and the increase in asset base and also the number of devotees who would visit his shrine, the Government intervened and a scheme was formulated for the better administration of the said religious and charitable trust. He took us through the relevant Clauses 2(c), 13(2), 17(1), 17(2)(l) (m), 19, 21(1) of the Shri Sai Baba Sansthan Trust (Shirdi) Act of 2004 to show that there were several religious objects, duties and obligations on the assessee Trust and thus the assessee Trust was existing both for charitable and religious purpose. 15. The Ld.Sr.Counsel further submitted that, whether Shri Sai Baba was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. This fact according to him, established that the Revenue itself did not consider holding of certificate u/s 80G to be contradictory or inconsistent with certificate held u/s 10(23C)(v) of the Act. The Ld.Sr.Counsel thus submitted that the reliance placed by the Revenue on the 80G certificate to deny the benefit of Section 115BBC(2)(b) was untenable and thus deserves to be rejected. For the aforesaid reasons, Shri S. Ganesh, Sr.Counsel, prayed that the order of the Ld. CIT(A) deleting the addition made u/s 115BBC of the Act be upheld. 17. We have heard both the parties and perused the material submissions placed before us. The facts as noted in the foregoing are that, the assessee had received aggregate donations of Rs. 228,25,45,877/- during the year, which comprised of anonymous donations (hundi collections) of Rs. 159,12,82,169/-. After allowing benefit of 5%, sum of Rs. 147,71,54,875/- was taxed by the AO under Section 115BBC(1) of the Act. The case of the assessee is that, it exists both for charitable and religious purposes and thus the provisions of Section 115BBC(1) does not apply to it, in light of the specific exclusion set out in Section 115BBC(2)(b) of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... educational institution or any hospital or other medical institution run by such trust or institution. (3) For the purposes of this section, anonymous donation means any voluntary contribution referred to in sub-clause (iia) of clause (24) of section 2, where a person receiving such contribution does not maintain a record of the identity indicating the name and address of the person making such contribution and such other particulars as may be prescribed. 19. It is noted that the above provision was inserted by the Finance Act, 2006 with effect 01.04.2007 with the intent to check introduction of unaccounted monies in the garb of anonymous donations. The legislative intent behind the same was explained the CBDT in their Circular No. 14/2006 dated 28.12.2006 wherein it was stated as follows:- 25. Taxation of anonymous donations received by wholly charitable trusts or institutions including non-profit educational or medical institutions 25.1 Income of wholly charitable or religious trusts or institutions as well as partly charitable or religious trusts or institutions is exempt from income-tax under sections 11 and 12, subject to the fulfilment, inter alia, of certain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions. It is a well-known culture in India that devotees who visit religious institutions make offerings on account of respect, love, regard and their reverence for the deity or towards the pious-status of the place/shrine etc. Such types of offerings are collected in hundis/donation boxes, which are placed within the premises of such institutions where the devotees donate their offerings. Understandably, it is not possible to maintain the name, details and records of such donors/devotees making their offerings. There are also instances where the devotees do not want their name to be registered or glorified because of the offerings made by them, having regard to the respect, love and regard which they have for the deity or out of selflessness. It may also be because of their ingrained belief that the deity is the ultimate giver, because of whom they have what they are offering, and that the offerings made by them is not a donation but a way of giving it back to the deity to whom it always belonged. It is for these reasons that, the trusts / institutions which are existing for religious purposes or both religious charitable purpose, have been kept out of the ambit of Section 115BBC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntional festivals and fairs of Shri Ram navmi, Guru Pournima, Gokul Ashtami and Punyatihi of Sai Baba at Shridi in accordance with the established practice. c. To disseminate useful knowledge about life, activities, leelas and teaching of Shri Sai Baba. d. To maintain and expand a library of Shri Sai Literature and other religious and philosophical books. e. To organize and promote the feelings of brotherhood, unity, faith, service and equality among the devotees of Sai Baba and with that in view: i) to hold conference, seminars, lectures, competitions among the devotees and members. ii) to feed the poor from the fund established for the purpose. iii) to perform such other functions and festivals as may be decided by the Board of Management. iv) to give aids to the poor and deserving at Shirdi provided donations are received Specifically in that behalf (and for no other purpose) and also to give necessary assistance inclusive of financial help to the poor and deserving institute at Shirdi elsewhere 22. It is noted that amongst the several objects of the assessee Trust, one of the objects has been associated with activities associated with worshiping Shri S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oses for which the Trust is to be administered under this Act. (2) In particular and without prejudice to the generality of the provisions contained in sub-section (1), the Committee shall (l) Disseminate and propagate useful knowledge about the life, activities, Leelas and teachings of Shri Sai Baba, and maintain and expand the library of Shri Sai literature; (m) organise or undertake activities or programmes aimed at promoting the feelings of brotherhood. unity, faith and equality among the devotees of Shri Sai Baba. 24. The Ld.Sr.Counsel had pointed out to us that, Section 2(m) of the Sai Baba Trust Act provided that any words or expression, not expressly defined, shall have the meaning as assigned in Bombay Public Trusts Act, 1950. It is noted that, the word Temple is not defined in the Trust Act, but the same is defined in Section 2(17) of the Bombay Public Trusts Act, 1950 as follows :- temple means a place by whatever designation known and used as a place of public religious worship and dedicated to or for the benefit of or used as of right by the Hindu community or any section thereof as a place of public religious worship. 25. It is further noted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind Section 115BBC(2)(a) (b) is to exclude such trusts/ institutions which inter alia exists for religious purposes and not tax the anonymous donations received by them. The Revenue erred in singling out Shri Sai Baba or Hindu Gods in an Ultra-philosophical manner to say that their worship cannot be said to be religious purpose, as neither Sai Baba nor Hinduism is a religion, but a way of life or spirituality. To put it in another way, if one chooses to subscribe to the Revenue s contention that, then it would mean that since Hinduism is not a religion, worshipping Hindu deities and maintaining temples cannot be regarded as religious purpose for the purposes of Section 115BBC of the Act. In such a scenario, the hundi collections / anonymous donations received by almost all the revered temples of India, without naming any, shall be liable to be taxed u/s 115BBC of the Act. In our considered view, such a proposition put forth by the Revenue is wholly inconceivable, fallacious and untenable. 27. Instead, we find that the Ld. CIT(A) had rightly relied on the decision of the Hon ble jurisdictional Bombay High Court in the case of DIT(E) Vs Bombay Panjrapole Trust (supra). In the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court observed that that to a Hindu nothing can be of greater religious merit than to relieve suffering of dumb cattle and animals by giving them fodder. It is hardly necessary to emphasize that, according to Hindu religion and philosophy, animals have the same soul as human beings have and the spark of divinity is as much present in them as in human beings. Thereafter, concluded by holding that supply of fodder to cattle and animals is not only a good religious trust but it is also a good charitable trust. Therefore, the submissions of the Revenue is in the face of the decision of this Court in VallabhdasKarsondasNatha (supra) wherein taking care of animals is considered to be a charitable as well as religious activity. We may also refer to the decision of Gujarat High Court in the case of Swastik Textile Trading Co. (P.) Ltd. (supra) wherein the issue for consideration was whether establishing, maintaining, running and helping gaushalas, panjarapoles and other similar institutions for animals, would be considered to be a charitable and religious purpose .. In fact at times religious and charitable purposes may overlap. Charitable activities in all cases arise out of com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose used in Section 115BBC of the Act has to be understood in broad sense. It accordingly held that the activities described by the assessee, as having been undertaken by it during the year, can be included in the broad conspectus of Hindu religious activity. The relevant portion of the judgment is set out below :- 5. In the impugned order dated 20th August 2014 the ITAT while allowing the Assessee's appeal concluded, after discussing the relevant clauses of the Trust Deed as well as the decision of the Supreme Court in CIT v. Dawoodi Bohra Jamat [2014] 364 ITR 31/222 Taxman 228 (Mag.)/43 taxmann.com 243, that the AO and CIT had proceeded on a very narrow and incorrect understanding in holding that the Assessee Trust was engaged in spreading spirituality and since Section 115BBC only exempts religious trust, a trust allegedly imparting spiritual knowledge was consequently not contemplated as an exception by the Legislature as much as it consequently is barred to claim exemption vis-a-vis the anonymous donation. The ITAT held that the said aim has to be understood in the context of and read along with the other objects of the trust whose target groups are widows, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shadji v. MuldasBhudardas Vaishya AIR 1966 SC 1119 the Supreme Court pointed out that what constitutes a religious activity under the Hindu faith is very broad in nature. It held: 29. When we think of the Hindu religion, we find it difficult, if not impossible, to define Hindu religion or even adequately describe it. . . . It may broadly be described as a way of life and nothing more. 15. It might well be that a Hindu religious institution like the Assessee is also engaged in charitable activities which are very much part of religious activity. In carrying on charitable activities along with organising of spiritual lectures, the Assessee by no means ceases to be a religious institution. The activities described by the Assessee as having been undertaken by it during the AY in question can be included in the broad conspectus of Hindu religious activity when viewed in the context of the objects of the Trust and its activities in general. 16. For the aforementioned reasons, the Court finds no legal infirmity in the conclusion of the ITAT that for the purpose of Section 115 BBC (2) (a) anonymous donations received by the Assessee would qualify for deduction and it cannot be i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the aforesaid reasons, we also hold that the decisions in the case of Shiv Mandir Devsttan Panch Committee Sanstan Vs CIT (56 SOT 456) and Tarehati Charitable Trust Vs CIT (supra) relied upon by the Revenue is not relevant as they were rendered in the context of registration under Section 80G of the Act. 33. Even otherwise, addressing the merits of this argument of the Revenue, we note that, the assessee was accorded approval by the Ld. Chief Commissioner of Income-tax, Mumbai under Section 10(23C)(v) of the Act vide order dated 17.03.2008. Undisputedly, the approval u/s 10(23C)(v) is accorded to those trusts which are wholly for public religious purposes and charitable purposes. We agree with the Ld. CIT(A) that this approval carries significant evidentiary value as it shows that the affairs of the assessee Trust had been verified by a superior authority and the assessee was found to exist for both religious and charitable purpose. On query from the Bench, the Revenue was unable to show that this approval granted u/s 10(23C)(v) of the Act has been withdrawn or rescinded by the Ld. CCIT. We further note that this approval u/s 10(23C)(v) of the Act was available on record, when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s total income in that previous year shall be deemed to be an institution or fund to which the provisions of this section apply. The aforesaid provision is a non obstante clause and overrides Explanation 3 and declares that to the extent any institution or fund incurs not exceeding five per cent. of its total income for religious purposes, it does fall within the ambit of section 80G and it shall be deemed to be an institution to which section 80G apply. To such institutions the restriction of Explanation 3 will not be attracted. Thus, the position with effect from April 1, 2000 would be that notwithstanding one or more clauses of the trust deed being wholly or substantially religious, if the income-expenditure ratio in respect of the expenses incurred on such purposes falls within the ambit of sub-section (5B), it shall still be treated to be an institution to which the provisions of section 80G would apply and the donations to which would qualify for deduction. 36. In view of the above, the position which emerges is that, there may be instances where a trust which is existing both for charitable and religious purpose, has incurred religious expenditure which is less than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... denied the benefit of accumulation of income claimed u/s 11(2) of the Act. On appeal, the Ld. CIT(A) noted that the Board had issued Circular No.7/2018 dated 20.12.2018, in which jurisdiction was conferred with the Commissioner to admit belated application in filing Form 10 and condone the delay for AY 2016-17. The Ld. CIT(A) observed that the AY in question was 2015-16 and therefore this Circular cited by the assessee was not applicable. The CIT(A) further observed that, under any circumstance, the power to condone the delay in filing Form 10 was only with the Principal Commissioner and not vested with him. Hence, in absence of any order condoning the delay in filing of Form No. 10, the Ld. CIT(A) upheld the action of the AO denying the accumulation of income to the assessee u/s 11(2) of the Act. 40. At the time of hearing, the Ld.Sr.Counsel for assessee furnished the copy of the order passed u/s 119(2)(b) of the Act by the CIT(Exemptions), Mumbai dated 16.03.2023, wherein, the Ld. CIT(Exemption) has since condoned the delay in filing of Form 10 by the assessee for AY 2015-16. The Ld.Sr.Counsel accordingly prayed that, since the delay in filing the Form No. 10 has now been cond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would constitute its property and it is entitled to accumulate twenty-five per cent thereout. It is unclear on what basis the Revenue contended that it was entitled to accumulate only twenty five per cent of Rs. 87,010. For the aforesaid reasons, the civil appeal is dismissed. It is clear from the above that deduction of twenty-five per cent was held to be allowable not on total income as computed under the IT Act. Any amount or expenditure, which was application of income, is not to be considered for determining twenty five per cent to be accumulated. Their Lordships, as noted earlier, affirmed the decision of Kerala High Court in (1997) 141 CTR (Ker) 502 : (1997) 228 ITR 620 (Ker) (supra) wherein it is held as under : At the outset, the statutory language of s. 11(1)(a) of the IT Act, 1961, relates to the income derived by the trust from property. The trust is required to be wholly for charitable or religious purposes, and the income is expected to have relation to the extent to which such income is applied to such purposes in India. It is thereafter the statutory provision proceeds further that such income is not to be understood to be in excess of 25 per cent of the inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction. Similar view has also been taken by the Hon'ble Madhya Pradesh High Court in ParsiZorastrianAnjuman Trust vs. CIT (supra). No reason whatsoever has been given by the Revenue authorities for deducting Rs. 2,17,126 in this case for purposes of s. 11(1)(a). The decision cited on behalf of the Revenue did not take into account the decision of the Supreme Court referred to above. The circular of CBDT has also been considered by the Hon'ble Kerala High Court in its decision referred to above. Accordingly, the question referred to is answered in the affirmative and in favour of the assessee. 44. It is further noted that identical issue came up before the coordinate Bench of this Tribunal at Bangalore in ACIT (Exemption) Vs. Bhagwan Mahaveer Memorial Jain Educational Cultural Trust, ITA Nos. 1514 1515/Bang/2016 for AYs 2020-11 and 2011-12 and ITA No. 137/Bang/2017 for AY 2012-13 dated 21.08.2019, wherein it was held as under: 16. The third issue that arises for consideration in ITA No.1515/Bang/2016 for AY 2011-12 is as to whether 15% accumulation for application in future has to be calculated on gross receipts or net receipts after deduction of revenue expenditu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed by the Assessee. The relevant ground of appeal of the revenue is accordingly dismissed. 45. Respectfully following the above decisions (supra), we hold that the accumulation u/s. 11(1)(a) of the Act should be allowed in the manner as claimed by the assessee and the AO is directed to do so. Ground No. 3 of the assessee s appeal is accordingly allowed. 46. Ground Nos. 4 5 of the appeal of the assessee are as follows:- 4. On the facts and under the circumstances of the case and in law, the 8670814- Commissioner of Income Tax Appeals, National Faceless Appeal Centre, erred in confirming addition of Rs. 25,50,98,981/-u/s 11(1)(d) of I T Act, 1961 without giving opportunity to the appellant to accumulate the same under section 11(2) of the I. T. Act, 1961. 5. On the facts and under the circumstances of the case and in law, the A.O. ought to have allowed as deduction expenditure under the head Grant-in-aid Charity Rs. 17,64,54,309/- Services to Sai Devotees Rs. 18,77,189/-, Expenses on Other Objects Rs. 19,37,850/- Expenditure Building Fund Rs. 12,15,87,500/- and Expenditure 35AC Fund Rs. 9,20,04,557/- when relevant information was available on record. 47. Grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstead, the proximate source of interest was that, it had been earned from fixed deposits made by the assessee. We are therefore in agreement with the Ld.CIT(A) that it did not qualify for exemption u/s 11(1)(d) of the Act. As rightly noted by Ld. CIT(A), the assessee s reliance upon the decisions rendered in the cases of DIT vs Shri Ram Krishna SevaAashrama CIT(E) vs Mata Amrithanandamayi Math (supra) was misplaced. In these cases, the donor had made a specific direction that the interest earned on corpus donation shall also be towards corpus and therefore on such unique facts the benefit of exemption u/s 11(1)(d) of the Act was allowed to that assessee. The facts involved in the present case are found to be distinguishable. Before us also, the assessee has not been able to adduce any evidence or letter or directions from the corpus donors that the interest derived from investment of the corpus funds would also be towards the corpus of the assessee.We thus hold that the Ld.CIT(A) had rightly denied the exemption claimed by the assessee u/s 11(1)(d) of the Act in relation to the interest income of Rs. 25,50,98,980/- derived from investment of corpus funds. The findings of the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution. (b) There has to be specific direction of the donor that this donation shall be towards corpus of the trust. In absence of any of the two attributes the amount shall not be eligible for exemption u/s 11(1)(d). In the present case the proximate source of the amount is interest earned on fixed deposit and not any voluntary donation. And there has not been any instruction whatsoever, by the original donor of the corpus funds that this amount has to be used for corpus of the assessee trust only. Therefore, in absence of any of the characteristics mandatory for exemption u/s 11(1)(d) the amount of interest earned on the corpus fund shall not be eligible for the above mentioned exemption. 7.7 It is considered essential here to point out, as to why, the cases relied upon by the assessee are distinguishable and as a corollary does not entitle Assessee Trust to avail the exemption provided u/s 11(1)(d). I. In the case of Mata Amrithananadamayi Math (supra). The fact of the case was that the donors had made specific direction that the interest earned on the corpus donation shall also be treated as corpus donation. The court have made the following observation before making ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on in writing, the only way that one can find out whether there was a specific direction and to find out how the money so paid it is utilized. If the money so received by way of voluntary contributions, it is meant to use for the Leprosy patients and is credited to a particular account and from the income from the said capital, the said activity is carried on the requirement of Clause (b) of sub-section (1) of Section 11 is complied with. In the instant case, on record, we see that those people who have paid amounts by way of donation that includes the cheque with a letter with a specific direction, which is in compliance with Section (1) (d) of the Act. But, in case if the contributions are made without cheques i.e.. by cash, and oral direction has been issued to the trust to utilize the said fund for the purpose of treating the leprosy patients and if such amounts arc credited to the account meant for it, even then the requirement of clause (d) of sub-section (1) of Section 11 is complied with. Therefore, we do not see any substance in the said contention From the facts of the case above we can appreciate that the amount in question here in this case was the voluntary donati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies. It is noted that the assessee Trust had received corpus contributions towards various specific Funds, which in turn were invested in modes specified u/s 11(5) of the Act. It is noted from the Schedule A of the financials that, out of the corpus funds (including interest), the assessee has also spent amounts which was in excess of the interest income in question. Although this fact was discernible from the face of the accounts, we find that the lower authorities overlooked the same while seeking to tax the gross interest income from corpus funds. At the same time however, it is noted that even the assessee failed to bring the details of the amounts spent out of these funds to the attention of the lower authorities. According to us, the amount spent out of such interest income from corpus funds which are towards the objects of the Trust has to be allowed by way of application of income, while computing the assessable income of the assessee Trust. In the fitness of the matters therefore, we set aside this issue back to the file of the AO with the direction to examine the details of the amount spent out of the interest from corpus funds and allow the deduction in relation thereto ..... X X X X Extracts X X X X X X X X Extracts X X X X
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