Income Tax Appellate Tribunal - Ahmedabad
Income Tax Officer vs Shri Satya Kabir Sahabani Gadi. (Shri ... on 14 July, 1994
Equivalent citations: (1994)50TTJ(AHD)501
ORDER
B. L. CHHIBBER, A. M. :
This appeal by the Revenue and the cross-objection filed by the assessee arise out of the order of the CIT(A), II Rajkot. The only effective ground raised in the appeal filed by the Revenue reads as under :
"The CIT(A) erred in law and on facts of the case in directing to delete the amount of Rs. 3,37,223 and Rs. 8,62,677 and also directing to allow a sum of Rs. 42,922 as expenses as claimed by the assessee."
2. The assessee is a Public Charitable Trust. During the year under appeal the trust received donation amounting to Rs. 3,37,223 towards "BLdg. Fund A/c". It also received donations aggregating to Rs. 8,62,677 towards "Kayami Fund Account". Before the ITO the assessee-trust contended that these donations were received with a specific direction that these shall form corpus of the respective funds. It was further submitted that both the "Bldg. Fund A/c." and "Kayami Fund A/c." constituted corpus of the trust. The ITO was not satisfied with the explanation furnished and treated the above two amounts of Rs. 3,37,223 and Rs. 8,62,677 being donations towards "Bldg. Fund A/c." and "Kayami Fund A/c." respectively, as income of the assessee trust.
3. On appeal, the CIT(A) want through the receipts issued by the assessee-trust and noted that in every receipt the purpose of the donation was mentioned and the donations were received for "Bldg. Fund A/c." and "Kayami Fund A/c". He, therefore, held that the donations had been made by the donors with the specific directions that these were for the corpus of the trust. Relying upon the decision of Delhi Bench "A" of Tribunal in the case of Dharama Pratishthanam vs. ITO (1985) 11 ITD 40 (Del) he directed the Assessing Officer to delete the additions of Rs. 3,37,223 and Rs. 8,62,677.
4. Shri A. K. Hajela, the learned Departmental Representative, submitted that the donations of Rs. 3,37,223 and Rs. 8,62,677 towards "Bldg. Fund A/c." and "Kayami Fund A/c." respectively were voluntary contributions and constituted the income of the assessee-trust under S. 2(24)(iia) of the Act. He further submitted that there were no specific directions from the donors that the contributions were towards the corpus of the trust and, hence, reliance placed by the CIT(A) on the decision of Delhi Bench "A" of Tribunal (supra) is misplaced.
5. Shri P. M. Maharshi, the learned counsel for the assessee, submitted that during the year the assessee trust was receiving donations of Rs. 3,37,223 towards "Bldg. Fund A/c." from various persons. The list of such persons along with the photo copies of the receipts were filed before the ITO and the CIT(A). As the "Bldg. Fund A/c." was to be spent towards construction of building which formed part of the capital of the trust and, hence, it constituted the corpus of the trust. The receipts specifically indicated that the donations were being taken for the building fund. Hence, this amount is not at all income of the trust under S. 2(24)(iia) of the Act. In support of this contention he relied upon the decision of Bangalore Bench of Tribunal in the case of St. Anns Home for the Aged vs. ITO (1982) 13 TTJ (Bang) 185. The learned counsel for the assessee further submitted that the trust received donations of Rs. 8,62,677 towards "Kayami Fund A/c." which was a permanent fund and constituted the corpus of the trust. Detailed list of various donations received towards this permanent fund along with the photocopies of the receipts were filed before the ITO and the CIT(A). The receipts clearly show that the donations were given by the donors for the corpus of the trust. The learned counsel for the assessee, therefore, concluded that the ITO was not justified in treating the amounts of Rs. 3,37,223 and Rs. 8,62,677 as voluntary contributions assessable under S. 12 of the Act.
6. We have considered the rival submissions and perused the facts on record. We have also gone through the list of donors and perused the receipts issued by the assessee trust. These receipts contained names and addresses of the donors and the purpose for which the donations were made have been given either Bldg. Fund or Kayami Fund. We find that the Bldg. Fund is to be spent towards construction of the building which forms part of the capital of the trust and, hence, these donations constituted towards the corpus of the trust. We find that the word Kayami is a Gujarati word which means in English "permanent". Thus the composition of this fund is of permanent nature and the contributions made to it are to be utilised towards the properties of the fund such as immovable properties. Thus, Kayami Fund constituted the corpus of the trust. In our view the voluntary contributions made with a specific direction that they shall form part of the corpus of the donee-trust and accepted by the donee-trust as such, are such voluntary contributions which constituted the income within the meaning of S. 12 of the Act, because the subject-matter of the donation becomes part of the corpus or capital of the donee trust and cannot constitute income of the receiving trust. Such contributions will not, therefore, fall within the purview of S. 12 of the Act. We are supported in this proposition by the judgment of Allahabad High Court in the case of Sri Dwarkadheesh Charitable Trust vs. ITO (1975) 98 ITR 557 (All) and the judgment of Honble Gujarat High Court in the case of CIT vs. Bal Utkarsh Society (1979) 119 ITR 137 (Guj) and the decision of the Tribunal Delhi Bench "A" in the case of Dharam Pratishthanam (supra) and the decision of Tribunal in the case of St. Anns Home for Aged (supra). In the instant case since the donations were made with the specific directions that they shall form part of the corpus of the donee-trust and accepted by the donee-trust as such, we find no justification in the action of the ITO in subjecting these donations to tax. We accordingly uphold the finding of the CIT(A).
7. Now we deal with the second limb of the ground, i.e., the disallowance of Rs. 42,922 as expenses claimed by the assessee. The assessee-trust incurred expenses of Rs. 42,922 for the purpose of buying movable properties for the objects of the trust. These were disallowed by the ITO. On appeal, the CIT(A) held that these expenses were incurred for running and maintenance of the trust and were allowable as deduction in view of the ratio of the decision of Delhi A Bench in the case of Dharam Pratishthanam (supra).
8. After hearing both the parties, we do not find any infirmity in the order of the CIT(A). The expenses of Rs. 42,922 were incurred by the trust for the purpose of buying movable properties for the objects of the trust and accordingly these are allowable deduction.
9. The cross-objection filed by the assessee merely supports the order of the CIT(A). In view of our observations in Revenues appeal, the cross-objection has become infructuous and is dismissed.
10. In the result the appeal and the cross-objection are dismissed.