Income Tax Appellate Tribunal - Ahmedabad
Income-Tax Officer vs Maganbhai S. Patel on 30 September, 1999
Equivalent citations: [2000]74ITD481(AHD)
ORDER
Shri T.J. Joice, Accountant Member
1. These five appeals by the Revenue are directed against the consolidated order of the CIT(A)-II, Baroda, dated 13-11-1992 for the assessment years 1977-78 to 1981-82. Since the issues involved are common, these appeals are being disposed of by this common order for the sake of convenience.
The grounds of appeal for the assessment year 1977-78 read as under :
1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred -
(i) in holding that initiation of proceedings under section 147 was not justified and the re-assessment made was not valid.
(ii) in holding that application of the trust fund to the extent of Rs. 1,05,000 for the purchase of premises in Suraj Plaza-II complex amounted to utilisation of income for charitable objects of the Trust Acrid thus eligible for exemption under section 11 of the Income-tax Act.
2. On the facts and in the circumstances of the case and in law the ld. CIT(A) ought to have upheld the order of the Assessing Officer.
3. It is therefore prayed that the order of CIT(A) be set aside and that of the Assessing Officer be restored.
2. The grounds of appeal for the other years are identically worded except with regard to the amounts mentioned in ground No. 1(ii). The figures relating to the oilier years are as under :
Asstt. year Amount 1978-79 1,23,500 1979-80 1,60,000 1980-81 70,000 1980-82 1,70,000
3. From the above, it is clear that the main grievance of the Revenue is with regard to the CIT(A)'s decision in holding that the reassessment proceedings were not valid and also in holding that the application of the trust funds for the purchase of premises in Suraj Plaza-II, amounted to utilisation of income for charitable purposes of the trust.
4. The assessee is a trust constituted under a deed of settlement dated 5-9-1958. The objects of the trust are set out in para III of the trust deed. Since the objects of the trust are germane to the adjudication of the disputes involved in the present appeals, we consider it necessary to reproduce para-III of the trust deed below :-
"III Objects :
That the objects of the Trust hereby created and established and to be maintained and administered are as under :-
That the Trustees shall apply the net income of the Trust property and if they unanimously agree the whole or portion of the corpus of the trust property for the time being without reference to caste or creed, for all or any of the objects hereafter specified in such and in all respects as they in their absolute discretion deem fit.
(a) For spread of education of any kind technical, physical, etc. in any manner and for giving college fees to deserving and/or needy students.
(b) Establishing or constructing or maintaining or contributing or running institutions for any purposes connected with the promotion of general moral uplift of people or with the promotion of educational activities of the people.
(c) Assistance and encouragement in like manner either by grant of scholarships or tuition fees to the poor and needy in the matters of education for study or in the promotion of or in the acquisition by them of knowledge of any science or art of mechanical or industries in receiving technical education or in study of social human relations, public welfare.
(d) For spread of primary, secondary, college and post-graduate education of all and any kind including technical, medical, commerce, science, engineering, agricultural, social education and/or by promoting primary schools, secondary schools, colleges, for imparting of all and every kind of education and/or by giving grants, scholarships, contributions to institutions, colleges, schools, imparting such education and contributing to or establishing and maintaining hostels.
(e) To accept and execute any of the trust which have the objects similar to this trust.
(f) To use the trust property or any part thereof or the income thereof or any pair thereof for objects of public charitable nature.
(g) At any time to amalgamate or hand over or vest the trust property or any part thereof in augmentation and/or furtherance of all or any of the Trust either by way of donation and with or without reservation to any institution, trust which have as its objects herebefore stated and on such terms and conditions and for such purpose or purposes as the trustees for the time being under these presents shall deem fit.
(h) To accept any donation, contribution either in cash or in any kind, from any person on such terms which are in conformity with the objects of this Trust and on conditions including the condition of associating the name of such person and for such purposes and such objects as are in conformity with the objects of this trust as the trees in their absolute discretion shall deem fit.
(i) To accumulate the income of the trust fund and to amalgamate the same with the corpus of the trust.
(j) To purchase, acquire, take on lease movable and immovable properties and to construct, build, repair, rejuvenate, rehabilitate and develop any, immovable property for the purposes of the trust.
(k) To take on hire or exchange any property for the purposes of the trust.
(l) To allow the use and occupation of any immovable property of the trust with or without licence fee or to rent the same at nominal rent or concessions rent or at such rent or carrying on the purposes of the trust.
(iii) To appoint committees, advisory boards, governing body, for any institution established, run and maintained by the trust.
(n) To employ and discharge staff for the purposes of the trust.
(o) To open and operate accounts with banks, individuals and to purchase, sell, negotiate, securities, cheques and negotiate instruments.
(p) To prosecute, sue and defend all actions at law and to refer to arbitration and accept award and to compromise or forego any claim by the trust.
(q) To borrow or raise monies on the security of the trust fund which may be needed in times of emergency and to repay the same.
(r) To reimburse and pay to the Settlors or any of them all costs pertaining and incidental to these presents including the cost of stamp, registration, lawyers' and engineer's fees which they or any of them may have spent or incurred liability to pay and to keep them idemnified and harmless from any liability, responsibility incidental to the execution of these presents.
(s) To do all such things as are incidental to or conductive to the attainment of the above objects or any of them. And the objects set in any sub-clause of this clause shall not, except when the context so requires, be in any wise limited or restricted by reference to or inference from the terms of any other sub-clause and the widest possible interpretation of sub-clauses be given to be in conformity with the objects of public charitable nature."
5. The original assessments for the assessment years 1977-78 to 1981-82 were completed on the dates as mentioned in para 6 of the impugned order of the CIT(A). However, the assessments were reopened under section 147(a) subsequently on the following grounds :-
"(i) income derived from the property held under trust has not been applied for charitable purpose within the meaning of sub-section 11(1) of the Income-tax Act, 1961.
(ii) The assessee trust has filed Form No. 10 on 6-10-73 11(2) intimating that they wanted to set apart Rs. 50,000 per annum for a period of 10 years beginning with S.Y. 2029 and ending on S.Y. 2038 corresponding to (assessment years 1974-75 to 1983-84) for being spent that out of accumulated fund, the assessee has spent a large sums in several years on acquiring property/flats, named as Suraj Plaza. These flats have been let out to outside parties and are not being used for the charitable object of the trust. Therefore the expenditure for acquiring of these flats are not application of the income for the purpose of the object of the trust."
6. Notices for reopening were issued for all the years under section 148, r.w.s. 147(a) of the Income-tax Act, 1961. The CIT(A) has reproduced verbatim the reasons for reopening recorded by the Assessing Officer for the various years. He has also reproduced the contents of the original assessment orders and also the text of the reassessment orders for each of the years in question. He has also made a reference to the details of the return of income filed by the assessee along with copies of audited income and expenditure accounts and the balance-sheet for the relevant years, both at the time of original assessments and the time of reassessment. It is remarked by the CIT(A) that there was no difference between the statements of account furnished at the time of original returns and at the time of filing the returns in response to the notices under section 148.
7. In para 14 of the impugned order the CIT(A) has referred to an order under section 263 passed by the CIT, Baroda on 27-3-1989 for the assessment year 1984-85 wherein the Assessing officer was directed to treat the expenditure on the acquisition of flat(s) at Surat Plaza as application for purposed other than charitable purposes and also to bring the accumulated amount of Rs. 1,70,000 to tax, if facts so warrant, in terms of the provisions of section 11(3) of the Income-tax Act. The CIT(A) further goes on to make a mention of the audit objection raised by the audit party for the assessment year 1984-85 in LAR, I.T. 510 dated 30-3-1988. The text of the audit objection is reproduced at pp. 14 & 15 of the impugned appellate order. The CIT(A) after the examination of the relevant materials on record came to the conclusion that the Assessing Officer reopened the assessments after forming a belief on the basis of the audit report mentioned above and that such belief was not on the basis that there was on the part of the assessee non-disclosure or omission to disclose material facts necessary for assessments. Relying on the decisions of the Supreme Court in the case of Indian & Eastern Newspaper Society v. CIT [1979] 119 ITR 996/2 Taxman 197, the CIT(A) held that the opinion of the audit party on a point of law could not be regarded as information within the meaning of section 147(b). Relying on the decision of the Gujarat High Court in the case of Kasturbhai Lalbhai v. R. K. Malhotra, ITO [1971] 80 ITR 188, the CIT(A) also held that there was only a change of opinion on the part of the Assessing Officer with regard to the application of the trust fund for purposes other than the objects of the trust. The CIT(A) further goes on to discuss the ratio of the following decisions from which relevant extracts are quoted in the body of the appellate order :-
1. Indian & Eastern Newspaper Society's case (supra)
2. Kasturbhai Lalbhai's case (supra)
3. CIT v. Jyoti Ltd. [1978] 112 ITR 973 (Guj.)
4. CIT v. A. Raman & Co. [1968] 67 ITR 11 (SC)
5. Bai Aimai Gustadji Karaka v. GTO [1975] 99 ITR 257 (Guj.)
6. ITO v. Lakhmani Mewal Das [1976] 103 ITR 437 (SC)
7. ITO v. Calcutta Chromotype (P.) Ltd. [1974] 97 ITR 55 (Cal.)
8. Sirpur Paper Mills Ltd. v. ITO [1978] 114 ITR 404 (AP)
9. Indo-Aden Salt Mfg. & Trading Co. (P.) Ltd. v. CIT [1986] 159 ITR 624 (SC)
10. Phoolchand Lalith Kumar & Co. v. ITO [1992] 196 ITR 302/65 Taxman 162 (AP)
8. By applying the ratio of the above decisions, the CIT(A) concluded that neither of the two grounds given by the Assessing Officer for reopening the assessments was sufficient to form a belief that by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment, income chargeable to tax escaped assessment. In other words, the CIT(A) held that the reopening of the assessment was void for all these years as the conditions set out in section 147(a) were not fulfilled.
9. The CIT(A) has also discussed the merits of the case with regard to the question whether the trust fund has been utilised for charitable purposes or otherwise. He found that the assessee had accumulated its income for the objects set out in Form No. 10 filed before the Income-tax authorities who permitted the accumulation from the year, 1974-75 upto the assessment year, 1984-85. He also found that the trustees had acquired certain properties out of the sums set apart for charitable purposes, and for the purpose of raising further money for carrying out the objects of the trust, let out the premises so acquired to Bank of Baroda and ultimately effected sale in favour of Bank of Baroda and then the funds received on sale were ultimately used for giving donation to the M.S. University of Baroda. The CIT(A) thereupon concluded that the expenditure incurred for acquisition of the property could not be considered as applied for purposes other than the charitable purposes of the trust in terms of section 11(3)(a) and section 11(3)(c) of the Income-tax Act, 1961. In reaching this conclusion he has relied on the ratio of the following decisions from which also relevant extracts are quoted in the body of the appellate order :-
(a) Satya Vijay Patel Hindu Dharamshala Trust v. CIT [1972] 86 ITR 683 (Guj.)
(b) CIT v. Sarladevi Sarabhai Trust (No. 2) [1988] 172 ITR 698/40 Taxman 388 (Guj.)
(c) CIT v. Cherupushpam Hospital Trust [1990] 181 ITR 512 (Ker.)
(d) Addl. CIT v. Surat Art Silk Cloth Mfrs. Association's [1980] 121 ITR 1/[1979] 2 Taxman 501 (SC)
(e) ITO v. Servants of the People Society [ITAT Delhi Bench]
(f) CIT v. J. K. Charitible Trust [1992] 196 ITR 31/[1991] 59 Taxman 602.
10. Finally the CIT(A) has once again reiterated the position that the reopening of the assessments under section 147(a) by issue of the notices under section 148 was ab initio void. Reliance in this connection has been placed on the following decisions :-
(1) Lakhmani Mewal Das's case (supra) (2) Soorajmal Srigopal v. ITO [1979] 117 ITR 326 (Cal.) (3) S. P. Agrawalla v. ITO [1983] 140 ITR 1010/[1981] 5 Taxman 299 (Cal.) (4) Sir Bansilal & Co.
(5) Technocraft Industries v. G. S. Tung, Second ITO [1990] 185 ITR 465/52 Taxman 68 (Bom.) (6) Raja Bahadur Motilal (P.) Ltd. v. K. R. Vishwanathan, ITO [1990] 183 ITR 80 (Bom.)
11. In the appeal before us, the ld. D. R. Shri Ramkrishna Gupta, vigorously disputed the findings given by the CIT(A). He pointed out that though the assessee filed Form No. 10 setting apart the accumulated funds for certain specified purposes, it was subsequently found that instead of applying the funds for such specified purposes, the funds were utilised for purchase of a property which was subsequently let out to the bank of Baroda. On the basis of this material fact which came to light subsequently the Assessing Officer reopened the assessment by issue of notices under section 148. Since the objects of the trust were not advanced by the utilisation of the trust funds in the above said manner, the Assessing Officer formed a reasonable belief that the assessee was not entitled to exemption claimed under section 11 as the funds were spent for purposes other than charitable purposes. Thus the ld. D. R. vehemently supported the action of the Assessing Officer in reopening the assessments and challenged the findings of the CIT(A).
12. On the other hand, Shri K. C. Patel, the ld. counsel for the assessee stoutly defended the order of the CIT(A). The ld. counsel pointed out that right from the inception, the trust was enjoying exemption under section 11 of the Income-tax Act, 1961. The accumulated funds of the trust were utilised for investment in certain immovable properties from which rental income was realised by the assessee trust and the entire income was subsequently spent by way of donation to the M.S. University, Baroda and also for construction of buildings for the said University in accordance with the objects of the trust which were obviously charitable in nature. The ld. counsel, Shri K. C. Patel put emphasis on the fact that but for the audit objection for the assessment year 1984-85, revisional order under section 263 would not have been passed by the CIT, Baroda directing the Assessing Officer to examine the question of application of funds and the Assessing Officer would not have reopened the assessments for the assessment years prior to 1984-85. The ld. counsel has drawn our attention to the relevant portions of the CIT(A)'s long order. Particular emphasis is placed on the ratio of the decision of the Supreme Court in Indo-Aden Salt Mfg. & Trading Co. (P.) Ltd.'s case (supra) which has been referred by the CIT(A) at p. 20 of his order. The ld. counsel further draw our attention to the details contained in the paper book submitted by him which includes inter alia the trust deed dated 5-9-58, copy of the certificate from the Charity Commissioner, Resolution of the trustees dated 26-7-89 regarding donation to M.S. University, Baroda, Memorandum of Understanding dated 15-4-91 with the M.S. University Baroda, copies of account relating to the purchase of property in various years and expenses incurred in connection with the construction of property, and copies of correspondence and other details furnished before the lower authorities in the various proceedings before them. On the basis of these details the ld. counsel pleaded that the assessee trust has applied the accumulated income for the purpose of the trust and therefore, the assessee is entitled to the claim of exemption under section 11. Therefore, the original assessment made in this connection accepting the claim of the assessee should not have been disturbed by the subsequent reopening of the assessments. It is further pointed out that the reopening of the assessments has been rightly held as in-valid by the CIT(A) by applying the ratio of the decisions cited by him in the impugned appellate order.
13. In support of his arguments with regard to the legal issue of reopening of assessments, the ld. counsel has cited the following decisions :-
1. Kasturbhai Lalbhai's case (supra)
2. Calcutta Chromotype (P.) Ltd.'s case (supra)
3. Bhai Aimai Gustadji Karaka's case (supra)
4. Lakhmain Mewal Das's case (supra)
5. Jyoti Ltd.'s case (supra)
6. Sirpur Paper Mills Ltd.'s case (supra)
7. Soorajmal Srigopal's case (supra)
8. Indian & Eastern Newspaper Society's case (supra)
9. S. P. Agrawalla alias Sukhdeo Prasad Agrawalla's case (supra)
10. Technocraft Industries' case (supra)
11. Phoolchand Lalith Kumar & Co.'s case (supra)
14. With regard to the merits of the case, on the question of application of trust funds for the objects of the trust, the ld. counsel has relied on the following case laws :-
1. Satya Vijay Patel Hindu Dharamshala Trust's case (supra)
2. Surat Art Silk Cloth Mfrs. Association's case (supra)
3. Sarladevi Sarabhai Trust (No. 2)'s case (supra)
4. Cherupushpam Hospital Trust's case (supra)
5. J. K. Charitable Trust's case (supra)
15. In his rejoinder, the ld. D.R. once again pointed out that letting out of the property to the Bank of Baroda was not in furtherance of the charitable objects of the trust as letting out of the property is not one of the charitable objects of the trust. Relying on the decision of the Supreme Court in Aditanar Educational Institution v. Addl. CIT [1997] 224 ITR ITR 310/90 Taxman 528, the ld. D.R. pleaded that the question of exemption should be considered for each year specifically in the light of the application of the funds for specified purposes.
16. We have considered the rival submissions and the evidence on record. We have also given serious thought to the ratio of the decisions relied upon by the ld. CIT(A), the ld. counsel for the assessee and the ld. Departmental Representative. In our view the impugned order of the CIT(A) does not call for any interference as it is based on a detailed analysis of the facts of the case in the light of the judicial principles laid down by the Hon'ble Supreme Court and the High Courts in regard to the law of reassessment under the provisions of section 147 of the Income-tax Act, 1961.
17. As rightly observed by the CIT(A), the genesis of the reassessment proceedings in question can be traced to the revisional order passed by the Commissioner of Income-tax, Baroda, under section 263 dated 27-3-1989 for the assessment year 1984-85. This revision order itself was occasioned by an audit note dated 30-3-1988 (as mentioned in para 6 above). It is pertinent to observe in this connection that the Commissioner set aside the assessment for the assessment year 1984-85 directing the Assessing Officer to treat the expenditure on the acquisition of the flat(s) at Suraj Plaza as application for purposes other than charitable purposes and after due verification bring the accumulated amount of Rs. 1,70,000 to tax, if facts so warrant, in terms of the provisions of section 11(3) of the Income-tax Act, 1961. The assessee challenged this order under section 263 before the Tribunal and as per order in ITA No. 1825/Ahd./89 dated 25-4-1993, the Tribunal did not find any reason to interfere with the order of the Commissioner. Subsequently, the assessment under section 143(3) was done on 18-9-1989 in compliance with the direction of the Commissioner and this matter came up before the first appellate authority who dismissed the appeal as incompetent as assessment was made merely to give effect to the order under section 263. On assessee's further appeal before the Tribunal, it was held in ITA No. 3999/Ahd./1990 dated 31-3-1995 by the Tribunal, Ahmedabad Bench 'A' that the various grounds raised by the assessee were not disposed of by the first appellate authority on merits and in this view of the matter it was restored to the file of the first appellate authority for fresh consideration and disposal on various grounds based on merits. It is understood from the ld. counsel for the assessee that this matter for the assessment year 1984-85 is pending with the CIT(A) and the Assessing Officer.
18. Be that as it may, our purpose in referring to the proceedings for assessment year 1984-85 is to high-light the fact that the reassessment proceedings for the assessment years 1977-78 to 1981-82 (with which we are concerned here) are to be seen in the background of the audit objection dated 30-3-1988 and the revision order dated 27-3-1989 for the assessment year 1984-85. In view of the decision of the Supreme Court in Indian & Eastern Newspaper Society's case (supra) we agree with the observation of the CIT(A) that the reopening of the assessments was not justified on the basis of the audit objection. Even if it is conceded that the Assessing Officer came to an independent conclusion without regard to the audit note while forming the belief that income changeable to tax has escaped assessment, we have to observe that the other ingredients of section 147 are not fulfilled in this case. The reopening has been done under clause (a) of section 147, according to which there should have been omission on the part of the assessee, to make the return under section 139 or to disclose fully and truly all material facts necessary for the assessments. This essential ingredient clause (a) of section 147 is not available in the present case as it is found that the assessee had in the original proceedings filed the return of income accompanied by copies of audited statements of account wherein the investment in the property under consideration was clearly indicated. Moreover, rental income from a property at Mumbai, Shivasagar Estate, has been offered for taxation for various years and this has been accepted by the Assessing Officer as the income of the trust which was also considered as available for application for charitable purposes. In other words, letting out of a property for earning income for the purposes of the trust was considered as part of the activities of the trust and such income was considered as available for application towards charitable purposes. This being the position in the earlier years and in the original assessments completed for the various years, it is clear that while reopening the assessments the Assessing Officer simply changed his opinion on the same set of facts which were available to him while doing the original assessments. On going through the details of the statements furnished along with returns of income in the original assessment proceedings we find that all the material and primary facts necessary or relevant to computation of income were disclosed by the assessee. In the circumstances it cannot be held that there was any omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessments.
19. That apart, the resolution dated 1-4-1976 regarding the purchase of premises at Suraj Plaza and the certificate issued by the Charity Commissioner dated 22-9-1979 giving approval for the proposed purchase of the property for the objects of the trust were before the Assessing Officer and these documents clearly prove that it disclosed all the primary facts with regard to the said investment and with regard to its intention to make the above said investment in connection with the objects of the trust.
20. We also find that the various investments from time to time spread over various years have been reflected in the statements of account furnished for the relevant assessment years in the original assessment proceedings. In other words the periodical payments in respect of purchase of property namely Suraj Plaza and the rental income realised from various properties are shown on the payments and receipt side of the statements of the account and the investments are also reflected in the balance-sheet filed for the relevant year. We finally come to the assessment year 1989-90 for which year there is a reference to the resolution dated 27-2-1987 by the Trust to donate Rs. 25 lakhs to M.S. University for the construction of Maganbhai S. Patel Institute of Management Studies. There is a Memorandum of Understanding dated 15-4-1991 between the Trust and the M.S. University of Baroda for the above purposes copy of which appears at pp. 29 to 31 of the paper book-I filed by the ld. counsel for the assessee. Page 32 of the same paper book shows a receipt dated 30-3-1991 by the Maharaja Sayaji University, Baroda (referred to as M.S. University of Baroda) of a sum of Rs. 3 lakh by way of donation from the assessee trust. For the assessment year 1992-93, we find that the assessee trust incurred expenditure to the tune of Rs. 17,38,166.70 during the financial year 1991-92 for the construction of a building for M.S. University. A further expenditure of Rs. 21,10,585.63 was incurred during the financial year 1992-93 relevant for the assessment year 1993-94 for the same purposes. All these details are reflected in the copies of the statements of account furnished to the Assessing Officer for the relevant assessment year concerned.
21. One of the arguments advanced by the revenue was that the trust did not use the accumulated income for the purpose specified in Form No. 10. However, we find that this argument is not tenable in view of the evidence available on record which indicates that the assessee trust has not misused the accumulated funds for any purpose other than the charitable objects of the trust. The third object in Form No. 10 was stated as under :-
"to donate and/or spend funds set apart and accumulated as aforesaid, for any public charitable purposes."
22. In para 4 above, we have reproduced the objects of the trust as per the trust deed dated 5-9-1958. The dominant object is to spread education by establishing, constructing, maintaining, contributing to or running institution of the promotion of education, assistance to students by way of scholarships, tuition fees etc. (vide clauses (a), (b) (c) and (d) of para - III). Clauses (f) & (g) authorise the trust to use the trust property for argumentation or furtherance all or any of the objects of the trust. Clauses (i)(l), (k) and (l) authorise accumulation of trust fund for the purpose of trust and investment in movable and immovable properties and also leasing out the property on rent for promoting the objects of the trust. Finally clause(s) is a residual clause which authorises the trustees to do all such things as are incidental or conductive to the attainment of the above objects or any of trust. Thus when we consider the investment made by the Trust in the immovable property, the letting out of the property to Bank of Baroda, the donation to the M.S. University of Baroda and the expenditure incurred for construction of property for and on behalf of the M.S. University - all these factors taken together lead to the inescapable conclusion that the trust was engaged in carrying out the objects of the trust as set out in the Trust Deed dated 5-9-1958. The letting out of the property to the Bank of Baroda was all intermediary step for augmenting the income of the trust which was accumulated from year to year and finally spent by way of donation to the M.S. University of Baroda and also by way of expenses incurred in connection with the construction of property for the said University. Even the sale proceeds of property sold to the Bank of Baroda have been utilised for the final contribution made to the M.S. University. It is not the case of the revenue that any income earned by the assessee trust has been diverted in any year for purposes other than the objects of the trust, even though in the reassessment orders, the Assessing Officer has indicated to the contrary. The stand taken by the Assessing Officer is diametrically contrary to the position accepted by the department for the earlier years and also for the assessment years under consideration in the original assessment proceedings, as indicated by us earlier. We fully endorse the decision of the CIT(A) in holding the reassessment proceedings as invalid based on the ratio of the decisions cited in para 6 above. On merits also the application of the trust funds for the purposes of the trust is clearly established in view of the case laws cited in para 7. The decisions quoted by the ld. counsel as indicated by us in para 11 above also lead to the inescapable conclusion that the decision of the CIT(A) cannot be faulted on the facts of the case.
24. Coming to the decision relied on by the ld. D.R. namely Aditanar Educational Institution supra, we have to observe that the ratio laid down by the Supreme Court in this case does not vindicate the stand taken by the Department in the present case. On the other hand, this decision supports the case of the assessee in the context of overall object of promotion of education. The following observations of their Lordships would be worth quoting in this context :-
"We may state that the language of section 10(22) of the Act is plain and clear and the availability, of the exemption should be evaluated each year to find out whether the institution existed during the relevant year solely for educational purposes and not for purposes of profit. After meeting the expenditure, if any surplus results incidentally from the activity lawfully carried on by the educational institution, it will not cease to be one existing solely for educational purposes since the object is not one to make profit. The decisive or acid test is whether on an overall view of the matter, the object is to make profit. In evaluating or appraising the above, one should also bear in mind the distinction/difference between the corpus, the objects and the powers of the concerned entity. The following decisions are relevant in this context Governing Body of Rangaraya Medical College v. ITO [1979] 117 ITR 284 (AP) and Secondary Board of Education v. ITO [1972] 86 ITR 408 (Orissa)." (p. 318 of 224 ITR)
25. Even though the above observations were made with reference to the language of section 10(22) of the Income-tax Act, these observations hold good in the context of section 11 where also the objects of the trust established purportedly for charitable purposes will have to be considered from the point of view of availability of funds, earning of income, surplus accumulated, the purpose of such accumulation and the way in which income and the surplus funds are utilised. It is not established in the present case that the assessee trust invested in the immovable property or let out the immovable property for the purpose of earning profit with a view to using the funds for any ulterior purpose i.e. other than the charitable objects of the trust. It is also not in dispute that the Trust is registered as a Charitable Trust and it has complied with the procedural formalities laid down in section 11 read with sections 12, 12A and 13 for the various assessment years in question. Hence the claim of exemption under section 11 made by the Trust is perfectly in order. Even though the revenue authorities are entitled to look into the statements of account from year to year, a broad view should be taken and in an overall view of the matter, it is clear that in the present case, the dominant motive relating to the immovable property transaction was to augment the income and accumulate the surplus funds for the purpose of contribution to the M.S. University of Baroda by way of donation and by way of construction of property for the said University. Thus we are fortified in reaching the conclusion indicated by us in paras 13 and 18 above by the ratio of the decision of the Hon'ble Supreme Court mentioned supra and the case laws referred to in paras 6, 7, 8 and 11 above. In view of the foregoing discussion, we uphold the order of the CIT(A) and do not find any reason for interference.
26. In the result, the appeals are dismissed.