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This appeal of the Revenue, for assessment year 2007-08, is directed against the order of the ld. CIT(A), Chennai, dated 29.6.2010.

2. Briefly stated, the facts of the case are that the assessee is a Public Charitable Trust registered u/s 12A(a) of the Act. The Trust owns and runs an educational institution by the name 'SASTRA UNIVERSITY'. It filed its return of income on 6.1.22006 showing 'NIL' income for the assessment year 2007-08 which was accepted u/s 141. Subsequently, scrutiny assessment was completed u/s 143(1) on 31.3.2009 determining the total income of the assessee at ` 12,19,15,648/-. While doing so, the exemption u/s 11 of the Act was denied on the ground that the assessee-trust had made certain donations which were not in conformity with its objects as contained in the Trust Deed. Being aggrieved, the assessee preferred first appeal. The ld. CIT(A), following the decision of Hon'ble A.P High Court rendered in the case of Trustees of H.E.H. the Nizam's Pilgrimage Money Trust vs CWT/IT (171 ITR 323), which was later approved by the Apex court, in which it was held that the donation made by the assessee are primarily for charitable activities recognized in law and also within the objects of the Trust, directed the Assessing Officer to allow the donation made by the assessee as claimed and to further allow the exemption u/s 11 of the Act. Now, the Revenue is aggrieved and has raised the following grounds before us:

5. The Assessing Officer has not even accepted a sum of ` 715000 being donations paid to public charitable trusts which also enjoy exemption u/s 80G of Income Tax Act, 1961 as the assessee could not produce evidence .that these particular donations were towards educational activities. The appellant submits that its trust deed allows for giving of donations to trusts which are generally carrying on charitable activities (clause 14 of the Incidental objects clause of the Trust Deed). A trust which is registered u/s 12A/12AA and also has the benefit of exemption u/s 8OG in respect of donations received by it is certainly a trust which carries on charitable activity and therefore there is no violation of the Trust Deed.
Further, Under the Income Tax Act, it is immaterial whether the charitable or religious purposes for which the trust is created are confined to the objects of the Trust Deed, what is required is that the income must be applied or accumulated for application or set apart for application as per the provisions of the Income Tax Act, 1961. For what is relevant under the Income Tax Act is the 'application of income'. Thus even though the objects of the trust do not empower the trustees to spend any part of the income of the trust property for a particular purpose, still, if they do spend any part of the income, or accumulate or set it apart for application, for charitable or religious purposes in India, it would be entitled to exemption u/s 11(1)(a) for that year. It may be that the trustees would be acting contrary to the terms of the trust deed, but that may not be a relevant circumstance u/s 11 (1 )(a), since under this provision what is relevant is the application of the income and not the objects. A similar view has been taken by the Andhra Pradesh High Court in the case of Trustees of H.E.H. the Nizam's Pilgrimage Money Trus vz. CWT/IT (171 ITR 323) wherein the Hon'ble Court has held that "If any part of the income of the trust has been applied to charitable or religios purposes in India in the assessment year 1974-75 or is accumulated or is set apart for application to such purposes in India, the income to that extent is entitled to be dealt with under section 11(1)(a) and exemption granted in accordance with the said section. It may be noted that the Hon'ble Supreme Court Court had upheld the aforesaid order of the Andhra Pradesh High Court, reported in 243 ITR 676.

7. From the above it becomes manifestly clear that out of total sum of ` 6,65,60,886/- disbursed by the assessee-trust towards 'charities and donations' during the previous year relevant to the assessment year under consideration, the Assessing Officer has accepted an amount of `6,50,66,000/- as donation made in pursuance of the objects of the assessee-trust. The balance amount of ` 14,94,886/- constituting 0.34% of the total expenditure are found not in accordance with the objects of the trust though the donations were made for the charitable purposes. The trust deed contains main objects, secondary objects and other incidental objects to achieve the main objects. The Assessing Officer has accepted the major share of donations but has not accepted the paltry amount of donations. Most of the donations denied by the Assessing Officer are in relation to trust having exemption u/s 80G of the Act. The other donations were in relation to Tsunami relief, staff welfare activities, advertisement to promote environment/nature, disbursement of cloth and feeding of the poor and small donation given to youth organization. The assessee has also spent a small amount towards renovation of various temples falling within the limit of 5% permitted in the Act. Some donations were made during the year to various persons/institutions at the request of the founder of the assessee-