CIT and Another vs Shamnur Savithramma Kallappa Public Trust

N. Kumar, J.—All these appeals are preferred by the Revenue challenging the order of the Tribunal upholding the order of the appellate authority granting exemption. The Assessee is common in all these appeals and the question of law involved is the same. Therefore all the appeals are heard together and disposed of by a common order.

The Assessee is a trust formed with object of education, relief to the poor, medical relief and the advancement of other objects, charitable or general public utility not involving the carrying on of any activity for profit. In particular, cl. 4(a) reads as under:

4(a) To establish, maintain and run educational institutions for the benefit of all sections of the people, irrespective of caste, creed or colour of such kinds as the trustees deem proper for imparting general, technical or professional knowledge and to afford financial or other assistance to such institutions.

It is in pursuance of the said object, for the assessment year 1999-2000, they have given donations of Rs. 5,00,000 to TTD Devasthanam, Tirupathi and Rs. 1,25,000 to Rajiv Gandhi University. For the assessment year 2001-02, they have given Rs. 3,00,000 to Sri Rama Vittal Trust. For the assessment year 2004-05, they have given Rs. 5,00,000 to Imperial Pools and Rs. 1,00,000 to Vigneshwara Sowharda Sahakari Niyamith. For the assessment year 2000-01, they have given Rs. 1,00,000 each to Shri S. Nijalingappa National Foundation (r), Delhi Karnataka Sangha and National Education Society of Karnataka, Rs. 10,00,5000 to BIRRD (Trust), Tirupathi TT Devasthanam. For the assessment year 2002-03, they have given Rs. 2,00,000 each - to the Deputy Director, Public Instructions and Kodaikanal International School, Rs. 10,00,000 to Rs. Sikshalaya Education Society and Rs. 2,00,000 to Doddapete Sri Basaveshwara Seva Sangha. For the assessment year 2003-04, they have given Rs. 5,00,000 to Imperial Pools and Rs. 2,00,000 to Sri Krishna Vajra Kavacha Trust (R).

It is not in dispute that all donees are exempted from payment of tax under the Act, as they are carring on charitable activities. The AO held that the aforesaid donations are not utilized for the objects enumerated in the trust deed. Moreover, there is no clause in the trust deed to donate to other institutions/trusts. As the trust has not utilized the funds for meeting its objectives for which it was established, he proceeded to hold that the donations made by the trust are in violation of its objects clause and therefore, not entitled to deductions. Therefore, he passed an assessment order directing the Assessee to pay the income tax as mentioned in each of these orders. Aggrieved by the same, the Assessee preferred an appeal before the CIT(A), Hubli. The appellate authority reappreciated the entire material on record and looked into the objects of the trust of the Assessee. He held that the trust has applied its donations received for the objects of the trust and therefore, eligible for exemption u/s 11 of the Act. Accordingly, he set aside the assessment orders. Aggrieved by the same, the Revenue preferred an appeal to the Tribunal. Again, the Tribunal reconsidered the entire material on record, looked into the terms of the trust deed and came to the conclusion that the donee trusts were exempted u/s 80G of the IT Act and renewed every year and the objects of those trusts are similar and identical with that of Assessee. Clause 4(a) of the trust deed authorizes the trust to afford financial or other assistance to such institutions. In the trust deed, there is a specific object that to establish, maintain and run educational institutions for benefit of all sections and to afford financial or other assistance to such institutions. Therefore, it held that the order of the AO misinterpreting the provisions was incorrect and hence the order passed by the CIT(A) is valid and legal and accordingly, dismissed the appeals. Aggrieved by the said order, the Revenue is in appeal.

The learned Counsel appearing for the Revenue assailing the impugned order contended that there is no clause in the trust deed which permitted the Assessee trust to donate money to the other trusts. Secondly, he contended that the donee trusts have not utilized the funds for charitable purpose. This aspect has not been considered by both the appellate authorities and therefore according to him the impugned order is liable to be set aside.

Per contra, the learned Counsel for Assessee trust supported the impugned order.

From the material on record, it is clear that the trust was constituted for a charitable purpose. Clause 4(a) makes it clear as to what are the purposes for which the trust is constituted. However, it is important to note that the trustees are authorized by the trust to spend money for the establishment, maintaining and running educational institutions for the benefit of all the sections of the people and for imparting general, professional and technical knowledge. It authorizes the trust to extend financial or other assistance to such institutions. Therefore, the clause in the trust deed is unambiguous. There is no scope for any confusion. Not only the trust carries on charitable purpose, but it also extends assistance to such institutions carrying on these charitable purposes. It is not in dispute that all the donees who are carrying on charitable activities are exempted u/s 80G and which is renewed every year. If those donees have not utilized the funds for charitable purposes, the said amount is taxable at their hands. The donee trusts which are registered under the Act are recognised as carrying on charitable purposes and the registration is renewed every year and in particular to the relevant years. Therefore, the lower appellate authority as well as the Tribunal on consideration of the entire material on record, have properly held that the order passed by the AO is illegal, contrary to law and requires to be set aside. Accordingly, the same is set aside. Hence, no interference is required by this Court. No substantial question of law is involved in this appeal for consideration. Accordingly, all appeals are dismissed.