Shri Akhey Ram Ishwari Prasad Trust vs Commissioner of Income Tax

Mr. Kasliwal pleads no instructions. He does not want to appear for the assessee. No other person has appeared for the assessee.

Heard learned counsel for the Revenue.

On an application filed u/s 256(1) of the IT Act, 1961, the Tribunal has referred the following question for our opinion :

"Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the income of the assessee-trust was not entitled to exemption u/s 11(1)(a) of the IT Act ?"

The assessee is a trust. It was constituted by Shri Jeewanmal Tapadia, who was the manager of certain religious and charitable funds. A formal declaration for creating trust in respect of the religious and charitable funds was made by the aforesaid Shri Jeewanmal Tapadia on 26th Aug., 1957.

There were number of funds, which Shri Tapadia was managing, By the deed of indenture dt. 26th Aug., 1957, it was declared that the respective assets of the religious and charitable funds will be in favour of the trustees, who will hold the management and operate the respective assets of these funds for the purposes stated in the trust deed. The assessee claimed exemption on this ground.

The ITO noticed that during the accounting period, the income from various funds and application thereof are as under :

Name of institution Income credited to the account Expenses debited Expenses out of current income

Rs. Rs. Rs.

Shri Kaliji Temple 4,826 7,998 4,826

Charity Fund 7,526 6,663 6,663

Smt. Moharidevi Sanskrit

Pathshala

15,526

M/s Jeetmal Charity Fund 1,244

M/s Jagannath Tapadia

Ayurvedic Aushdhalaya

- 11,239 -

M/s Jagannath Tapadia

Homeopathic Aushdhalaya

- 9,112 -

29,124 35,012 11,489

A bare perusal of the aforesaid details reveal that the income in the first institution was only Rs. 4,826, whereas the expenses were at Rs. 7,998. These extra expenses are met from the accumulated fund of the earlier years. There was no income from M/s Jagannath Tapadia Ayurvedic Aushdhalaya, but expenditure against that Aushdhalaya has been at Rs. 11,239 and 9.112, respectively. This expenditure was also incurred by withdrawing from the Charity Fund Account. In Smt. Moharidevi Sanskrit Pathashala and M/s Jeetmal Charity Fund, there were incomes of Rs. 15,526 and Rs. 1,244 respectively, but there was no application of that income. Thus, against the total income of Rs. 29,124, the expenses incurred were of Rs. 35,012. Since the expenses incurred were in excess than the income, therefore, the trustee was not entitled to exemption u/s 11(1)(a) of the IT Act and exemption was refused by the AO.

In appeal before the AAC, the AAC followed the decision of the High Court of Madhya Pradesh in Mohanlal Hargovinddas Public Charitable Trust Vs. Commissioner of Income Tax, and allowed the appeal.

In appeal before the Tribunal, the Tribunal considered that the assessee has incurred more expenses than the income, therefore, not entitled for exemption u/s 11(1)(a) of the IT Act, therefore, he restored the view taken by the ITO.

Considering the specific finding of the Tribunal and the AO that assessee has incurred expenses from the charity fund and has incurred excess expenses than the income earned, the assessee is not entitled for exemption u/s 11(1)(a) of the IT Act.

In the result, we answer the question in affirmative i.e., in favour of the Revenue and against the assessee.

The reference so made stands disposed of accordingly.