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TAXAP/859/2010 6/ 6 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 859 of 2010
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DIRECTOR
OF INCOME TAX (EXEMPTION) - Appellant(s)
Versus
AHMEDABAD
SOUTH INDIAN ASSOCIATION CHARITABLE TRUST - Opponent(s)
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Appearance
:
MR MR BHATT SR. ADV. WITH MRS
MAUNA M BHATT for Appellant(s) : 1,
MR KR DIXIT for Opponent(s) :
1,
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CORAM
:
HONOURABLE
MR.JUSTICE AKIL KURESHI
HONOURABLE
MS JUSTICE SONIA GOKANI
Date
: 26/09/2011
ORAL
ORDER
(Per
: HONOURABLE MR.JUSTICE AKIL KURESHI)
This
appeal is preferred against the judgement of the Tribunal dated 9th
October 2009. Following question has been raised for our
consideration:
“Whether
the Appellate Tribunal is right in law and on facts in reversing the
order passed by CIT(A) and thereby deleting the addition of
Rs.59,26,706/- eventhough the same is not exempted u/s.10(22) of the
Act?”
2. The
issue pertains to the exemption claim of the assessee u/Sec.11 of the
Income Tax Act, 1961 (for short `the Act’) with respect to the
contributions received by the assessee from various persons in the
form of advertisements in the souvenir published by the assessee on
the occasion of annual function of the school run by the
respondent-Trust. The case of the Revenue was that such
contributions made by different persons did not carry any specific
direction that the same should form part of the corpus of the Trust.
The case of the Revenue , therefore, is that u/Sec.11(1)(d) of the
Income Tax Act, 1961, such income of the Trust cannot be exempt from
the tax. On the other hand, the case of the respondent assessee has
all along been that the receipts in the form of donations from
different persons coming through advertisements in the souvenir would
be covered u/Sec.11(1)(d) of the Act. It is the case of the assessee
that the persons giving such advertisements did not hope to get wide
publicity since the souvenir was not circulated amongst large number
of people. It is also the case of the assessee that the collections
were made with a specific purpose of utilizing the funds for
construction of building and purchase of furniture and fixtures, etc.
In short, the funds were to be utilized for various educational
development plans. For this specific purpose, fund raising programme
was conducted, during which, souvenir was published and money was
collected from different donors.
3. The
Assessing Officer held the issue against the assessee. The Assessing
Officer’s decision was carried in appeal by the assessee. C.I.T.
(Appeals) overruled Assessing Officer’s view and deleted the
additions made. Revenue thereupon approached the Tribunal. Tribunal
agreed with the view of the C.I.T. (Appeals). Revenue thereupon is
before us in the present appeal.
4. Learned
counsel for the Revenue submitted that the donations made by various
contributors did not carry any specific direction for forming the
same as part of the corpus of the Trust. In that view of the matter,
such amounts received by the Trust would not fall within Sec.11(1)(d)
of the Act. By virtue of Sec.12(1) of the Act, therefore, the income
of the Trust would have to be treated as provided under sub-secs.
(2), (3) and (4) of Sec.11 of the Act. Counsel submitted that the
Tribunal did not examine this important aspect of the matter and
ruled in favour of the assessee.
5. On
the other hand, counsel for the assessee opposed the appeal
contending that there was a specific fund raising drive undertaken by
the Trust. As part of such fund raising drive, souvenir was
published and contributions were received from different donors for
publishing advertisements in the souvenir. Such souvenir did not
receive any wide circulation. The donors, therefore, had no
intention of receiving wide publicity. He further submitted that in
the Board meeting held in the financial year 1997-98 various
educational development plans were discussed, and for implementation
of such plans, fund raising programme was undertaken. Appeal for
contributions from industrialists and business organizations was
issued on 27th November 1997. Fund raising programme was
discussed at length in the meeting of the members’ community on 8th
March 1998.
In
view of the factual position, counsel for the assessee relied on the
decisions of the Bombay High Court in the case of Commissioner
of Income-Tax, Bombay City-1 v. Trustees of Visha Nima Charity Trust
reported in 138
ITR 564 as well as on the
decision of this Court in the case of Commissioner of
Income-Tax v. Sthanakvasi Vardhman Vanik Jain Sangh
reported in 260 ITR 366.
6. Having
thus heard learned counsel for the parties and perused the orders on
record, it becomes clear that the C.I.T. (Appeals) as well as the
Tribunal both noticed the facts presented by the assessee. Such
relevant facts were that the Trust had decided to undertake certain
educational development
plans. For implementation of such development plans, the assessee
decided to organize a fund raising programme. Details of such fund
raising programme were discussed in the meeting on 8th
March 1998. In the meantime, a public appeal was issued requesting
for contributions from industrialists, businessmen, etc. As part of
the fund raising programme, a souvenir was published and several
persons made contributions.
7. As
noted, in this background, the Tribunal was of the opinion that
printing the souvenir was only an activity incidental to the annual
programme of the institution. The contributors did not place
advertisements in the souvenir with an intention of getting any
publicity for themselves or for enhancing the market value of their
products. The contributions were made only for the purpose of
helping the institution.
8. It
may be true that there was no specific direction of each donor
individually that such contribution should form part of the corpus of
the Trust. Nevertheless, we cannot judge the issue in isolation.
Looking to the totality of the facts and circumstances of the case,
it can be clearly seen that the publication of souvenir was part of a
fund raising drive of the trust. The appeal to the members of public
including industrialists and businessmen was in connection with such
fund raising drive for carrying out educational development
activities of the trust. The contributions made by different donors
must therefore be seen in this background.
9. In
light of the above facts, we noticed the decision of the Bombay High
Court Visha Nima Charity Trust (supra). We
find that in the said case, the assessee was a Trust. The trustee of
the Trust had made an appeal for voluntary contributions from
institutions and members of pubic. Such contributions were received
in the form of sale of tickets for charity show and also in the form
of advertisements published in the souvenir. It was in this
background, the Court was of the opinion that the contributions
received in the form of sale of tickets and advertisements in
souvenir were voluntary contributions made for the purpose of
charity. The entire income was, therefore, held to be exempt from
tax u/Sec.11(1) of the Act.
10. In
the case of Sthanakvasi Vardhman Vanik Jain Sangh
(supra) Division Bench of
this Court was considering a situation where the assessee trust had
received contributions from various sources for construction of
`wadi’ for the members of a particular community. It was in this
background that the Division Bench of this Court was of the opinion
that such income would not form part of the income of the Trust.
11. From
the above discussion, it can be seen that the issue is similar to one
decided by the Bombay High Court in Visha Nima Charity
Trust (supra). Even
if the decision of this Court in Sthanakvasi Vardhman
Vanik Jain Sangh (supra) was
rendered somewhat in a different factual background wherein there was
specific direction for the donations to be part of the corpus of the
Trust, nevertheless, we do not see any substantial question of law
arising. The C.I.T. (Appeal) as well as the Tribunal both have
examined the facts and come to the conclusion that the contributions
were meant for educational development activities of the
Trust for which a public appeal was issued by the Trust.
12. In
the result Tax Appeal is dismissed.
(AKIL
KURESHI, J.)
(SONIA
GOKANI, J.)
[sn
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