Director of IT & Ors. v. Ramakrishna Seva Ashrama

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The Tax Publishers2012 TaxPub(DT) 1661 (Karn-HC) : (2012) 046 (I) ITCL 0039 : (2013) 357 ITR 0731 : (2013) 258 CTR 0201 : (2012) 205 TAXMAN 0026 INCOME TAX ACT, 1961 --Deduction under section 80G--Charitable trustRenewal of approval under section 80G--Assessee, a trust, registered under section 12A. It was also given the benefit of section 80G only after looking into the balance sheet that the amounts collecged by them for a period of three years was under the head of rural project fund. Assessee filed an application for renewal of the recognition under section 80G for the relevant assessment year but DIT (Exemptions) refused to grant approval on ground that assessee had not applied 85 per cent of this income for charitable purposes as intended to be under section 11(2). Assessee argued that this being a specific donation, the same was credited to Rural Project Fund pending till utilisation of the above funds and, therefore, the question of applying 85 per cent of the income would not arise. DIT was of the view that the donations to so-called rural project fund were not corpus donations, as such, the same was not credited to corpus account. No details of the donars were furnished in spite of the specific directions. Tribunal was granted approval under section 80G and found that assessee collected the amounts by way of donations directly towards funds, known as Rural Project Fund. It was a capital fund formulated by assessee and earmarked for specific rural projects. Therefore, all donations collected under that head were in the nature of corpus donations and such corpus donations did not form part of the income of a charitable trust. Held: Was justified. If any voluntary contribution is made with a specific direction, then it shall be treated as the capital of the trust for carrying on its charitable or religious activities. Then such an income falls under section 11(1)(d) and is not liable to tax. Therefore, it is not necessary that a voluntary contribution should be made with a specific direction to treat it as corpus. If the it intention of the doner is to give that many to a trust which they will keep it in trust account in deposit and the income from the same is utilised for the defination port of the corpus. One of the activities of the trust is to treat T.B. and leprosy patients and for that purpose, they have a project called Leprosy Eradication Project and the said project is confined to the rural areas in Pavagada, the border districts of Karnataka-Andhra Pradesh. They received voluntary contributions from philanthrofers and they have accumulated the said amount under the head of Rural Health Project. All the contributions received are kept in fixed deposit. In other words, no portion of the contribution received is utilised for this project. It shows the intention of the assessee is to treat these contributions as corpus and the income derived from the corpus is used for carrying on the said activities. Income Tax Act, 1961 Section 80G IN THE KARNATAKA HIGH COURT N. KUMAR & RAVI MALIMATH, JJ. The DIT & Ors. v. Ramakrishna Seva Ashrama SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2012 TaxPub(DT) 1661 (Karn-HC) : (2012) 046 (I) ITCL 0039 : (2013) 357 ITR 0731 : (2013) 258 CTR 0201 : (2012) 205 TAXMAN 0026

INCOME TAX ACT, 1961

--Deduction under section 80G--Charitable trustRenewal of approval under section 80G--Assessee, a trust, registered under section 12A. It was also given the benefit of section 80G only after looking into the balance sheet that the amounts collecged by them for a period of three years was under the head of rural project fund. Assessee filed an application for renewal of the recognition under section 80G for the relevant assessment year but DIT (Exemptions) refused to grant approval on ground that assessee had not applied 85 per cent of this income for charitable purposes as intended to be under section 11(2). Assessee argued that this being a specific donation, the same was credited to Rural Project Fund pending till utilisation of the above funds and, therefore, the question of applying 85 per cent of the income would not arise. DIT was of the view that the donations to so-called rural project fund were not corpus donations, as such, the same was not credited to corpus account. No details of the donars were furnished in spite of the specific directions. Tribunal was granted approval under section 80G and found that assessee collected the amounts by way of donations directly towards funds, known as Rural Project Fund. It was a capital fund formulated by assessee and earmarked for specific rural projects. Therefore, all donations collected under that head were in the nature of corpus donations and such corpus donations did not form part of the income of a charitable trust. Held: Was justified.

If any voluntary contribution is made with a specific direction, then it shall be treated as the capital of the trust for carrying on its charitable or religious activities. Then such an income falls under section 11(1)(d) and is not liable to tax. Therefore, it is not necessary that a voluntary contribution should be made with a specific direction to treat it as corpus. If the it intention of the doner is to give that many to a trust which they will keep it in trust account in deposit and the income from the same is utilised for the defination port of the corpus. One of the activities of the trust is to treat T.B. and leprosy patients and for that purpose, they have a project called Leprosy Eradication Project and the said project is confined to the rural areas in Pavagada, the border districts of Karnataka-Andhra Pradesh. They received voluntary contributions from philanthrofers and they have accumulated the said amount under the head of Rural Health Project. All the contributions received are kept in fixed deposit. In other words, no portion of the contribution received is utilised for this project. It shows the intention of the assessee is to treat these contributions as corpus and the income derived from the corpus is used for carrying on the said activities.

Income Tax Act, 1961 Section 80G

IN THE KARNATAKA HIGH COURT

N. KUMAR & RAVI MALIMATH, JJ.

The DIT & Ors. v. Ramakrishna Seva Ashrama