DIT Vs. RAMAKRISHNA SEVA ASHRAMA

JUDGEMENT

(1.) THE revenue has preferred this appeal challenging the order dated 16.02.2010 passed by the Tribunal in ITA No.937/Bang./2009 setting aside the order of the Director of Income-tax (Exemptions), who had rejected the application of the assessee for approval under section 80-G of the Income Tax Act (for short I.T. Act.) and directed him to pass an order giving recognition to the assessee for the purpose of Section 80-G of the Act.

(2.) THE assessee Sri Ramkrishna Seva Ashrama, Pavagada, came into existence by way of trust deed dated 08.10.1990. It was granted registration under Section 12(A) of the I.T. Act on 24.05.1991. The assessee was also given the benefit of Section 80-G of the I.T. Act, 1961. The assessee has been making an application for its renewal regularly and it was renewed from time to time. On 02.02.2009 the assessee filed an application in Form No.10-G seeking for renewal of the recognition under Section 80-G of the I.T. Act for the relevant assessment years. The authority on receipt of the said applications noticed certain deficiencies and by letter dated 06.03.2009 called upon them to furnish particulars mentioned in the said letter. On receipt of the same, the assessee furnished the details called for on 23.09.2009. Further clarification sought for was also furnished by the assessee. In the statement of accounts for the past three years, i.e., 31.03.2006, 31.03,2007 and 31.03.2008, the assessee computed the income under Section 11 (1). The capitalised receipts of Rs. 13.86.199/-, Rs. 1.11.37,611/- and Rs. 19,33,268/- for the financial year 2005-06, 2006-07 and 2007-08 respective as Rural Project fund. The assess was asked to explain the nature and purpose of the said fund and also as to why the said amount is not considered for computation of 85% application under Section 11(1) of the I.T. Act for the respective years. The assessee replied by a letter dated 22.07.2009 contending that the area of operation of the assessee-trust is in a remote place of the border of Karnataka-Andhra Pradesh rural area. Several organisations have been giving specific donations for Rural Project Fund. This being a specific donation, the same is credited to Rural Project Fund pending till utilisation of the above funds and therefore, the assessee contended that the question of applying 85% of the income so derived to charitable or religious purposes and eligibility for claiming exemption would not arise. The Commissioner for Director of Income Tax Department did not accept the said contention. He was of the view that the donations to so-called rural project fund are not corpus donations, as such, the same is not credited to corpus account. No details of the donors are furnished, in spite of the specific directions. All donations except, corpus donations referred to in Section 11(1)(d) would constitute income irrespective of use of the same for different purposes. There is no distinction between the specific and non-specific fund in law. The assessee has not clarified the project for which the fund is intended to be used, except calling it as specific fund and no specific purpose is mentioned. The assessee has accumulated Rs. 1,47,64,078/- for a period of more than four years. During these years, no expenditure was incurred for so-called rural project. The assessee has not applied 85% of this income for charitable purposes, as intended to be under Section 11(2) of the Act. Unless the authority is satisfied, registration or renewal is not permissible. Therefore, he refused to grant approval under Section 80-G(5) of the Act. Aggrieved by the said order, the assessee preferred an appeal to the Tribunal.

(3.) LEARNED counsel for the revenue assailing the impugned order contended that, for the said amount to constitute corpus fund, the required law is that the said contribution has to be made with specific direction that it shall form part of the corpus of the trust. In the instant case, except in the case of two donations, in spite of request from the department, the assessee has not furnished the name of other donors. Therefore, there is nothing on record to show that the other donors made the contribution with specific direction. Then only it shall form part of the corpus fund. Secondly, he contended that, it was not collected as corpus fund, but it was collected under the head of Rural Project Fund and in the statement of accounts filed, the assessee reflected it under the aforesaid head. Therefore, it does not constitute a part of the corpus fund. Thirdly, he contended that to be eligible to claim exemption under Section 11(2)(a) of the I.T. Act, 85% of the aforesaid income has to be utilised for charitable purposes. If for any reason, that amount is not used for the said purpose, then it is the requirement of law that they should file an application under Section 11(2) in Form No. 10 furnishing the particulars mentioned therein, Admittedly, if 85% of the amount collected as rural fund is not spent, then no such declaration in Form No. 10 is filed and therefore, in either event the assessee is not entitled to the benefit of exemption and therefore, he submits that the assessee is not entitled to the said benefit.