HONESTY ENGINEERS AND CONTRACTORS TRUST Vs. CIT

JUDGEMENT

(1.) THE assessee carries on business under the name of Honesty Engineering and Contractors Trust. The assessee made a declaration on the 10th of October, 1968, before the magistrate at Pondicherry declaring that business is being carried on by him for the sole benefit of the Aurobindo Ashram. Later, he executed a deed of trust on the 21st of June, 1972, in which it was set out that he was a sole trustee; that the business was held in trust and that the sole beneficiary thereof is the Aurobindo Ashram, Pondicherry. The object of the trust was stated to be the contribution to and aid in perpetuity of Shri Aurobindo Ashram Trust and its various activities and institutions including Aurobindo International Centre of Education and other charitable institutions. The trust was irrecoverable. In case of winding up or closure of the business under any circumstances and for any case whatsoever, the whole of the surplus of the assets of the business is to be offered and made over to Sri Aurobindo Ashram Trust, Pondicherry.

(2.) THE assessee made credit entries in its books of account for the asst. yrs. 1973 74 and 1974 75 in favour of the Aurobindo Ashram to the tune of Rs. 1,74,570 of which Rs. 1,55,155 was actually applied. For the year 1974 75, the credit was for Rs. 1,44,759, the amount applied being Rs. 1,31,592.

(3.) THE genuineness of the declaration made by the assessee in the year 1968 and later in the year 1972 was not questioned by the Revenue at any time. The fact that credit entries have been made in favour of Aurobindo Ashram, Pondicherry, and that the bulk of the amount so credited was applied for the benefit of the Ashram is also accepted. It has been held by the apex Court in the case of CIT vs. Thanthi Trust (1999) 156 CTR (SC) 605 : (1999) 239 ITR 502 (SC) and by this Court in the case of CIT vs. Thanthi Trust (1999) 156 CTR (Mad) 607 : (1999) 239 ITR 510 (Mad) that credit entries made in favour of the educational institution in the assessee's books of account would be sufficient and would amount to application of income. The fact that the entire amount credited was not applied during the year, therefore, cannot result in the assessee being rendered ineligible for claiming that the monies had been applied for charitable purposes.