Case Law Details
DCIT Vs Mukund Bhavan Trust (ITAT Pune)
Revenue challenging the action of CIT(A) in allowing exemption u/s. 11 of the Act without appreciating the expenditure on the objects of the trust is negligible as compared to expenditure incurred on maintenance of commercial property.
AO found that the assessee incurred capital expenditure towards Mandir and Vidyalaya which is the part of total expenditure of Rs.544.54 lakhs. Further, he held that the capital expenditure incurred other than the objects is negligible as compare to expenditure incurred towards the objects. We find that the AO summarized the expenditure towards objects as well as capital expenditure incurred by the assessee in Page No. 6 of the assessment order. We find that the assessee incurred expenditure towards object at Rs.121.16 lakhs and towards capital expenditure at Rs.423.38 lakhs which is 77.75% than 22.25% towards objects. Therefore, the AO opined that the capital expenditure incurred by the assessee is meager than that of incurred to its objects.
We note that the case of the AO is that the expenditure incurred on other than the object is Rs.423.38 lakhs which was incurred for the purpose of commercial adventure. He also found that the said amount is part of total expenditure incurred to an extent of Rs.544.54 lakhs. The contention of ld. AR is that the AO nowhere held the said expenditure incurred into violating the objects of trust and no adverse remark as held by the assessee violated the provisions of section 13 of the Act while incurring the said expenditure. We note that the CIT(A) by placing reliance on the decision of Hon’ble High Court of Kerala in the case of St. George Forana Church reported in 170 ITR 62 held that where surplus funds were utilized for additions to a building, which was let out and the income thereof applied for charitable or religious purposes, the utilization of such surplus was held to amount to application of income for religious or charitable purposes. Further, we note that the CIT(A) placed reliance on the decision of Hon’ble High Court of Jharkhand in the case of Karimla Trust reported in 302 ITR 57 which held that breach of conditions would not disentitle assessee from getting benefits. The CIT(A) examined the issue in detail from Page No. 11 of the impugned order and held the assessee is entitled to claim exemption u/s. 11 of the Act. Thus, we agree with the reasons recorded by the CIT(A) and it is justified.
FULL TEXT OF THE ORDER OF ITAT PUNE
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