Case Law Details
CIT Vs ST. Joseph Convert Chandannagar Educational Society (Calcutta High Court)
The Revenue seeks to question the propriety of an order passed by the Appellate Tribunal which has allowed donations to be made by the assessee charitable trust to another charitable trust. According to the Revenue, Sections 11 to 13 of the Income Tax Act, 1961 do not permit the income generated by a trust to be made over to another trust irrespective of the nature of the activity of the donee trust since the charitable activity for which exemption is granted by the certificate issued under Section 12A of the Act is the charitable activity of the assessee trust.
It is not in dispute that certain sums of money were made over by this assessee to another charitable trust. It is also not in dispute that certain donations were received by this assessee from another charitable trust. The Appellate Tribunal interpreted the relevant provisions to imply that it is only if a person contributes more than Rs.50,000/- to the assessee charitable trust and the trust makes some payment to such person, would the transaction fall within the mischief of the relevant provisions. Further, the Appellate Tribunal found, as a matter of fact, that the Revenue had not questioned the propriety of the donation or even asserted that the funds of the trust had been diverted by such process. The Appellate Tribunal appropriately held that the true intention of Section 13(1)(c) of the Act was to ensure that the funds of an entity granted a special exemption are not misapplied or diverted for use as income.
In the light of the Tribunal’s treatment of the facts, no real legal issue arises since the Tribunal interpreted the appropriate provisions and applied the same in the context of the facts. As to whether the Tribunal was right or wrong is not really a question of law. As to the interpretation of Section 13(1)(c), it does not appear that the view expressed by the Appellate Tribunal is inappropriate.
For the reasons indicated above and, particularly, since there was no allegation of the income of the assessee trust being diverted for non-charitable purposes, the Appellate Tribunal’s order does not warrant any interference. In any event, no substantial question of law has arisen on the facts.
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