Karikkakom Chamundi Temple Trust Vs ADIT (Exemption) (ITAT Cochin)
No Diversion, Only Devotion – Advances towards temple projects not future expense but present application u/s 11; Capital Outlay for Temple Is Application — AO’s Narrow View Rejected-Temple Construction Advances Count as Application: ITAT Allows 11 Exemption
Assessee, Karikkakom Chamundi Temple Trust, is registered u/s 12AA. For AY 2003-04, it filed a NIL income return claiming exemption u/s 11. The trust claimed expenditure on investment in immovable assets as “application of income,” including- ₹9,18,890 advance to an architect for construction of Rajagopuram & ₹1,80,000 paid to M/s. Ajanta Electricals for purchase of electrical goods. AO held these were advances for future expenses & not application of income for the year, hence added them back. CIT(A) upheld AO’s view.
Assessee argued that the advances were directly related to ongoing Rajagopuram construction & temple building works. Subsequent year’s balance sheet showed these amounts capitalised as part of completed assets. Rajagopuram completed in AY 2004-05 at a cost of ₹40,84,661. Building with electrical works completed in AY 2004-05 at a cost of ₹21,22,338. No diversion or siphoning of trust funds & payments were towards the trust’s objects.
Revenue argued that the amounts remained as capital work-in-progress & only when the asset is completed can it be considered application of funds.
