Full Judgment Text
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ITA 128/2022
CIT (EXEMPTION), DELHI ..... Appellant
Through: Mr.Ajit Sharma, senior standing
counsel.
versus
OM PRAKASH JINDAL GRAMIN JAN KALYAN SANSTHAN
..... Respondent
Through: Mr.Salil Kapoor with Mr.Sumit
Lalchandani and Ms.Ananya Kapoor,
Advocates.
th
% Date of Decision: 26 April, 2022
CORAM:
HON'BLE MR. JUSTICE MANMOHAN
HON'BLE MR. JUSTICE DINESH KUMAR SHARMA
J U D G M E N T
MANMOHAN, J (Oral):
C.M.No.19919/2022
Keeping in view the averments in the application, delay in filing the
present appeal is condoned. Appeal is taken on record.
Accordingly, the application stands disposed of.
ITA No.128/2022
rd
1. Present appeal has been filed challenging the order dated 03
September, 2019 passed by the Income Tax Appellate Tribunal (hereinafter
referred to as ‘ITAT’) in ITA No. 6012/Del./2015 for the Assessment Year
2010-11.
2. Learned counsel for the Appellant states that the ITAT has erred in
upholding the order of CIT(A) allowing the utilization of corpus fund of
ITA No.128/2022 Page 1 of 3
Signature Not Verified
Digitally Signed
By:KRISHNA BHOJ
Signing Date:27.04.2022
19:51:09
Rs.19 crore towards revenue expenditure as application of income under
Section 11(1)(d) of the Income Tax Act, 1961 (hereinafter referred to as ‘the
Act’). He states that after transfer of corpus fund of Rs.19 crore to general
reserve, the Respondent/Assessee has purchased land worth
Rs.5,27,45,958/- only and has given a donation of Rs.13.4 crore to another
Trust.
3. He further states that the impugned decision implies that a Trust can
transfer funds from corpus to general reserve and still claim that the
department adjudicate the real nature of the expenditure incurred from
general reserve account and grant exemption. According to him, Section
11(1)(d) does not permit exemption in cases where donation received is
transferred from corpus to general reserve even if the nature of expense
incurred from general reserve is charitable in nature.
4. A perusal of the paper book reveals that both CIT(A) and ITAT have
set aside the assessment order on the ground that Rs.19 crore cannot be
added as additional income of the Trust since exemption on corpus donation
is allowed on purchase of land, as it is a purchase of capital asset. This Court
also finds that there is no ground of appeal either before the ITAT or before
this Court challenging the concurrent finding of the CIT(A) and the ITAT
that the substance of the transaction was that the corpus fund had been
utilised for a purchase of a capital asset.
5. This Court is further in agreement with the findings of the CIT(A) and
ITAT that the substance of the transaction must prevail over the form and, if
required, the Appellant must examine the nature of the transaction. In fact,
this approach is commended by the Allahabad High Court in Sri
Dwarkadheesh Charitable Trust vs. Income Tax Officer, "C" Ward
ITA No.128/2022 Page 2 of 3
Signature Not Verified
Digitally Signed
By:KRISHNA BHOJ
Signing Date:27.04.2022
19:51:09
[(1975) 98 ITR 557(AII)] , which has been quoted by the appellant in the
present appeal. The relevant portion of the Allahabad High Court judgment
is reproduced hereinbelow:-
“18. Normally, if a charitable trust mikes a gift of property which
constitutes its own capital or corpus, it will be income in the
hands of the receiving trust. The receiving trust will be free to
apply or spend the property which is the subject-matter of gift for
any of the purposes for which it can spend money or property;
though the property was capital in the hands of the donor trust, it
will be deemed to be income in the hands of the receiving trust.
But, if the donor trust makes the gift on the express condition that
the subject-matter will constitute capital or corpus of the
receiving trust, and the donee-trust accepts the gift or donation
subject to the condition that it will form part of the capital or
corpus of the donee-trust, the subject-matter of the donation
becomes part of the corpus or capital of the donee-trust. In such,
a case the subject-matter of the donation will not constitute, or
be deemed to be, the income of the receiving trust. There is no
law which prohibits such a transaction. A bilateral contract to
that effect is perfectly valid and enforceable. If, in spite of it, the
receiving trust spends the donation as if it were its income, the
receiving trust would be guilty of misapplication of its assets and
could be restrained in suitable proceedings from committing
breach of trust.”
6. Consequently, this Court is of the view that no substantial question of
law arises for consideration in the present appeal. Accordingly, the same is
dismissed.
MANMOHAN, J
DINESH KUMAR SHARMA, J
APRIL 26, 2022
KA
ITA No.128/2022 Page 3 of 3
Signature Not Verified
Digitally Signed
By:KRISHNA BHOJ
Signing Date:27.04.2022
19:51:09