Holding

Voluntary contributions received by a charitable trust are income under Section 12(1) and are exempt only if applied solely to charitable or religious purposes; here they were not, so exemption does not apply.

Summary

The R.B. Shreeram Religious and Charitable Trust, a registered public trust, received voluntary contributions of Rs 4,55,000 during AY 1966‑67 and used the amount to repay a loan to a mining firm, rather than applying it solely to charitable or religious purposes. The Income‑Tax Officer added the contributions to the trust’s total income, holding they were not exclusively for charitable purposes; this finding was upheld by the Income‑Tax Appellate Tribunal and the Bombay High Court. The trust argued that, prior to the 1972 amendment, Section 12(1) of the Income‑Tax Act should be read to exclude only income derived from the investment of voluntary contributions, not the contributions themselves, and that the contributions were not “income” under the then‑definition in Section 2(24). The Supreme Court examined the language of Section 12(1) and (2) together, held that “income derived from voluntary contributions” refers to the contributions themselves, which are income unless applied solely to charitable purposes, and that the 1972 amendment did not change the pre‑amendment interpretation. Consequently, because the contributions were not applied solely for charitable purposes, the trust could not claim exemption under Section 12(1). The appeal was dismissed.

Issues considered

Whether voluntary contributions received by a charitable trust constitute ‘income’ under Section 2(24) of the Income‑Tax Act as it stood before the 1972 amendment
Whether Section 12(1) exempts only income derived from the investment of voluntary contributions or the contributions themselves
Whether the contributions were applied solely to charitable or religious purposes sufficient to claim exemption under Section 12(1)
Whether the Board Circular No. 20/10/67 interpreting Section 11(1) is relevant to the interpretation of Section 12(1)

Legislation cited

Income Tax Act, 1961s. 11, s. 12(1), s. 12(2), s. 215, s. 2(24), s. 39

Subjects

Income TaxVoluntary contributionsCharitable trustSection 12 exemptionDefinition of incomeLoan repaymentBoard circular1972 amendment

Judgment

MIS R.B. SHREERAM RELIGIOUS AND A
CHARITABLE TRUST
v.
THE COMMISSIONER OF INCOME-TAX
VIDARBHA, NAGPUR

JULY 16, 1998
B

[SUJATA V. MANOHAR ANDS. RAJENDRA BABU, JJ.]

Income Tax Act. 1961 :
c
S.2(24) (as it stood prior to amendment made by Finance Act, 1972),
s.12 (!)-Income of trust for charitable or religious purposes-Amounts
received by trust as voluntary contribution-Exclusion from total income-
Held, since voluntary contribution was not applicable and was not in fact
applied wholly for religious or charitable purposes, assessee trust cannot get D
benefit of s.12 (!)-Sub-section(!) refers to income in the form of voluntary
contributions received by recepient trust-It has no reference to income
which may later on be derived from investment ofsuch voluntary contributions.

The appellant assessee, a registered public trust, disclosed a deficit in
its income tax return for the assessment year 1966-67. The appellaut had, E
during the material period, a loan account with a mining firm (R.8.S. Mining
Firm). At the beginning of the relevant year pertaining to the assessment
year 1966-67, the assessee owed to the said Mining Firm a sum of Rs. 7.65
lakhs under the said loan account. During the relevant year the assesee
received a sun of Rs. 4,55,000 as voluntary contributions and transferred the
same amount to the Mining Firm as repayment of the loan. F

The Income Tax Officer added to the income of the assessee the
voluntary contributions received by it amounting to Rs. 4,55,000 on the
ground that the voluntary contributions were not solely applicable to religious
or charitable purpose and were not actually applied as such, and the transfer G
of the sum of Rs. 4, 55,000 to the Mining firm could not be considered as
application of money for religious or charitable purpose. This finding was
ultimately upheld by" the Income Tax Appellate Tribunal. It also held that the
balance-sheet of the assessee revealed that it used to transfer a substantial
portion of its income to an account called Dharamshala and other Building
Fund', and out of this Fund the investment in Dharamshala covered only a H
697
698 SUPREME COURT REPORTS [1998] 3 S.C.R.

A 'part of the amount. On a reference being made to the High Court it was held -/"
that the amount of Rs. 4,55,000 was rightly considered by the Tribunal as '
income of the assessee not exempt under Section 12 (I) of the Income Tax
Act, I 961 as it stood at the relevant time. Aggrieved, the assessee filed the
present appeal.

B It was contended for the assessee-Trust that s.12 (I) of the Income Tax
Act, prior to the amendment of 1972, should be interpreted as referring only
to any income which accrued to the trust by investing voluntary contributions
which it had received and that the voluntary contributions itself were not
income at all. It was contended that prior to the insertion of sub-clause(a)
C in clause (ii) of s. 2(24) by Finance Act, I 972, the definition of 'income'
under s.2(24) did not expressly include voluntary contributions received by
a public religious or charitable trust. Dismissing the appeal, this Court.

HELD: I In order to get the benefit of s. 12(1) of Income Tax Act, 1961
the assessee was required to show that the voluntary contributions which it
D had received was applicable solely for religious or charitable purposes. In
view of the finding of fact recorded by the Tribunal that the voluntary
contributions received by the assessee trust were not applicable, and were
in fact not applied, entirely for religious or charitable purposes, the fligh

E
Court has rightly held that the amount of Rs 4,55,000 received by the
assessee as voluntary contributions was not applicable, and was, in fact, not
wholly applied for religious or charitable purposes. Therefore, the assessee
-
cannot get the benefit of s. 12(1).

2.1. The definition of income under Section 2(24) of the Act as it stood
at the relevant time was an extensive definition. Although it did not expressly
include voluntary contributions received by way of income by a religious or
F charitable trust, as the definition was not exhaustive, it would cover income
in all forms. The fact that by a subsequent amendment of Secticn 2(24), such
income is expressly included does not make any difference to the interpretation
of Section 12.

2.2. Undoubtedly by a subsequent amendment in 1972 to the definition
G of 'income' under Section 2(24), voluntary contributions not being
contributions towards the corpus of such a trust, are included in the definition
of 'Income' of such a religious or charitable trust. Even prior to the amendment
of 1972, any income received by a religious or charitable trust in the form
of a voluntary contribution would be income of the trust unless such
H contribution was expressly made towards the corpus of the trust fund. Section
R.B. SHREERAM RELIGIOUS CHARITABLE TRUST v. C.I.T. 699
12 therefore, prescribed that such income would not be included in the total A
income of the trust if it was applicable solely to charitable or religious
purposes. It would, however, be treated as income from property under Section
11 if it is received from another charitable or religious trust.

2.3. In order to examine the true import of s. 12 (1) it is necessary to
read s. 12 as a whole. Sub-section(l) of Section 12 excludes from the income B
of a trust for charitable or religious purposes, income derived from voluntary
contribution and applicable solely to charitable and religious purposes.
However, under sub-section(2) such income will be deemed to be income
derived from property for the purposes of Section 11 when the voluntary
contribution is made by a charitable or religious institution or trust to C
another religious or charitable institution or trust. Sub-section (2), therefore,
is an exception to sub-section(l). When sub-sections (I) and (2) are read
together, the phrase 'income derived from voluntary contribution' in sub-
section (I) refers to income in the form of voluntary contributions received
by the recipient religious or charitable trust. It has no reference to the
income which may later on be derived from such voluntary contributions as D
and when such contributions are invested, as contended by the assessee.
Also when under Section 12(2) voluntary contribution from one charitable
trust to another charitable trust is treated as income of the recipient trust,
there is no reason why under Section 12(1 ), voluntary contribution from
others to the charitable trust should not be treated as income.
E
Commissioner of Income-Tax, Tamil Nadu-IV v. Shri Billeswara
Charitable Trust (145 ITR 29)-The observations of the High Court that
voluntary contribution itself would not be income but only the income it
fetches when invested, disapproved.
F
Rev. Father Prior, Sacred Heart's Monastry v. Income-Tax Officer,
(Ernakulam) and others, (30 ITR 451 ), held inapplicable.

Sri Dwarkadheesh Charitable Trust v. Income-Tax Officer, Company
Circle, "C" Ward, Kanpur, (98 ITR 557); Commissioner of Income-Tax,
Gujarat-IV v. Bal Utkarsh Society, (119 ITR 137); Commissioner of Income- G
Tax v. Vanchi Trust & another, (127 ITR 227); Conimissioner of Income-Tax
Delhi-!! v. Eternal Science of Man's Society, (128 ITR 456) and Sukhdeo
Charity Estate, Ladnu v. Commissioner of Income-Tax, Rajasthan, Jaipur
(149 ITR 470 Raj.), referred to.

3. The Board Circular No. 20/10/67-IT(AI) dated 1.5.1967 deals with H
700 SUPREME COURT REPORTS [1998] 3 S.C.R.

A exemption of income ofa charitable trust under s.11(1) of the Act. It does
not deal with Section 12. The Circular correctly pointed out that Section
11(1) would be attracted to cases covered under Section 12 (2). Under Section
12 (1 ), as it stood then, income by way of voluntary contribution was totally
exempt provided it was applicable for religious or charitable purposes. The
B Board Circular, therefore, must be read only as interpreting Section 11 (1)
and not as interpreting Section 12 (1) which was not the subject-matter of
the said Circular.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. I 76 I of
1987.
c From the Judgment and Order dated 20.1.87 of the Bombay High
Court in l.T.R. No. 428of1975.

S. Ganesh, Ms. Bina Gupta and Ms. Rakhi Ray for the Appellant.

D B.B. Ahuja, Dhruv Mehta and B.K. Prasad for the Respondent.

The Judgment of the Court was delivered by

E
MRS. SUJATA V. MANOHAR. J. The assessee M/s. R.B. Shreeram
Religious and Charitable Trust, the appellant before us, is a registered public
trust. For the assessment year 1966-67 the assessee disclosed in its income-
-
tax return, a deficit of Rs. 32, 126. The Income-tax Officer, however, added to
the income of the assessee voluntary contributions received by the assessee-
trust amounting to a sum of Rs. 4,55,000 for the relevant year. The Income
Tax Officer held that the voluntary contributions amounting to Rs. 4,55,000
received by the assessee during the relevant year were not applicable solely
F for charitable and religious purpose; and were also not actually applied as
such. In appeal, the Appellate Assistant Commissioner held that out of the
sum of Rs. 4,55,000, a sum of Rs. 4,00,000 could not be treated as income
derived from voluntary coniributions. Both the revenue as well as the assessee
filed appeals from the order of the Appellate Assistant Commissioner before
G the Income-tax Appellate Tribunal. The Tribunal allowed the appeal filed by
the revenue and dismissed the appeal filed by the assessee. ·

At the instance of assessee, a reference was made to the High Court
under Section 256(1) of the Income-tax Act. The questions before the High
Court, as reframed by the High Court in the impugned judgement, were as
H follows:-
R.B. SHREERAM RELIGIOUS CHARITABLE TRUST r. C.l.T. [SUJATA V. MANOHAR, J.] 701

"(!) Whether on the facts and in the circumstances of the case and A
having regard to the relevant provisions of the I. T. Act, the voluntary
contributions aggregating to Rs. 55,000 received by the Assessee was
income liable to be taxed under the I. T. Act, 1961?

(2) Whether on the facts and in the circumstances of the case and
having regard to the relevant provisions of the l.T. Act voluntary B
contributions aggregating to Rs. 4,00,000 received by the assessee
was income liable to be taxed under the l.T. Act, 1961?

(3) Whether on the facts and in the circumstances of the case voluntary
contributions aggregating to Rs. 55,000 and Rs. 4,00,000 were exempt
uls 12(1) of the LT. Act, 1961? C
(4) Whether on the facts and in the circumstances of the case the
Tribunal mis-directed itself in holding that mere discharge of debt
whether existing or new during the year from out of voluntary
contributions of Rs. 55,000 and Rs. 4,00,000 does not render it a solely
charitable purpose admissible to exemption? D
(5) Whether on the facts and circumstances of the case the levy of
interest under Section l 39 and 215 of the l.T. Act, 1961 was justified
in law?"

Question No. 5 is not pressed. The High Court answered the remaining E
questions against the assessee and in favour of the revenue. Hence the
present appeal is filed before us by the assessee-trust.

The amount of Rs. 4,55,000 received as voluntary contributions consisted
of the following :-
F
( 1) A cheque for Rs. 25,000 from Saraf Mor & Co. Ltd., dated 2.11.65.

(2) A cheque for Rs. l 0,000 from MIS. Ferro Alloys Corporation Ltd.,
dated 22.11.65.

(3) A cheque for Rs. W,000 from R.B. Shreeram Durgaprasad & G
Fetehchand Narsinghdas, dated 19.11.66.

These three cheques constituted the sum of Rs. 55,,000 received by the
assessee-trust as voluntary contributions. The assessee also had, during the
material period, a loan account with Mis. R.B. Shreeram Durgaprasad (Mining
Firm). Amounts were lent to the assessee by the said mining firm from time H
702 SUPREME COURT REPORTS (1998] 3 S.C.R.

A to time. At the beginning of the relevant year pertaining to the assessment
year 1966-67, the assessee owed to the said mining firm a sum of Rs. 7.65
lakhs under the said loan account. During the relevant year, Mis. R.B. Shreeram
Durgaprasad & Fetehchand Narsinghdas (Export Firm) gave to the assessee
a total sum of Rs. 4,00,000 which was shown as debited to the account of the
B donor Export Firm. This amount was transferred to the said mining firm. By
the transfer of the said amount to the mining firm, the liability of the assessee-
trust to the mining firm under the said loan account was reduced. The sum
of Rs. 55,000 was also similarly transferred to the mining firm, thus reducing
the liability of the assessee under the said loan account.

C The Income-tax Officer, after examining the balance sheet of the assessee
for the years I 953-54 to I 966-67 and after examining the amounts lent under
the said loan account to the assessee-trust, held that out of the total income
earned by the assessee-trust amounting to approximately Rs. 24,00,000 for
these assessment years, only a sum of Rs. 7, 12,2 I 9 was invested in a
Dharamshala and the balance amounts were invested in other properties,
D advances and investments. The Income-tax officer came to the conclusion
that the transfer of sum of Rs. 4,55,000 to the said mining firm cannot be
considered as application of money for religious or charitable purposes. The
assessee had contended that the amount received by way of 1oans from the
said mining firm had been utilised for the construction of a Dharamshala. The
E Income-tax officer, however, held that the amounts received as loans from the
mining firm did not necessarily go into the construction of a Dharamshala.
The funds of the assessee were allowed to grow side by side with the loans
from the mining firm.

Looking to the totality of circumstances the Income-tax Officer gave a
F finding of fact that the voluntary contributions were not solely applicable to
religious and charitable purposes and were not actually applied as such. This
finding has been ultimately upheld by the Tribunal. The Tribunal has also
come to the conclusion that a close scrutiny of the balance-sheet of the
assessee-firm reveals that the assessee used to transfer a substantial portion
G of its income to an account called Dharamshala and other Buildings Fund;
and out of this Fund the investment in Dharamshala covered only a part of
the amount. In these circumstances the use of voluntary contributions for
discharge of liability under the loan account could not be considered as use
of the money solely for charitable purposes, especially because a part of the
advance which had been repaid was an advance of Rs. 2.51 lakhs by the
H mining firm on which interest was not charged. In this view of the matter the
R.B. SHREERAM RELIGIOUS CHARITABLE TRUST r. C.I.T. [SUJATA V. MANOHAR, J.] 703

,..._ Tribunal held that the voluntary contributions were not applicable entirely for A
religious and charitable purposes and were not, in fact, applied entirely for
religious or charitable purposes, The High Court, in view of this finding of
fact, has come to the conclusion that the said amount of RsA,55,000 has been
rightly considered as income of the assessee not exempt under Section 12(1)
of the income-tax Act as it stood at the relevant time.
B
Section 12 of the Income-tax Act as it stood at the relevant time (Prior
to its amendment in 1972) was as follows :-
-~

Section 12 :

"Income of trusts or institutions from voluntary contributions-(!) Any c
income of a trust for charitable or religious purposes or of a charitable
or religious institution derived form voluntary contributions and
applicable solely to charitable or religious purposes shall not be
included in tbe total income of the trustees or the institution, as the
case may be.
( D
(2) Notwithstanding anything contained in sub-section (I), where any
•-><. such contributions as are referred to in sub-section (I), are made to
a trust or a charitable or religious institutions by a trust or a charitable
or religious institution to which the provisions of Section 11 apply,
such contributions shall, in the hands of the trust or institution E
receiving the contributions, be deemed to be income derived from
property for the purposes of that section and the provisions of that
section shall apply accordingly."

The assessee contends that Section 12(1) refers not to the voluntary
contributions themselves but to any income derived from voluntary F
contributions so received. In other words, according to the assessee, the
exemption under Section 12(1) is applicable to any amount realised as income
from out of investment of any voluntary contribution received by the assessee
during the year. Voluntary contribution itself is not income at all, In support,
the assessee relies upon the definition of 'income' under Section 2(24) as in O
force at the relevant time. Section 2(24) at the relevant time did not expressly
include in the definition of 'income' voluntary contributions received by a
public religious or charitable trust. The definition of 'income' under Section
2(24) was, however, subsequently amended by the Finance Act of 1972 by
including in the definition of'income' under sub-clause (ii)(a) of Section 2(24),
voluntary contributions received by a trust created wholly or partly for H
704 SUPREME COURT REPORTS [1998] 3 S.C.R.

A charitable or religious purpose or by an institution established wholly or ~
partly for such purpose. The amended definition also excluded from the '
definition of 'income' those contributions which were made with a specific
direction that they shall form a part of the corpus of the trust or the institution.
The assessee, therefore, contends that Section 12( 1) prior to the amendment
of 1972 should be interpreted as referring only to any income which accrues
B to the trust by investing voluntary contributions which it has received.

In order to examine whether this interpretation is correct it is necessary
to read Section 12 as a whole. Sub-section (I) of Section 12 excludes from the
income of a trust for charitable or religious purposes, income derived from
c voluntary contribution and applicable solely to charitable and religious
purposes. However, under sub-section (2) such income will be deemed to be
income derived from property for the purposes of Section 11 when the
voluntary contribution is made by a charitable or religious institution or trust
to another religious or charitable institution or trust. Sub-section (2), therefore,
is an exception to sub-section (1). The language of sub-section (2) makes it
D clear that the subject-matter of sub-section (2) as well as sub-section (1) is
the voluntary contribution itself. When such a voluntary contribution is made
to a religious or charitable trust by another similar trust, then such a contribution
in the hands of the receiving trust shall be deemed to be its income derived
from property under Secti9n 11, and the provisions of Section 11 will apply.
E Therefore, when sub-sections (I) and (2) are read together, the phrase 'income
derived from voluntary contribution' in sub-section (I) refers to income in the
form of voluntary contributions received by the recipient religious or charitable
trust. It has no reference to the income which may later on be derived from
such voluntary contributions as and when such contributions are invested,
as contended by the assessee. Also when under Section 12(2) voluntary
F contribution from one charitable trust to another charitable trust is treated as
income of the recipient, there is no reason why under Section 12(1), voluntary
contribution from others to the charitable trust should not be treated as
income.

In this connection our attention has been drawn to a number of decisions
G
of various High Courts dealing with interpretation of Section 12(2). In the case
of Sri Dwarkadheesh Charitable Trust v. Income-Tax Officer, Company Circle,
"C" Ward, Kanpur, 98 !TR 557, the Allahabad High Court while interpreting
Section 12(2) observed that section 12 is confined to voluntary contributions
(
which should be treated as income. The Allahabad High Court was concerned
H with a case where the donor specified that the contribution was towards the
R.B. SHREERAM RELIGIOUS CHARITABLE TRUST 1•. C.l.T. [SUJATA V. MANOHAR, J.] 705

-
==t corpus of the receiving trust's funds. The Allahabad High Court held that A
since the voluntary contribution was made expressly towards the corpus of
the trust, it could not be considered as income. Hence it was not covered by
Section 12(2) which covers only income in the form of voluntary contributions.
The same view has been taken by the Gujarat High Court in Commissioner
of Income-tax, Gujarat-JV v. Bal Utkarsh Society, 119 !TR 137. The Gujarat
High Court, following the Allahabad High Court's decision in Sri
B
Dwarkadheesh Charitable Trust (Supra) has also observed that Section 12(1)
covers voluntary contributions which are received as income. Sub-section (2)
would apply if the voluntary contribution is from one public charitable trust
to another. However, when the voluntary contribution is expressly towards
the corpus of the receiving trust, it cannot be considered as income. A similar c
view has been taken by the Kerala High Court in Commissioner of Income-
Tax v. Vanchi Trust & another, 127 !TR 227, and by tl:e Delhi High Court in
Commissioner of Income-Tax, Delhi-// v. Eternal Science of Man's Society,
128 !TR 456. (See also Sukhdeo Charity Estate, Ladnu v. Commissioner of
Income-tax, Rajasthan, Jaipur, 149 !TR 470 [Raj]).
D
The Madras High Court in the case of Commissioner of Income-Tax,
~.:i..
Tamil Nadu-IV v. Shri Billeswara Charitable Trust, 145 !TR 29 was also
concerned with a case where a charitable trust had received a donation from
another charitable trust towards its corpus. The Madras High Court also held
that this cannot be treated as income of the receiving trust. However, in the E
course of its judgment, the Madras High Court has observed that Section
12(1) refers only to the income which is derived from voluntary contribution
i.e. voluntary contribution, when invested, would fetch income. This income
is covered by the provisions of Section 12(1 ). Therefore, voluntary contribution
itself would not be income. These observations do not seem to be correct
since they do not take into account the language of sub-sections (1) and (2) F
of Section 12 read as a whole. The definition of income under section 2(24)
of the Income-tax Act as it stood at the relevant time was an extensive
definition. Although it did not expressly include voluntary contributions
received by way of income by a religious or charitable trust, as the definition
was not exhaustive, it would cover income in all forms. The fact that by a
G
subsequent amendment of Section 2(24 ), such income is expressly included,
does not make any difference to the interpretation of Section 12.
I
<J
~
Our attention was also drawn to a decision of the Travancore-Cochin
High Court in the case of Rev. Father Prior, Sacred Heart's Monastery v.
Income-Tax Officer, (Ernakulam), and others, 30 !TR 451. That case turns H
706 SUPREME COURT REPORTS [1998] 3 S.C.R.

A upon the provisions of the Cochin Income-tax Act and the language used in
the relevant sections therein. It does not, therefore, throw any light on the
present question.

Hence Section 12(1) refers to any income derived by a trust for religious
or charitable purposes in the form of voluntary contributions. If such voluntary
B contributions are applicable solely to charitable or religious purposes, they
shall not be included in the total income of the trust. Had such voluntary
contribution been considered as not income at all, the need for Section 12(1)
would not have arisen.

C Undoubtedly by a subsequent amendment in 1972 to the definition of
'income' under Section 2(24), voluntary contributions not being contributions
towards the corpus of such a trust, are included in the definition of 'income'
of such a religious or charitable trust. Section 12 as amended in 1972 also
expressly provides that any voluntary contribution received by a trust for
religious or charitable purposes, not being contribution towards the corpus
D of the trust, shall, for the purpose of Section 11, be deemed to be income
derived from property held by the trust wholly for charitable or religious
purposes. This, however, does not necessarily imply that prior to the
amendment of 1972, a voluntary contribution which was not towards the
corpus of the receiving trust, was not income of the receiving trust. It was.
E Even prior to the amendment of 1972, any income received by a religious or
charitable trust in the form of a voluntary contribution would be income of
the trust unless such contribution was expressly made towards the corpus of
the trust's fund. Section 12, therefore, prescribed that such income would not
be included in the total income of the trust if it was applicable solely to
charitable or religious purposes. It would, however, be treated as income from
F property under Section 11 if it is received from another charitable or religious
trust.

The assessee has relied upon a departmental circular No. 20/10/67-
IT(AI) dated 1.5.1967 which deals with exemption of income of a charitable
G trust under Section I !(I) of the Income-tax Act, 1961. Departmental circular,
inter alia, states that provisions of Section I !(I) will not be applicable to
capital receipts. It states, "The donations received by charitable trust from the
members of the public, being capital receipts, cannot be regarded as income
of the trust. Accordingly, the donations received by the trust should be .
.
b

excluded from the income of the trust for the purpose of calculating the
H accumulation limit of 25 per cent except in cases covered by Section 12(2) of
R.B. SHREERAM RELIGIOUS CHARITABLE TRUST l'. C.l.T. [SUJATA V. MANOHAR, J.] 707

_,
, the Act''. The Board circular was not dealing with Section 12. It was dealing A
with the application of Section 11( 1). The Circular correctly pointed out that
Section 11(1) would be attracted to cases covered under Section 12(2). Under
Section 12(1), as it stood then, income by way of voluntary contribution was
totally exempt provided it was applicable for religious or charitable purposes.
The Board Circular, therefore, must be read only as interpreting Section 11(1) B
and not as interpreting Section 12(1) which was not the subject-matter of the
Board Circular.

To get the benefit of Section 12( 1), the assessee was required to show
that the voluntary contribution which it had received was applicable solely
for religious or charitable purposes. The Tribunal, as well as the High Court, C
relying upon the Tribunal, have held that the voluntary contribution amounting
to Rs.4,55,000 was not applied and was not wholly applicable for religious or
charitable purposes. In this view of the matter, tJie assessee, on the facts of
the present case, cannot get the benefit of Section 12(1).

The appeal is, therefore, dismissed. There will, however, be no order as D
to costs.

RP. Appeal dismissed.