ORDER

G.S. Pannu, AM. :

This appeal by the assessee is directed against the order of the CIT(A) dt. 1st Oct., 2009 pertaining to the asst. yr. 2006-07. The substantive dispute in this appeal relates to an addition of Rs. 40,55,480 made by the AO.

2. The brief background and the facts leading upto the present dispute can be summarized as follows. The, appellant is a society registered under the Societies Registration Act, 1860 and runs a temple at Kullu. The institution, Shree Mahadevi Tirath Sharda Ma Seva Sangh (Vaishno Mata Mandir) is run by the appellant society. The society is registered under s. 12AA of the Act with the CIT, Shimla ( in short 'the CIT' ) w.e.f. 28th Feb., 2002. For the year under consideration, the assessee filed a return of income on 26th March, 2007 declaring an income of Rs. 64,505, which was claimed as exempt being a charitable institution. The return of income filed was subject to a scrutiny assessment under s. 143(3) of the Act whereby the total income has been assessed at Rs. 41,19,985 by making an addition of Rs. 40,55,480, which is the issue in appeal before us. The said amount represented donations received by the assessee with a specific direction from the donors that the same be utilized for construction of the building. Accordingly, the said amount was not treated as voluntary contributions and not credited in the income and expenditure account. On the contrary, the amount was shown in the balance sheet under the head 'Donation for building construction with specified direction from individuals'. The AO, however held that the said amount was liable to be treated as a voluntary donation and not as a receipt towards corpus and therefore included the same in the total income liable to tax. The reason advanced was that the assessee did not possess any evidence to show that the donation credited under the 'building fund' has been donated by the donors with a specific direction to utilize the same for building construction only. Apart from the aforesaid reason, the AO has noted in the assessment order that the CIT has granted registration to the assessee under s. 12AA of the IT Act, 1961 (in short 'the Act') w.e.f. 1st April, 2007 and as such the benefits under ss. 11 and 12 of the Act were available to the assessee from 1st April, 2007 onwards and not for the year under consideration. For the aforesaid twin reasons, addition of Rs. 40,55,480 was made to the returned income.

3. In appeal before the CIT(A), the assessee submitted that consequent to an application made by the assessee, the CIT reviewed the registration granted w.e.f. 1st April, 2007 vide order dt. 29th Jan., 2009 and the assessee was granted registration under s. 12AA of the Act w.e.f. 28th Feb., 2002. Thus, the assessee was eligible for benefits under ss. 11 and 12 of the Act for the year under consideration also. Secondly, it was reiterated that the donations of Rs. 40,55,480 were received from various donors with a specific direction to be utilized for construction of building and therefore, the said sum was excludible from voluntary contributions, in terms of s. 12(1) of the Act. In support, it was submitted by the assessee that the donations were collected in a box kept in the temple premises which was earmarked for collection of donations meant for construction of building only. The CIT(A) has not upheld the stand of the assessee on the ground that the assessee failed to provide the requisite details or any documentary evidence to prove that the donations in question were made with specific directions for 'construction of building'. Accordingly, the appeal of the assessee was dismissed.

4. Before us, learned counsel for the assessee vehemently pointed out that the CIT(A) has failed to appreciate the facts and circumstances of the case in its proper perspective. The learned counsel pointed out that the assessee has collected donations earmarked for being spent on construction of building in the same manner as in the past years. It was pointed out that the impugned amount has been credited to the 'building fund" in the balance sheet which also included an opening balance and on the asset side, the assessee has shown the expenditure on construction of building. It was pointed out that the impugned sum has been spent exclusively towards the construction of building and there is no dispute on this aspect. The learned counsel pointed out that in the Mandir premises, the donation boxes are kept with different objectives and demonstrated the same with the help of photographs. Donation box amount for 'construction of building' was identified separately. Similarly, separate boxes were kept for collection of donations meant for Langar and general purposes. In this regard, our attention has been invited to a copy of resolution of the society dt. 11th March, 2002 whereby the different boxes were decided to be kept in the Mandir premises for enabling the devotees to make donations according to their direction. This included keeping of a box for collection of donations, which were to be used for undertaking 'construction of building'. Any devotee/donor desirous of making a donation 'towards construction of building', would put the money in the said box. It was pointed out that certificates from the Councilor, Nagar Parishad, Kullu, an ex-President, Zila Parishad, Kullu and the local Gram Panchayat are enclosed at pp. 16, 17 and 18 of the paper book. It is pointed out that the said certificates testify the system evolved by the assessee since earlier years for collection of donations towards construction of building. It is further pointed out that as per the resolution of the society dt. 11th March, 2002, at specified intervals, the boxes are opened and the amount collected is put into the respective accounts. It is pointed out that the insistence of the AO to produce the specific names of the donors is not justified in view of the nature of collection undertaken by the assessee, which is supported by the past history. It was pointed out that after the money is collected from the respective boxes, it is duly entered in either the 'building fund donation register' or the 'normal donation account' and thereafter entered in the books of account accordingly. The learned counsel pointed out that the evidence in support of the system evolved by the assessee has not been commented adversely by either the AO or even by the CIT(A) and therefore, the plea of the assessee that the impugned amount has been collected as donation with specific directions for spending on building construction, cannot be rejected. The learned counsel pointed out that the voluntary contributions made by the donors with a specific purpose are exempt and cannot be deemed as income and that the assessee had complied with all the conditions under s. 11/12 of the Act. In support, the learned counsel has relied on following decisions :

(i) St. Ann's Home For Aged v. ITO [1982] 13 TTJ (Bang.) 185;

(ii) ITO v. Maliram Pooranmal Charitable Trust [1981] 12 TTJ (Jp) 245;

(ii) Shri Vasu Pujiya Jain Derasar Pedhi v. ITO [1991] 39 TTJ (Jp) 337 ;

(iv) Agnel Charities (Agnel Sewa Sang) v. ITO [1988] 31 TTJ (Delhi) 160 in support of his submissions.

5. On the other hand, the learned Departmental Representative has pointed out that during the course of assessment proceedings, the assessee was asked to furnish the complete names and addresses of the donors who have made the impugned donations with specific directions i.e. for 'building construction'. It was pointed out that the assessee vide letter dt. 3rd Dec, 2008 addressed to the AO pointed out that the said information was not available and therefore, the AO has not accepted the plea of the assessee that the impugned donations have been received with specific directions to utilize the same for construction of building only. As a result thereof, the impugned amount has been rightly held to be assessable as a voluntay/general donation.

6. We have considered the rival submissions carefully. Before we proceed to deal with the aspect as to whether or not the impugned donations have been received by the assessee with specific directions, it would be appropriate to touch upon the first objection of the AO that the assessee was not entitled to the benefits of ss. 11 and 12 of the Act as the registration under s. 12AA of the Act was granted by the CIT w.e.f. 1st April, 2007. In this connection, we find that initially the assessee was granted registration w.e.f. 1st April, 2007 but consequent to an application made by the assessee under s. 154 of the Act dt. 2.1st Jan., 2009, the CIT passed an order on 29th Jan., 2009 whereby the registration under s. 12AA of the Act was granted w.e.f. 28th Feb., 2002. The aforesaid factual matrix is uncontroverted by the Revenue, In fact, we find that said position was explained by the assessee before the CIT(A), as noted by her in para 3.2 of the impugned order. However, inexplicably in the operative portion of her order in para 4, the CIT(A) notes that the assessee has been granted registration under s. 12AA of the Act w.e.f. 1st April, 2007. Be that as it may, having regard to the uncontroverted factual matrix, the appellant assessee is eligible to claim the benefits under s. 11/12 of the Act for the year under consideration, having regard to the order of the CIT dt. 29th Jan., 2009 granting registration under s. 12AA of the Act w.e.f. 28th Feb., 2002, of course subject to the fulfillment of the requisite conditions.

7. Now, we may consider the plea of the assessee regarding the donations of Rs. 40,55,480. As per the assessee, it is running and managing the temple, Shree Mahadevi Tirath Sharda Ma Seva Sangh (Vaishno Mata Mandir) at Kullu in Himachal Pradesh. In the course of its activities, the assessee is undertaking construction of building in temple premises. In terms of a resolution of society dt. 11th March, 2002 placed in the paper book at p. 14, the assessee society decided to raise funds for carrying out the construction of building. The society decided that a public notice board be put up in temple premises stating that whatever donation is put in the box, it shall be utilized for construction of building only. Similarly, donations collected in the second box were to be utilized for Langar purposes and likewise donations collected in the third box were to be utilized for other activities of the society. Accordingly, the appellant claims that respective boxes have been kept in the temple premises. The appellant has put on record photographs showing the notice board and the identification of the boxes meant for collection of different donations. The claim of the assessee is that the impugned amount of Rs. 40,55,480 has been collected from a box kept in the temple for the purpose of building construction. The daily receipts are counted in the evening from the 'building donation box and the amounts so accounted for in the books of account. The assessee has also pointed out that the said sum is credited in the 'building fund' in the balance sheet and the amounts are utilized for construction of the building which are supported by entries in the books of account. In this connection, we have perused the audited balance sheet and income and expenditure account for the year under consideration which are placed in the paper book. In support of this practice, testimony of the local Gram Panchayat etc. has been placed on record, which remains uncontroverted. In these circumstances, the appellant claimed that the impugned donations have been made by the donors with specific directions that they shall be spent on building construction and accordingly such amount of Rs. 40,55,480 is exempt and cannot be deemed as income.

8. We have carefully considered the pleas set up by the assessee. It is an undisputed position that the assessee is managing a temple and there is also no dispute that the institution is being maintained mainly by way of public donations. During the year under consideration, the appellant institution received donations of Rs. 19,53,094, bank interest—Rs. 4,17,366 and proceeds from sale of books and cassettes—Rs. 1,75,530, totalling to Rs. 25,45,990, which have been credited in the income and expenditure account. Apart from the above, the assessee has received donations of Rs. 40,55,480, it has claimed that the same were made with specific direction that they shall be spent on construction of building. The dispute revolves around the assertion of the assessee that such donations have been received with specific directions. Before we adjudicate this, it would be appropriate to refer to s. 12(1) of the Act, which reads as under :

"12. Income of trusts or institutions from contributions.—(1) Any voluntary contributions received by a trust created wholly for charitable or religious purposes or by an institution established wholly for such purposes (not being contributions made with a specific direction that they shall form part of the corpus of the trust or institution) shall for the purposes of s. 11 be deemed to be income derived from property held under trust wholly for charitable or religious purposes and the provisions of that section and s. 13 shall apply accordingly."

As per s. 12(1), any voluntary contributions made with a specific direction that they shall form part of the corpus of the trust or institution are not to be treated as income for the purposes of s. 11 of the Act. Now the plea is that the impugned amount constitutes contributions with a specific direction that they form part of the corpus and therefore, are not to be treated as income for the purposes of s. 11 of the Act. Whether or not the manner in which the assessee has collected the impugned donations can be said to be signifying a direction from the donor that the funds are to be utilized for the 'construction of building' is the moot question. Quite clearly, the requirement contained in s. 12(1) is "contributions made with a specific direction that they shall form part of the corpus" is relevant. It is clear that the manner in which the specific direction is to be made has not been laid down in the Act or in the IT Rules, 1962. In other words, there is no method or mode prescribed by law of giving such directions. Therefore, it would be in the fitness of things to deduce that the same are to be gathered from the facts and circumstances of each case.

9. In the case of Shri Vasupujiya Jain Derasar Pedhi (supra), a dispute had arisen as to whether the donations received can be said to be received with specific directions that they shall form part of the corpus of the trust. It was observed that the counterfoil receipts issued by the trust were under the head 'Mandir Nirman' and the same were held to be showing that the donations were treatable as corpus donations. Similarly, in the case of Agnel Charities (supra ), the assessee had staged a drama for raising funds for construction of school building. The circular letter issued relating to the drama mentioned that the assessee was inviting subscriptions and donations for school building. Such donations received were held to be donation towards corpus of the trust and held entitled to exemption. From the aforesaid decisions of the Tribunal, it can be deduced that in the absence of any prescribed mode of giving directions, the same are -to be evaluated from the facts and circumstances of the case. In the present case, the resolution of the society, dt. 11th March, 2002 clearly shows that a donation box was kept in the temple premises with the appeal that the amounts collected would be spent for building construction. The devotees visiting the temple or other donors were depositing money in the donation box which was to be utilized for construction of building only. The manner in which such donations have been collected by the assessee is not disputed by the AO. The only dispute is that the assessee could not provide the names and addresses of individual donors who have contributed towards 'building construction fund'. Quite clearly, the donations are being collected from the devotees at large and the insistence of the AO of production of individual names and addresses is not justified. Moreover, the bona fides of such practice being carried out by the assessee, either in the past or during the year under consideration is not doubted. Therefore, in our considered opinion, having regard to facts and circumstances of the case, the donations to the extent of Rs. 40,55,480 collected by the assessee can be considered as carrying specific directions for being used for construction of building. Ostensibly, the devotees putting money in the donation box did so in the face of the appeal by the society that the amounts collected would be used for construction of building. In such circumstances, the plea of the assessee that it should be taken as donation towards the corpus is reasonable.

10. Further, we find that the aspect of the contribution towards building forming part of the corpus of the assessee society is not disputed. As a result thereof, we find it expedient to hold that the impugned amount contributed voluntarily by the donors can be understood as carrying a specific direction that they be utilized for construction of building and therefore, the same is liable to be treated as forming part of the corpus of the appellant society and resultantly, such amount would not constitute income for the purposes of s. 11/12 of the Act.

11. In the result, the order of the CIT(A) is set aside and the AO is directed to delete the addition of Rs. 40,55,480.

12. Resultantly, the appeal of the assessee is allowed.