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Income Tax Appellate Tribunal, CUTTACK BENCH CUTTACK
Before: SHRI C.M. GARG, JM & SHRI L.P. SAHU, AM
Per L.P.Sahu, AM: This is an appeal filed by the assessee against the order of CIT(A)-3, Bhubaneswar, dated 26.05.2016 for assessment year 2010- 2011. 2. The assessee has filed concised grounds of appeal, which read as under :-
That, the addition of Rs.60,000/- on account of donation, by the Id.AO as well as confirmed by the Id CIT (A) treating the same, as anonymous donation u/s 115BBC of the IT Act is arbitrary .excessive and bad in law.
That, the Id. AO as well as CIT(A), without properly appreciating the facts of the case and verifying the books of accounts, has wrongly added towards indirect income Rs. 14,46,915/- treating the same, as income from unexplained source in the nature
2 anonymous receipts, is also not tenable in the eye of law and liable to be deleted.
That the Id.AO while passing the order has added on account of depreciation, to the tune of Rs.2,68,275/ and confirmed by the Id CIT (A),which is erred in law ,as the same has not been claimed by the Appellant, while computing the taxable income
That the charging of interest U/S 234 and 244A (3) of the IT Act by the Id. AO as well as confirmed by the Id. CIT (A) is also arbitrary, excessive and bad in law.
That the assessment order as well as 1st appeal order passed by the Id. AO and CIT(A) respectively is otherwise arbitrary ,excessive and bad in law.
That, the petitioner craves leave of this Hon'ble Court to raise further / additional grounds, if any at the time of hearing.
Brief facts of the case are that the assessee is a trust registered
u/s.12A of I.T.Act, 1961 and filed its return of income for A.Y.2010-
2011 on 30.09.2010 declaring total income at Rs.Nil, which was selected for scrutiny. Subsequently, the AO issued statutory notices
u/s.143(2) & 142(1) of the Act. Accordingly, the AO completed the assessment making addition of Rs.60,000/- u/s.115BC of the Act,
Rs.14,46,915/- on account of unexplained source in the nature of anonymous receipts and Rs.2,63,821/- on account of depreciation.
Feeling aggrieved from the assessment order, the assessee
preferred appeal before the CIT(A) and the CIT(A) confirmed the additions made by the AO and dismissed the appeal of the assessee.
Further feeling aggrieved from the order of CIT(A), the assessee
is in further appeal before the Income Tax Appellate Tribunal.
3
We have considered the rival submissions of both the parties and perused the entire material available on record. Let us decide the appeal of the assessee after discussing the issue in groundwise and decision thereon in the following paragraphs.
Ground No.1 : Addition on account of donation of Rs.60,000/-
Ld. AR before us submitted that the assessee received
Rs.60,000/- towards donation and the assessee filed a list sharing the name of the donors before the AO during the assessment proceedings.
It was also submitted by the ld. AR that the receipts which are issued to individual donors by the project coordinators is maintained at the field
level and are available for verification. He further submitted that the donation has been declared as income and applied for charitable
purpose as per provisions of Section 11, 12 & 13 of the Act and,
therefore, it cannot be added again. Therefore, ld. AR submitted that the addition made on account of donation deserves to be deleted.
On the other hand, ld. DR relied on the orders of authorities below.
After considering the above submissions of the parties and perusing the entire material on record, we find that the addition made
by the AO on account of donation holding that the assessee could not produce the receipt of the donors, which has been confirmed by the CIT(A) in appellate proceedings. Before us, ld. AR drew our attention to the provisions of Section 115BC(1)(i)(B) of the Act and submitted that 4 as per the said provision, maximum upto Rs.1 lakh is allowed for anonymous donations. Therefore, the donation received by the assessee is within the prescribed limit provided in the above section.
We have also gone through the provisions of Section 115BBC of the Act
and found that anonymous donations to be taxed in case the donations
received in excess of the higher of five per cent of the total donations
received by the assessee or one lakh rupees. On careful perusal of the same, we find that the case of the assessee falls within the ambit of provisions of Section 115BBC(1)(i)(B) of the Act as the assessee has received Rs.60,000/- as donations which has not been disputed by both
the authorities below, even by the ld. DR before us. Accordingly, we
direct the AO to delete the addition of Rs.60,000/- made on account of donations received by the assessee. Ground No.1 of the assessee is allowed.
Ground No.2: Addition of Rs.14,46,915/- towards indirect income.
Ld. AR before us drawing our attention to the documents filed in the paper book to substantiate his claim, submitted that the assessee
has acquired agricultural lands and it cultivates paddy and other
seasonal goods and sells it and generates income. As required by the AO during the course of assessment proceedings, the assessee
produced general receipt book. With regard to tractor income, the ld.
AR drew our attention to the RC Book of the tractor and submitted that 5 the tractor was used only for agricultural purpose on the land acquired
by the trust. In respect of institutional charges, the ld. AR drew our
attention to pages 62 to 70 of the paper book, which are copies of agreement with Panchayat Raj Department, Government of Odisha for collaborating partner organization for undertaking filed level training
of PRIs in 2012-2013 with Administrative and Financial Guidelines and submitted that clauses 14 & 15 of the above guidelines contained that 15% of the expenditure is to be retained by the CPO and SIRD will
retain 5% as institutional charge on the expenditure incurred by the CPO, which is to be utilized for monitoring expenses and training
related MIS (Web based monitoring and others). Further in respect of training hall rent & accommodation of Rs.1,96,640/-, the ld. AR drew
our attention to pages 136 & 137 of the paper book and submitted that the assessee has produced the name and address of the party from whom the training hall rent & accommodation charges were received.
When the assessee has discharged his burden to prove the income
received from the different heads as stated above, therefore, the addition made on account of indirect income of Rs.14,46,915/-
deserves to be deleted.
On the other hand, ld. DR relied on the orders of authorities
below. Before us, ld. DR did not dispute the documents filed by the assessee in the form of paper book, however, he vehemently submitted
6 that those documents required verification on the part of the AO by restoring the issue to his file.
After considering the submissions of both the parties and perusing the entire material available on record, we find that though
the assessee has substantiated his claim by filing the required
documents before us in the form of paper book, however, on the request of the ld. DR, without going much into the merits of the issue,
we direct the assessee to produce all those documents before the AO
and the AO is also directed to consider the claim of the assessee after
due verification and examination of the documents. Accordingly, we
allow the ground No.2 of the appeal of the assessee for statistical
purposes.
Ground No.3:Addition of Rs.2,63,821/- on account of depreciation.
Ld. AR before us submitted that the assessee has computed the taxable income by including all receipts such as grants, donations, bank
interest, income generation, training hall rent, institutional charges,
tractor income etc. as gross receipts/income from which all revenue
and capital expenditure made to charitable purposes have been deducted towards application as per the provisions of Section 11 of the Act, 1961 without deducting the depreciation to the tune of Rs.2,68,275/-, therefore, the ld. AR submitted that depreciation claimed
u/s.32 of the Act by the assessee deserves to be allowed.
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Ld. DR, on the other hand, relied on the orders of authorities
below.
After considering the submissions of both the parties and perusing the entire material available on record, we find that the AO
denied the claim of the assessee for depreciation u/s.32 of the Act on the basis that the assessee has claimed expenditure on capital assets as application of funds. Ld. AR during the course of arguments relied on the decision of Hon’ble Delhi High Court in the case of DIT Vs.
Indraprastha Cancer Society, Income Tax Appeal Nos.240, 348, 406,
463 and 464/2014, order dated 18.11.2014 and drew our attention to para 11 and submitted that depreciation claimed by the assessee is allowable as per the above judgment of the Hon’ble Delhi High Court.
We have also gone through the order of Hon’ble Delhi High Court in the case of Indraprastha Cancer Society (supra) and found that the Hon’ble
High Court has considered the issue of claim of depreciation by the assessee and dismissed the appeal of the Revenue holding that the depreciation claimed by the assessee is allowable. The relevant
observations of the Hon’ble High Court at para 11 read as under :-
“11. By Finance (No. 2) Act of 2014, sub-section (6) to Section 11 stands inserted with effect from 1st April, 2015 to the effect that where any income is required to be applied, accumulated or set apart for application, then for such purposes the income shall be determined without any deduction or allowance by way of depreciation or otherwise in respect of an asset, the acquisition of which has been 8 claimed as application of income under this Section in the same or any other previous year. The legal position, therefore, would undergo a change in terms of Section 11(6), which has been inserted and applicable with effect from 1st April, 2015 and not to the assessment years in question. The newly enacted sub- section relates to application of income.”
Reliance can also be placed on the decision of Delhi Bench of the Tribunal in the case of M/s Krishna Charitable Society Vs. Addl. CIT, in ITA No.3302/Del/2015, order dated 30.05.2018 for Assessment Year
2010-2011, wherein the Tribunal deleted the addition made on account of depreciation claimed by the assessee on the assets on which deduction is application of income has already been granted.
Respectfully, following the above decision of Hon’ble Delhi High Court,
we direct the AO to delete the addition made on account of claim of depreciation of the assessee. Ground No.3 of the appeal of the assessee
is allowed.
In the result, appeal of the assessee with regard to ground Nos.1
& 3 is allowed and ground No.2 is allowed for statistical purposes.
Order pronounced in the open court on 16/01/2020. (C.M.GARG) (L.P.SAHU) न्यानयक सदस्य / JUDICIAL MEMBER ऱेखा सदस्य / ACCOUNTANT MEMBER कटक Cuttack; ददनांक Dated 16/01/2020 Prakash Kumar Mishra, Sr.P.S.
9 आदेश की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to : अऩीलाथी / The Appellant-
Society for the Welfare of Weaker Sections, Near DFO Office, Ramsagar Road, Parlakhemundi-761200, Odisha प्रत्यथी / The Respondent-
DCIT, Berhampur Circle, Berhampur आयकि आयुक्त(अऩील) / The CIT(A), 3. आयकि आयुक्त / CIT 4. ववभागीय प्रनतननधध, आयकि अऩीलीय अधधकिण, कटक / DR, ITAT,
Cuttack गार्ा पाईल / Guard file. 6. सत्यावऩत प्रनत //// आदेशािुसार/ BY ORDER,
(Senior Private Secretary) ITAT Cuttack Bench, Cuttack