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Income Tax Appellate Tribunal, BANGALORE BENCHES “C”, BANGALORE
Before: Shri Chandra Poojari, AM & Shri George George K, JM
O R D E R Per George George K, JM : These appeals at the instance of the assessee are directed against three separate orders of the CIT(A), all dated 30.11.2017. The relevant assessment years are 2009-2010, 2010-2011 and 2011-2012.
Common issues are raised in these appeals, hence, they were heard together and are being disposed of by this consolidated order. Identical grounds are raised in all the appeals, except for variance in figures. The grounds raised for assessment year 2009-2010 read as follows:-
“1. The orders of the learned CIT[A] in so far as it sustains additions impugned in this appeal is totally is opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case. 2.1 The impugned order of assessment is bad in law and void- ab-initio as assessment was concluded much opposed to "he -1549/Bang/2018. M/s.Mysore City Police Welfare Trust. principles of natural justice as additions were made behind the back of the assessee and thus, the assessment order requires to be annulled. 2.2 Without prejudice to the above, the Hon'ble CIT[A] grossly erred in upholding the Orders of learned AO who by Order treated the capital receipt received in the form of Donation to Building fund as revenue receipt to the extent of Rs.52,39,790/- and thus impugned additions requires total deletion as AO has no sanction under law to exceed his jurisdiction. 2.3 the Hon'ble CIT[A] grossly failed to appreciate that the provisions of section 11(1)(d) of the Act in the appellant case is squarely applicable and further there is no violation of said section by the appellant and the additions thus made by the learned AO requires deletion. 2.4 The Hon'ble CIT[A] ought not to have upheld the Order of the learned AO who while concluding the assessment change the character of the receipt from the capital to revenue which is not permissible under law thus additions made liable to be deleted.
3. Without prejudice to above, the Hon'ble CIT[A] further erred in not appreciating that the Proviso to the provisions of Section 2(15) of the Income-tax Act not at all applicable to the nature of activity of the appellant and therefore addition thus made liable for deletion.
Without prejudice to above, the Hon'ble CIT[A] failed to substantiate whether the additions were made on account of change in character of receipt from capital to revenue or on account of violation of Proviso to Section 2(15) and thus Order of assessment suffers from ambiguity and addition made thereby liable for deletion. .
5. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice be rendered.”
Brief facts of the case for assessment year 2009-2010 are as follows: The assessee is a trust, which is recognized u/s 12AA of the I.T.Act. The main object of the trust is construction of community hall for the welfare of the members of the Police Department for Mysore City and of general public at large, -1549/Bang/2018. M/s.Mysore City Police Welfare Trust. without any discrimination of cast, creed or religion. For the assessment year 2009-2010, the return of income was filed on 09.09.2009 declaring a loss of Rs.6,03,802. The assessment was reopened by issuance of notice u/s 148 of the Act and reassessment was completed vide order dated 31.03.2016 u/s 143(3) r.w.s. 147 of the I.T.Act. In the impugned reassessment, the AO held that the activities of letting out of halls has been accounted in the guise of donation and the AO after making local enquiries, treated the entire donation as a revenue receipt (the assesee had treated the donation towards building fund in total amounting to Rs.52,39,790 as corpus donation). Further, it was held by the AO that the assessee was hit by the proviso to section 2(15) of the I.T.Act.
4. Aggrieved by the order of the Assessing Officer by treating the donation as a revenue receipt, the assessee filed appeal before the first appellate authority. The CIT(A) rejected the appeal of the assessee. The CIT(A) held that the assessee was unable to establish with credible and verifiable documentary evidences that the amounts collected was used for charitable purposes during the previous year relevant to the assessment year 2009-2010.
Aggrieved, the assessee has filed this appeal before the ITAT. The assessee has filed a paper book enclosing therein details of the hall rent, copy of the details for corpus fund, copy of the building donations, sample copies of cash receipts, the case laws relied on, the written submissions filed
The learned Departmental Representative supported the assessment order and the CIT(A)’s order.
We have heard rival submissions and perused the material on record. The corpus donations for building fund is a capital receipt and cannot be brought to tax. The Hon’ble jurisdictional High Court in the case of Director of Income-Tax (Exemption) & Anr. v. Sri Ramakrishna Seva Ashrama reported in (2013) 357 ITR 731 (Karn.) had held that in view of the language employed in clause (d) of sub-section (1) of section 11, requirement is that voluntary contribution have to be made with a specific direction. However, it was held by the Hon’ble Court that the law does not require the direction should be in writing.
7.1 The Mumbai Tribunal in the case of Bank of India Retired Employees Medical Assistance Trust v. ITO reported in (2018) 172 ITD 78 had held that the corpus donation received by the assessee-trust has to be applied for specific purpose for which respective fund was created and would be treated as a capital receipt. Therefore, the same cannot be brought to tax despite the fact in that case the assessee-trust was not registered u/s 12A of the I.T.Act.
7.2 In the instant case, the assessee has furnished the details of the corpus fund, details of funds for donation for annexe building, sample cash receipts for receipt of -1549/Bang/2018. M/s.Mysore City Police Welfare Trust. donations, copies of hall rent etc. The A.O. had treated the donations received for building fund as a revenue receipt by holding that the rent have been accounted in the guise of donation. The A.O. has not disclosed any documents to show that the hall rent have been accounted for in the guise of donation and how he arrived that there is direct nexus between the hall rent and the donations. The donors of the building fund are entirely different from booking of hall rent. The AO summarily dismissed the books of account, which depict all the donation entries. The AO after making local enquiries, came to an assumed conclusion that such donations were in the nature of revenue receipts. On confronted for the alleged local enquiry details to be examined by the assessee, the AO failed to furnish such local enquiry details nor during the appellate proceedings, the details were parted with the assessee. Therefore, in the context of the above, the assessee was deprived of all principles of natural justice and additions were made behind the back of the assessee. Further, the statement of AO in the assessment order that AR has admitted that one has to make compulsory donation while taking hall on hire was denied by the AR and the same is made clear in the written submission filed before the CIT(A). Therefore, in the interest of justice and equity, we are of the view that the matter needs to be examined afresh by the AO. The AO is directed to come out with the details how he has come to the conclusion that the hall rents have been accounted in the guise of donation. The assessee is directed to cooperate with the AO and furnish the necessary
In the result, the appeal filed by the assessee is allowed for statistical purposes. & 1549/Bang/2018 (A.Ys 2010-2011 & 2011-2012) 9. Both the parties have agreed that the issue raised in these appeals are identical to the issue adjudicated by us for assessment year 2009-2010. Therefore, for our reasoning mentioned in para 7 to 7.2 (supra), these appeals are also remitted to the files of the A.O. for de novo consideration. The AO shall follow the directions of the Tribunal in the above said order. It is ordered accordingly.