HERALDS OF GOOD NEWS,THANGELLAMUDI vs. INCOME TAX OFFICER (EXEMPTIONS), VIJAYAWADA
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Income Tax Appellate Tribunal, VISAKHAPATNAM “SMC” BENCH, VISAKHAPATNAM
Before: SHRI DUVVURU RL REDDY, HONBLE & SHRI S BALAKRISHNAN, HONBLE
आदेश /O R D E R PER SHRI S BALAKRISHNAN, ACCOUNTANT MEMBER: 1. This appeal is filed by the assessee against order of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal centre, Delhi [hereinafter in short “Ld.CIT(A)”] vide DIN & Order No. ITBA/NFAC/S/250/2024-25/1066458939(1) dated 05.07.2024 for the
ITA No. 346/VIZ/2024 Heralds of Good News A.Y.2013-14 arising out of order passed under section 143(3) of Income Tax Act, 1961 (in short ‘Act’) dated 31.03.2016.
Brief facts of the case are, assessee a Trust filed its return of income for the A.Y. 2013-14 on 27.10.2013 declaring total income at Nil. After processing the return summarily under section 143(1) of the Act, the case was subsequently selected for scrutiny under CASS and statutory notices under section 143(2) and 142(1) of the Act were issued and served on the assessee. In response to the notices, assessee’s representative appeared and furnished the details called for. It was also submitted that the assessee is having registration under section 12A of the Act. It was observed that the assessee has purchased two properties for a consideration of Rs.77,000/- and Rs. 1,92,000/- as per the Registered sale deeds. However, the assessee claimed to have paid an amount of Rs.29,80,000/- over and above the market value agreed upon and declared to the registration authorities. Ld. Assessing Officer (in short “Ld. AO") in the absence of any justification of the amounts paid over and above the registration value amount of Rs.29,80,000/- issued a show-cause notice to the assessee to show-cause why the amount should not be treated as not spent towards charitable purposes. Further, he also observed that the trust has incurred foreign travel expenditure towards Air Tickets Amounting to Rs.5,11,910/-and show-caused the assessee to explain why it should not be excluded from the exemption under section 11 of the Act as having not spent towards charitable purpose.
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ITA No. 346/VIZ/2024 Heralds of Good News 3. In response, Assessee furnished confirmations from the seller of the properties towards receipt of sale consideration over and above the registered value. The Ld. AO dis-agreed with the veracity of the confirmation letters submitted by the assessee and the claim of Rs.29,80,000/- claimed as exemption under section 11 of the Act and added it to the total income of the assessee. Further, Ld. AO also rejected the submissions with respect to expenditure towards foreign travel and considered it there is no justifiable reason and therefore added a sum of Rs.5,11,910/- by rejecting the claim of exemption under section 11 of the Act.
On being aggrieved with the above additions, the assessee filed appeal before Ld. CIT(A). Assessee made similar submissions before Ld. CIT(A) as submitted before Ld. AO. The Ld. CIT(A) rejected the contentions of the assessee-representative and dismissed the appeal of the assessee.
On being aggrieved by the order of the Ld. CIT(A), assessee is in appeal before us by raising following grounds in its appeal: -
“1. That on the facts and circumstances of the case and in law, the orders passed u/s 143(3) of the Income Tax Act, 1961, dt.31.03.2016, as upheld by the Ld. CIT(A), NFAC vide orders passed u/s 250 of the Income Tax Act, dt. 05.07.2024, are contrary to the facts of the case and the provisions of law, and therefore, deserve to be set aside. 2. The Ld. CIT(A) ought not to have upheld the addition of Rs. 29.80lakhs as the said amount being part of the purchase consideration paid by way of demand drafts over and above the amount mentioned in the registered document i.e., Rs.2.69 lacs, especially when such receipt was acknowledged by the sellers of the land and paid through banking channels.
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ITA No. 346/VIZ/2024 Heralds of Good News 3. That the Ld. CIT(A) failed to appreciate the facts of the case, with respect to the consideration paid vide demand drafts towards the purchase of property of Rs. 32.49 lakhs, instead, the Ld. CIT(A) erroneously observed that from out of this an amount Rs. 29.80lakhs were not incurred towards the objects of the society. 4. That the Ld. CIT(A) also erred in upholding the disallowance of Rs.5,11,910/-, being travel expenses incurred and spent towards the objects of the society, without properly considering the relevant facts and evidence on record. 5. For these and other reasons that may be urged at the time of hearing, the appellant prays that the orders passed u/s 250 of the Income Tax Act be set aside and the additions made by the Assessing Officer be deleted.”
Ground Nos. 1 and 5 are general in nature and needs no adjudication.
Ground Nos. 2 & 3 relates to addition of Rs.29,80,000/-. On this issue, Ld.Authorized Representative (hereinafter in short “Ld.AR”) submitted that the assessee has paid an amount of Rs.29,80,000/- over and above the document values based on the advice of the Sub-registrar stating that if the document is considered for registration, he would have to apply the same card rate for other transactions. He also further submitted that an affidavit from the seller also enclosed stating that the amount has been received towards sale of property. Further, he also submitted that confirmations letters from the sellers and the bank statements of the sellers are also enclosed in Paper Book page No. 15-17. He therefore pleaded that the addition may be deleted.
Per contra, Ld. Departmental Representative (hereinafter in short “Ld.DR”) relied on the orders of the revenue authorities.
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ITA No. 346/VIZ/2024 Heralds of Good News 9. We have heard both the sides and perused the material available on record. It is an admitted fact that the assessee has purchased properties by making payments through banking channels for the purchase of property. However, it is noticed that the Registration value as per the sub-Registrar was done at a lower value. The assessee has also provided confirmation letters, bank statements and affidavit from the sellers evidencing the payments over and above of value mentioned in the documents has been made to sellers. In these circumstances, it was established by the Ld.AR the assessee has made payment over and above the document value towards purchase of property through banking channels which was also confirmed by the sellers and therefore we are of the considered view that the addition made by the Ld. AO by denying the exemption claimed under section 11 of the Act is not justifiable and we therefore direct the Ld. AO to delete the addition of Rs.29,80,000/-.
Further, on the Ground No. 4 wherein the Ld. CIT(A) upheld the disallowance of Rs.5,11,910/-. Ld.AR submitted that these expenses are incurred to attend educational seminars to provide education and scientific basis to the students. However, the Ld. AO disallowed a sum of Rs.5,11,910/- stating that it is not charitable in nature by denying exemption under section 11 of the Act. Ld.AR further submitted that it was incurred for deputing the priests for pursing advanced Post Graduation courses and other research works and is incurred in the course of providing their higher education. He therefore pleaded
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ITA No. 346/VIZ/2024 Heralds of Good News that these expenses are genuinely incurred by the assessee towards the achievement of the Trust and hence the denial of the exemption claimed by the assessee under section 11 of the Act is not justified.
Per contra, Ld. DR relied on the orders of the revenue authorities.
We have heard both the sides and perused the material available on the record. It was the contention of the assessee that being a missionary organization it has education seminars at different places for providing education to the students. Each seminary is affiliated to some recognized university. After the completion of the period of their study in seminary these students would be ordained as religious priests and they would be associated with their respective congregations for pastoral and philanthropic activities. Sometimes these priests were been deputed abroad by the assessee for advanced Post Graduation studies and other research works and hence the plea of the assessee that this expenditure incurred in the course of providing higher education which is the assessee’s objects of working towards cause of educations and hence they are charitable in nature and deserves to be allowed. However, it was not established by the assessee even before us, the relevance of sending the priests abroad for higher educations. Further, it was not also proved with cogent evidences the details of expenditure incurred towards foreign travel by the assessee. In these circumstances, there is no merit in the argument of the Ld.AR and hence we are not inclined to interfere in the order of the Ld. CIT(A)
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ITA No. 346/VIZ/2024 Heralds of Good News in upholding the addition made by the Ld. AO. Accordingly, this ground is dismissed.
In the result, appeal of the assessee is partly allowed.
Order pronounced in the open court on 28th August, 2025.
Sd/- Sd/- (दुव्वूरु आर एल रेड्डी) (एस बालाकृष्णन) (S. BALAKRISHNAN) (DUVVURU RL REDDY) लेखा सदस्य/ACCOUNTANT MEMBER उपाध्यक्ष/ VICE PRESIDENT Dated: 28.08.2025 Giridhar, Sr.PS आदेशकीप्रनतनिनिअग्रेनर्त/ Copy of the order forwarded to:- 1. निर्धाररती/ The Assessee : Heralds of Good News 5-97 Heralds of Seminary Janga Reddy Gudem Road Thangellamudi Andhra Pradesh – 534005 2. रधजस्व/ The Revenue : Income Tax Officer Exemption Circle Thangellamudi Eluru – 534005 Andhra Pradesh 3. The Principal Commissioner of Income Tax 4. नवभधगीयप्रनतनिनर्, आयकरअिीिीयअनर्करण, नवशधखधिटणम /DR,ITAT, Visakhapatnam 5. The Commissioner of Income Tax 6. गधर्ाफ़धईि / Guard file आदेशधिुसधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam
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