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Income Tax Appellate Tribunal, DELHI BENCH “H” NEW DELHI
Before: SHRI I.C. SUDHIR & SHRI INTURI RAMA RAO
ORDER PER I.C. SUDHIR: JUDICIAL MEMBER The Revenue has impugned First Appellate Order on the sole ground that:
“1. On the facts and in the circumstances of the case, the Learned CIT(Appeals) has erred in deleting the addition made u/s. 68 of the Act, as the assessee did not offer any explanation with regard to the genuineness of the corpus donations despite repeated opportunities provided to the assessee.”
We have heard and considered the arguments advanced by the parties in view of orders of the authorities below, material available on record and the decisions relied upon.
The relevant facts are that the Assessing Officer made addition of Rs.1,31,000 representing the corpus donation received by the assessee trust during the assessment year holding that it was income from other sources.
The action of the Assessing Officer was questioned before the Learned CIT(Appeals) who has granted relief by deleting the addition. Hence, the Revenue is in appeal before against the deletion made by the Learned CIT(Appeals).
In support of the ground, the learned Sr. DR has basically placed reliance on the assessment order. He submitted that there was no evidence as to what was the specific direction for the corpus donation, hence, the finding of the Learned CIT(Appeals) in para No. 7.5 of the First Appellate Order is misplaced.
The Learned AR on the other hand tried to justify the First Appellate Order. He submitted that corpus donation cannot brought to tax under sec.
68 of the Income-tax Act, 1961, as income stood applied for charitable purpose under sec. 11(1)(a) of the Act. He submitted that in the present case, income has been applied for charitable purposes. He pointed out that Rs.1,29,07,277 was applied on the fixed assets including building and in support he referred page No. 31 of the paper book i.e. Schedule-2 containing particulars of the fixed assets. He submitted further that Rs.12,39,291 is the revenue expenditure and referred page No. 33 of the paper book i.e. the details of differed revenue expenditure given under Schedule-V. The Learned AR submitted further that the income applied was more than alleged income received by way of corpus donation. He placed reliance on the following decisions: i) DIT vs. Keshav Social & Charitable Foundation – 278 ITR 152 (Delhi); ii) CIT vs. Sadhana Foundation in dated 07.07.2011; iii) CIT vs. O.P. Suri Memorial Education Society in ITA Nos. 1754 & 1755/2010 and 206/2011 – upholding decision of ITAT in the case of DCIT vs. Sadhana Foundation in ITA No.2704/Del/2010 dated 08.10.2010; iv) DIT vs. Moti Bagh Mutual Aid Education – 298 ITR 190 (Del.); v ) DIT vs. Akhil Bhartiya Mahajan Siromani Sabha in dt. 13.5.2009; vi) Order of ITAT in the case of Hans Raj samara Society vs. DIT(E) in ITA No. 2957/Del/2010 dated 14.1.2011; vii) 230 ITR 636 (S.C) S.RM.CT.M.Tiruppani Trust vs. CIT; viii) CIT vs. Uttaranchal Welfare Society – 364 ITR 398; & ix) dated 17.6.2015 – ITO vs. M/s. Saraswati Educational Charitable Trust.
The Learned AR submitted further that corpus donation is not income and exempt under sec. 11(1)(d) of the Act. In this regard, he placed reliance on the following decisions: i) DIT vs. Jaipur Golden Charitable Clinical Lab. Trust – 311 ITR 365 (Delhi);
ii) DIT vs. Ajay G. Piramal Foundation- 228 Taxman 332 (Delhi); iii) (Del) dated 23.9.2009 – DIT vs. Basanti Devi & Shri Chakhan Lal Garg edu. Trust Basanti. iv ) CIT vs. Eternal Science of Man’s Society – 128 ITR 456; v ) CIT vs. Puararpan Charitable Trust – 166 ITR 214 (Cal.); vi) Apollo Hospitals Research Foundations vs. Asst. DIT(E)- 241 ITR 26; vii) CIT vs. Sthanakvasi Vardhman Vanik Jain Sangh – 260 ITR 366 (Guj.); & viii) 61 ITD 196 (Cal.) Shri Shankar Bhagwan Estate vs. ITO.
The Learned AR also referred list of donors along with address and letters from donors, resolution passed by donors and receipts issued by assessee, copies whereof have been made available at page No. 100 to 172 of the paper book. He submitted that even during the assessment proceedings, the assessee had placed on record the ledger account of donation giving details of persons from whom donation was received which itself established that sum were received by account payee cheque. In this regard, he referred page Nos. 72 and 73 of the paper book. He submitted that the bank statement had also been placed on record and referred page Nos.
39 to 47 of the paper book. The Learned AR submitted further that apart from the above, for corpus donation of Rs.12 lacs evidenced in the shape of receipts return of income, letters, resolution were also made available on record, copies whereof have been placed at page Nos. 48 to 62 of the paper book. The Learned AR pointed out further that in the remand report (page No. 6 of the First Appellate Order), the Assessing Officer did not dispute the above facts and as such, the Learned CIT(Appeals) had admitted the additional evidence vide which findings recorded in para No. 2.2 at page No.14 of the First Appellate Order, which has again not been challenged by the Revenue. Thus, the ground raised to dispute the deletion of addition on account of non-furnishing of explanation to the genuineness of corpus donation is not tenable. The Learned AR pointed out that impugned assessment is for the assessment year 2003-04 and for subsequent assessment year returned income declared has been accepted after allowing exemption under sec. 11 and 12 of the Act in the assessment framed under sec. 143(3) of the Act. He submitted that burden of the assessee stood discharged as entire evidence stood furnished.
After considering the above submission, we find that the Learned CIT(Appeals) has dealt with the issue in detail. He has allowed additional evidence after giving opportunity to the Assessing Officer and discussing the same has come to the conclusion that the income has utilized for charitable purpose, hence, there is neither any logic nor legal and valid justification to deny the claim under sec. 11 of the Act. All what is required is irrespective of source that 75% of income should have been utilized for charitable purposes as has been done in the present case. The Learned CIT(Appeals) has observed further that even assuming though it is seriously disputed that Rs.1,31,00,000 is income of the assessee from other sources then too since more than 25% of Rs.1,31,00,000 i.e. Rs.98,25,000 has been utilized for charitable purpose by acquiring fixed assets of Rs.1,29,00,000, there was no basis for the Assessing Officer to bring the income of Rs.1,31,00,000 to tax as income of the assessee trust. In absence of rebuttal of this material finding of the Learned CIT(Appeals) that since more than 75% of Rs.1,31,00,000 has been utilized for charitable purpose by acquiring fixed assets of Rs.1,29,00,000, we do not find reason to interfere with the First Appellate Order deleting the addition of Rs.1,31,00,000. The Learned CIT(Appeals) has firstly held that Rs.1,31,00,000 represents corpus donation and is thus exempt under sec. 11(1)(d) of the Act. We find that this finding of the Learned CIT(Appeals) regarding corpus donation is well supported by the evidence filed by the assessee, discussed above in the submissions of the Learned AR. The First Appellate Order is thus upheld. The ground is accordingly rejected.
In result, the appeal is dismissed.
Cross-objection 308/Del/2011:
In this cross-objection, the assessee has objected the First Appellate Order; (i) upholding the validity of initiation of proceedings under sec. 147 and assessment framed in furtherance thereto under sec. 144/147 of the Act; and (ii) non-appreciation that the assessment was based on certain purported information received from Investigation Wing of the Department and that corpus donation is not taxable as income.
In view of the above finding in the appeal of the Revenue on the issue of validity of addition of Rs.1,31,00,000 made by the Assessing Officer under sec. 68 of the Act on account of non-genuineness of the corpus donations, the present cross objection has become infructuous and it is disposed off accordingly.