Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, VISAKHAPATNAM “SMC” BENCH, VISAKHAPATNAM
Before: SHRI DUVVURU RL REDDY, HON’BLE
O R D E R
Per Shri Duvvuru RL Reddy, Judicial Member :
This appeal is filed by the assessee against the order of Commissioner of Income Tax (Appeals) [CIT(A)], National Faceless Appeal Centre [NFAC], Delhi vide DIN & Order No.ITBA/NFAC/S/250/2022-23/1044994193(1) dated 29.08.2022, arising out of the assessment order passed by the Assessing Officer (AO) u//s 154 of the Income Tax Act, 1961 (in short “Act”) for the Assessment Year (A.Y.) 2013-14.
Brief facts of the case are that the assessee is a public religious trust, which was granted registration u/s 12A on 10.07.2014. The Sri Balaji Temple Trust, Srikakulam assessee filed it’s return of income for A.Y.2013-14 on 19.08.2014, declaring voluntary corpus donation of Rs.21,69,327/-. The return of income was processed by CPC and the voluntary corpus donations received of Rs.21,69,327/- was added to the income of the assessee as the assessee was not registered u/s 12A during the A.Y.2013-14. Subsequently, the assessee had filed a petition u/s 154 and submitted all relevant material with respect to voluntary corpus donations which were examined by the Assessing Officer (AO) and there was no dispute or objection with regard to the nature and genuineness of the voluntary corpus donations. However, the application u/s 154 was rejected on the grounds that since the assessee was not registered u/s 12A during the A.Y.2013-14, the provisions of section 11 and 12 are not applicable and therefore, the corpus donations received by the Trust were assessed as income and brought to tax.
On being aggrieved, the assessee preferred an appeal before the CIT(A) and the Ld.CIT(A) dismissed the appeal of the assessee.
On being aggrieved, the assessee preferred an appeal before the Tribunal and raised the following grounds :
Sri Balaji Temple Trust, Srikakulam
The order of the learned Commissioner of Income Tax (Appeals) is contrary to the facts and also the law applicable to the facts of the case.
2. The learned Commissioner of Income Tax (Appeals) ought to have held that the intimation u/s 143(1) issued on 15.11.2014 is erroneous and hence the assessing officer is not justified in rejecting the petition filed u/s 154 of the Act. 3. Without prejudice to the above, the learned Commissioner of Income Tax (Appeals) is not justified in upholding the addition of Rs.21,69,327/- made by the assessing officer towards corpus donations. 4. The learned Commissioner of Income Tax (Appeals) ought to have considered that the voluntary contributions forming part of corpus are not taxable even in the absence of Registration u/s 12A of the Act and ought to have directed the assessing officer to delete the addition made towards disallowance of the exemption of the corpus donations. 5. Any other grounds may be urged at the time of hearing. 5. Ground No.1, 2 and 5 are general in nature, which do not require specific adjudication.
6. Ground No.3 and 4 relate to disallowance of corpus donations. Now the question before me is whether the voluntary contributions forming part of corpus are taxable or not in the absence of registration u/s 12A. At the outset, the Ld.AR submitted that the assessee is a public religious trust, granted registration u/s 12A on 10.07.2014. He further submitted that voluntary corpus donations are capital receipts and hence not chargeable to tax, even if the assessee trust is registered u/s 12A or not Sri Balaji Temple Trust, Srikakulam and is eligible for exemption u/s 11 of the Act as a religious institution. He further submitted that the AO failed to observe that what is not income and what is not chargeable to tax cannot be treated as income, just because of an entry in the return of income filed by the assessee, which was erroneously upheld by the Ld.CIT(A). The assessee relied on the decision of coordinate bench of the Tribunal in the case of Sri Satya Sai Educational and Service Society, Srikakulam vide I.T.A.No.5/Viz/2022 dated 23.08.2022, wherein, it was held that the contributions received for specific purpose cannot be treated as income u/s 2(24)(iia) of the Act. He, therefore, pleaded to set aside the order passed by the Ld.CIT(A) and allow the appeal of the assessee.
Per contra, the Ld.DR submitted that the Ld.CIT(A) has rightly upheld the assessment as the voluntary corpus donation of Rs.21,69,327/- was collected in the A.Y.2013-14, but the assessee trust was granted registration u/s 12A on 10.07.2014, relevant to the A.Y.2014-15. Thus, it is evident that the assessee was not granted registration u/s 12A during the A.Y.2013-14, in which the voluntary corpus donation was collected. Hence, the provisions of section 11 and 12 are not applicable and therefore the corpus donations received by the trust were rightly assessed as receipts chargeable to tax. He, therefore, Sri Balaji Temple Trust, Srikakulam pleaded to uphold the order of the Ld.CIT(A) and dismiss the appeal of the assessee.
I have heard both the parties and perused the material placed on record. The coordinate bench of this Tribunal, relying on the decision in the case of Touching Heart Ministries Vs. ITO, vide dated 22.11.2017 for the A.Y.2010-11, has already decided the similar issue in the case of Sri Satya Sai Educational and Service Society (supra) and allowed the appeal filed by the assessee. Relevant part of the order of this tribunal is extracted for the sake of clarity and convenience as under:
We have heard both the sides and perused the material available on “5. record and also the orders of the Ld. Revenue Authorities. The admitted facts are that the assessee has received voluntary contribution towards corpus for the construction of building for Rs. 47,20,000/- and for plantation expenses Rs. 5,50,000/-. Disclosure was also rightly made while filing the return of income for the AY 2019-20. However, while processing the return summarily, due to non- availability of Registration u/s. 12A of the Act, these contributions were treated as income of the assessee. Reliance placed by the Ld. AR on the jurisdictional coordinate Bench in (supra) wherein vide para 6.2 of the order the Tribunal has held as follows: “6.2. In the instant case, the donations were received for specific purpose for acquiring fixed assets. This is evidenced by the letters placed before us from the donors. The funds are not freely available to the assessee society, for utilizing its objectives other than acquiring specified assets. The entire amount received for acquiring the fixed assets was utilized by the assessee and there are no surplus funds available to the assessee. The above facts are not disputed by the Ld. DR. the fact that the amount was utilized was evidenced by the Balance Sheet, thus the facts of the case is squarely covered by the decision of the Coordinate Bench of Bangalore in the case of Vokkalingara Sangha Cited supra, wherein the coordinate Bench held that contributions received for specific purpose cannot be regarded as income U/s. 2(24)(iia) of the Act. Respectfully following the view taken by the ITAT, Bangalore, we hold that the donations received for specific Sri Balaji Temple Trust, Srikakulam purpose of acquiring the capital assets are tied up grants and cannot be treated as income U/s. 2(24)(iia) of the IT Act. Accordingly, we set aside the orders of the lower authorities and allow the appeal of the assessee.”
Further, it is also observed that the Ld. Revenue Authorities have not disputed the contributions received but denied the exemption only due to the fact that the assessee is not registered u/s. 12A of the Act. The observation of the Ld. CIT(A) in para 4.21 of his order that the assessee is not registered under any Law either as a Society or as a Trust is not factually correct. The Ld. AR has produced a copy of the Registration Certificate duly registering the assessee- society under the Societies Registration Act vide Registration No.464 of 1995. Respectfully following the decision of the jurisdictional Coordinate Bench of the Tribunal, we hold that contributions received for a specific purpose cannot be treated as income u/s. 2(24)(iia) of the Act. Accordingly, we set-aside the order of the Ld. CIT(A) on Grounds no.3 and 4 raised by the assessee and these grounds raised by the assessee are allowed.” Respectfully following the decision of the coordinate bench of the Tribunal, I hold that contributions received for a specific purpose cannot be treated as income u/s 2(24)(iia) of the Act. Accordingly, I set aside the order of the Ld.CIT(A) and direct the AO to delete the additions made.
In the result, appeal filed by the assessee is allowed.
Order pronounced in the open court on 23rd May 2023. (दुव्वूरु आर.एल रेड्डी) (DUVVURU RL REDDY) न्याधयक सदस्य/JUDICIAL MEMBER Dated :23.05.2023 L.Rama, SPS