ITO (E), WARD- 2(3), NEW DELHI vs. THE MANAGING COMMITTEE OF SHIVALA APA GANGADHAR , DELHI

ITA. No. 226/Del/2018

IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH “G” NEW DELHI ] BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER आ.अ.सं .I.T.A No. 226/Del/2018 िनधा�रण वष�/Assessment Year: 2014-15 Income Tax Officer (E) The Managing बनाम Committee of Shivala Vs. Ward : 2 (3) APA Gangadhar, Near Red Fort, New Delhi. Chandni Chowk, Delhi – 110 006. PAN No. AAATT7829A अपीलाथ�/ Appellant ��थ�/ Respondent

Shri K. Sampath, Advocate; & िनधा�रतीक�ओरसे /Assessee by : Shri V. Raj Kumar, Adv.; राज�वक�ओरसे / Department by Ms. Kajal Singh, Sr. D. R.; : सुनवाईक�तारीख/ Date of hearing: 18.04.2023 उ�ोषणाक�तारीख/Pronouncement 30.05.2023 on : आदेश / O R D E R PER C. N. PRASAD, J. M.

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and Hundi Golak as corpus donation. The Assessing Officer while completing the assessment noticed that assessee claimed an amount of Rs.2,47,33,537/- as corpus donations details of which are as under:- (i) Golak receipts 74,47,590 (ii) Temple building fund 87,04,666 (iii) Hundi Golak 53,67,805 (iv) Interest on above 32,13,476 Total : 2,47,33,537

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corpus. However not convinced with the submissions of the assessee the Assessing Officer treated the entire corpus amount of Rs.2,47,33,537/- as general receipt. The Assessing Officer also denied application of income on account of renovation of temple building to the extent of Rs.34,82,434/- as the assessee did not furnish any details of expenditure.

“5.1 Ground of appeal Nos. 1 to 3 challenge the determination of taxable income of the assessee at Rs. 2,07,02,434/- by treating the offering to gods, amounts received towards temple building funds and amounts on account of offering in hundi golak specifically inscribed donation towards building fund as revenue receipts. 5.1.1 The following receipts claimed as corpus donation have been treated as revenue receipts: a) Golak receipts (offerings to God) Rs.74,47,590/- b) Temple Building Fund Rs.87,04,666/- c) Hundi Golak Rs.53,67,805/- d) Interest on the above three funds Rs.32,13,476/-

5.1.2 With regard to golak receipts (offerings to God), it has been submitted by the appellant that it has been held in assessment year 1975-76 onwards that such offerings do not form part of the income of the assessee. In the assessment year 1975-76, the Hon'ble ITAT Delhi in order dated 3

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06/03/1981 in ITA. No. 71/Del/81 in appellant's own case held that such receipts did not form part of the income of the assessee as the offerings were not income out of the property held under the trust but the same mere offerings to the details of the temple. It has also been submitted that since for years this issue is settled in the present case, exemption from tax should be allowed in respect of golak receipts. 5.1.3 On the said issue of golak receipts (offerings to God) I have considered the order of the Hon'ble ITAT in appellant's own case (supra). It is seen that the facts of the case on the said issue are similar to those decided by the Hon'ble ITAT. The Hon'ble Supreme Court in the case of Commissioner of Income-tax vs. Excel Industries Ltd. [2013] 38 taxmann.com 100 (SC) have held as under: "Secondly, as noted by the Tribunal, a consistent view has been taken in favour of the assessee on the questions raised, starting with the assessment year 1992-93, that the benefits under the advance licences or under the duty entitlement pass book do not represent the real income of the assessee. Consequently, there is no reason to take a different view unless there are very convincing reasons, none of which have been pointed out by the revenue. [Para 28]" 5.1.4 The facts of the case being similar to those for assessment year 1975-76 and no new facts having been brought on record by the Assessing Officer which should lead to different view, respectfully following the order of the Hon'ble ITAT in appellant's own case for assessment year 1975-76 it is held that golak receipts (offerings to God) do not form part of the income of the assessee. 5.1.5 As regards the temple building fund and hundi golak, it has been submitted that the Income Tax Act does not provide any method by which intention of the donor could be asserted or inferred. It has also been submitted that when a donor puts his money into a cashbox on which there is a clear indication that his collection will be utilised for building fund, such indication is accepted by the donor and he makes donation towards the corpus. It has also been submitted that it is not necessary that a donor should give in writing that the subscription is towards the corpus fund and that the receipt is issued after receiving a donation indicating that

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the donation would be used for the building fund and the donor accepts the receipt with such narration, there should not be any doubt that a donor has expressed his intention of donating towards the corpus at the time of the donation. In the case of Director of Income-tax, Bangalore v. Sri Ramakrishna Seva Ashrama [(2012) 18 taxmann.com 37 (Karnataka)], it has been held as under: "The word 'Corpus’ is used in the context of the Act. One has to understand the same in the context of a capital, opposed to an expenditure. It is a capital of an assessee; a capital of an estate; capital of a trust; a capital of an institution. Therefore, if any voluntary contribution is made with a specific direction, it shall be treated as the capital of the trust for carrying on its charitable or religious activities, then, such an income falls under section 11(1)(d) and is not liable to tax. Therefore, it is not necessary that a voluntary contribution should be made with a specific direction to treat it as corpus. If the intention of the donor is to give that money to a trust which they will keep it in trust account in deposit and the income from the same is utilized for carrying on a particular activity, it satisfies the definition part of the corpus. The assessee would be entitled to the benefit of exemptions from payment of tax levied. [Para 13] Therefore, what ultimately reveals that, - (i) the intention of the donor and (ii) how the recipient - assessee treats the said income. If the intention of the donor is that the amount/donation given is to be treated as capital and the income from that capital has to be utilized for the charitable purposes, then the said voluntary contribution is towards the part of the corpus of the trust. Similarly, the assessee after receiving the amount, keeps the amount in deposit and only utilise the income form the deposit to carry out the charitable activities, then also the said amount would be a contribution to the corpus of the trust and the nomenclature in which the amount is kept in deposit is of no relevance as long as the contribution received are kept in deposit as capital and only the income from the said capital which is to be utilized for carrying on charitable and religious activities of the institute/corpus of the trust, for which section ll(l)(d) is attracted and the said income is not liable for tax under the Act. [Para 15]

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..... They have denied the benefit under section 11(1)(d) on the assumption that the amount so collected is not towards the corpus of the trust. It is not in dispute that they have collected the amount for three years by way of voluntary contributions. The assessee is a charitable and religious trust. The documents furnished by them to the department, particularly, a report regarding 'V' Rural Health Center and 'S' Eye Hospital and Research Center (units of assessee-trust) it is clear that the said center was started in the year 1992 with due registration and it has been working since then for the welfare of the needy people and the first project of it is Leprosy Eradication Project. Likewise, they have set out 14 projects, which are started in the rural areas and in particular in the border districts of Karnataka- Andhra Pradesh. Therefore, one of the activities of the trust is to treat T.B. and leprosy patients and for that purpose, they have a project called Leprosy Eradication Project and the said project is confined to the rural areas in Pavagada, the border districts of Karnataka- Andhra Pradesh. They received voluntary contributions from philanthropers and they accumulated the said amount under the head of Rural Health Project. All the contributions received are kept in fixed deposit. In other words, no portion of the contribution received is utilized for this project. It shows the intention of the assessee is to treat these contributions as corpus and the income derived from the corpus is used for carrying on the said activities. [Para 16] Insofar as the argument that the persons who made these contributions do not specifically direct that they shall form part of the corpus of the trust is concerned, it has no substance. In view of the language employed in clause (b) of sub-section (1) of section 11, the requirement is that the voluntary contributions have to be made with a specific direction. The law does not require that the said direction should be in writing. In the instant case, those people who have paid amounts by way of donations that include the cheque with a letter with a specific direction, which is in compliance with section 11(1)(b). In case if the contributions are made without cheques, i.e., by cash, and oral direction has been issued to the trust to utilize the said fund for the purpose of treating the leprosy patients and if such amounts are credited to the account meant for it, even then the requirement of clause (b) of sub-section (1) of section 11 is complied with. [Para 17]" 6

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5.1.6 Further, in the case of Shree Mahadevi Tirath Sharda Ma Seva Sangh vs. ITO [(2010) 133 TTJ 57 (Chandigarh) (UO)], it was held that the manner in which such donations had been collected by the assessee was not disputed by the Assessing Officer. The only dispute was that the assessee could not provide the names and addresses of individual donors who have contributed towards 'building construction fund1. Quite clearly, the donations were being collected from the devotees at large and the insistence of the Assessing Officer of production of individual names and addresses was not justified. Moreover, the bona fides of such practice being carried out by the assessee, either in the past or during the year under consideration was not doubted. Therefore, the impugned amount contributed voluntarily by the donors could be understood as carrying a specific direction that it would be utilized for construction of building and, therefore, the same was liable to be treated as forming part of the corpus of the assessee and, resultantly, such amount would not constitute income for the purposes of section 11/12. 5.1.7 As has been held in the cases above, it is clear that it is not necessary that the direction should be in writing. As has been held in the case of Shree Mahadevi Tirath Sharda Ma Seva Sangh vs. ITO (supra) people putting money in the boxes marked with the appeal that amount would be used for building construction were ostensibly aware that the money will be used for specific purpose of construction of building. Further, the Assessing Officer has not disputed the manner of collection or that the donations were not used for the purpose of building. 5.1.8 As regards the observation of the Assessing Officer that the receipts submitted by the appellant have not been signed by the donors but were issued by the society, in the case of DIT (Exemption) v. Jaipur Golden Charitable Clinical Laboratory Trust [(2009) 311 ITR 365 (Delhi)], the Hon'ble Delhi High Court held that where assessee-trust, running a hospital, received donations from consulting doctors working at hospital which donations were voluntary and towards corpus of fund, such donations could not be treated as income of assessee trust. In the said case, during the assessment proceedings it was noticed that the assessee had 7

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received donations from 61 consulting doctors who had opted to give donations of Rs. 10,000/- each under the terms and conditions. According to the terms and conditions, the assessee was entitled to deduct 20% of the consulting charges and the balance amount was to be paid to the consulting doctors. It further provided that if the consulting doctors paid donations of Rs. 10,000/- then they would be entitled to 85% per cent of the consulting charges instead of 80%. The Assessing Officer was of the view that the donations received were not as per the provisions of sections 11 and 12 and were forced contributions as per the agreement executed between the doctors and the hospital authorities. Therefore, he treated the impugned donations of Rs. 6,10,000/- as income from other sources. The Hon'ble Court held that it was clear from the facts of the case that the donations received were voluntary contributions. It was optional for the consulting doctors to contribute donations which were also apparent from the fact that only 61 doctors opted for such arrangement out of 141 doctors working for the assessee. The relevant clause neither bound nor forced the doctors. In this view, the action of the Assessing Officer in holding that the donations received were forced donations was not justified. Further, the Tribunal had also gone through the receipts issued by the assessee-trust which showed that contribution by the doctors was towards corpus of the fund and, therefore, could not be treated as income of the assessee. 5.1.9 In view of the decision of the Hon'ble Delhi High Court, in the case of DIT (Exemption) v. Jaipur Golden Charitable Clinical Laboratory Trust (supra), the observation of the Assessing Officer that the receipts cannot be taken as evidence to suggest that specific direction had been given that the donations were towards building fund is missing is not tenable. It is, therefore, held that the temple building fund and hundi golak are corpus donations which have been given with a specific direction and are held to be exempt under section ll(l)(d). Accordingly, the interest earned on the same is also treated as corpus since the interest earned is on funds given for a specific purpose. 5.1.10 In view of the discussion above, the Assessing Officer is directed to treat the offering to gods, amounts received towards temple building funds and amounts on account of offering in hundi golak specifically inscribed donation 8

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towards building fund along with interest thereon as corpus donations eligible for exemption under section ll(l)(d). Grounds of appeal nos. 1 to 3 are allowed.”

“One ground which was taken up before the Ld. CIT (A) by the Assessee is Ground No. 4 read as under:- "4. Not allowing credit for application of Income on account of renovation of temple building in a sum of Rs.34,82,434/-," This ground has not been properly considered and decided by the Ld. CIT (Appeals). The aggrieved assessee has, therefore, proposed the following ground for adjudication under Rule 27 of the ITAT Rules: "Permission is respectfully sought for raising the following ground of appeal:

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“On the facts and in the circumstances of the case and in law, the action of the CIT(A) in declining to adjudicate Ground No. 4 of the appeal is erroneous, improper, unjust and be quashed with directions to adjudicate the same." Placed for the most favourable consideration" 2. During the course of the hearing before the Ld. CIT (A) the Appellant Trust had moved an application under Rule 46A of the Income-tax Rules, 1962 for admission of additional evidence. This is stated by the Ld. CIT (A) on page 6 para 4 of the Appellate order. 3. The Ld. CIT (Appeals) obtained a remand report from the Assessing Officer whereafter the additional evidence was admitted. This fact is stated in the Appellate order on page 8 of para 4.3 by the Ld. CIT (Appeals) as under: "4.3 I have considered the remand report and the rejoinder of the appellant. It had been submitted in the application that the appellant could not produce the said evidences since the Assessing Officer never asked for the same. From the remand report it is seen that no specific comments have been offered by the Assessing Officer regarding the contention of the appellant in the application under Rule 46A. It has merely been mentioned that the circumstances and conditions of Rule 46A do not exist in the case of the assessee. No comments have also been given with regard to the contention that no specific query regarding expenditure incurred on building was raised and accordingly the said evidences were not produced. It is noted that the case of the appellant falls under clauses (c) and (d) of rule 46A(1). Considering the facts and circumstances of the case and in accordance with the principles of natural justice and since the said evidences are required for proper adjudication of the appealthe additional evidence is admitted." 4. However, while concluding the case the Ld. CIT (A) observed as under to dismiss the ground:- "5.2 Ground of appeal No. 4 challenges not allowing credit for application of income on account of renovation of temple building amounting to Rs.34,82,434/-.

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5.2.1 No specific submissions have been made by the appellant on the said issue. It is also seen from the computation of income filed by the appellant during the appellate proceedings that the Assessing Officer has allowed application of income as claimed by the assessee. Since donations on account of temple building fund have been allowed as corpus donations, this ground of appeal becomes infructuous and does not require adjudication" 5. It is most respectfully submitted that in the remand report the Assessing Officer had conceded that in support of the expenditure of Rs.34,82,434/- supporting vouchers were available with the Assessee. Therefore, the application of that amount for charitable purposes during the subject year could not be denied. 6. It is further submitted that the consideration of such expenditure as application for charitable purposes during the year would cause a revenue effect by way of either excess or short application of the disposable charitable funds during the year. So the ruling of the Ld. CIT (Appeals) of the temple building fund contributions as corpus would not do away with the necessity of computing the shortage or excess of funds applied for a charity during the year. It is in this background that it is respectfully prayed that the Assessing Officer be kindly directed to annul the disallowance of application of Rs.34,82,434/- towards charity and to recompute the result of the application of funds during the year as disclosed by this Trust thereafter in its return of income.”

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remand report before us, we direct the Assessing Officer to consider the claim of the assessee in the light of the submissions of the assessee. Thus, we restore this issue to the file of the Assessing Officer who shall examine the contentions of the assessee and pass an order afresh in accordance with law.

Order pronounced in the open court on : 30/05/2023.

Sd/- Sd/- ( SHAMIM YAHYA ) ( C. N. PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated : 30/05/2023. *MEHTA* Copy forwarded to :- 1. Appellant; 2. Respondent; 3. CIT 4. CIT (Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, New Delhi.

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Date of dictation 23.05.2023 Date on which the typed draft is placed before the dictating 25.05.2023 member Date on which the typed draft is placed before the other 30.05.2023 member Date on which the approved draft comes to the Sr. PS/ PS 30.05.2023 Date on which the fair order is placed before the dictating 30.05.2023 member for pronouncement Date on which the fair order comes back to the Sr. PS/ PS 30.05.2023 Date on which the final order is uploaded on the website of ITAT 30.05.2023 Date on which the file goes to the Bench Clerk 30.05.2023 Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the order