The DDIT(Exemp.), Bhavnagar V. Chitrakuthdam Trust,

ITA 1126/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 9010 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 01-02-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 16-03-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJEEV KASHYAPDR
• Assessee Lawyers: MK PATELAR
• Keywords: Set aside
• Section: 80G; 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C, AHMEDABAD BEFORE SHRI BHAVNESH SAINI, JM & SHRI A.N. PAHUJA, AM I.T.A. NO.1126/AHD/2007 (ASSESSMENT YEAR 2004-05) DDIT(EXEMPTION) VS CHITRAKUTDHAM TRUST AAYKAR BHAVAN TALGAJRA, DIST : BHAVNAGAR NAKUBAUG, JASONATH CHOWK [PAN : AACTS2607K] BHAVNAGAR 364 001 (APPELLANT) (RESPONDENT) REVENUE BY : SHRI SANJEEV KASHYAP,DR ASSESSEE BY : SHRI MK PATEL,AR O R D E R AN PAHUJA : THIS APPEAL BY THE REVENUE AGAINST AN O RDER DATED 22-12-2006 OF THE LD. CIT(A)-XX, AHMEDABAD ,RAISES THE FOLLOWING GROUNDS: 1. THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITIO N OF RS.15,04,600/- THOUGH THE ASSESSEE HAS NOT SUBMITTE D ITS ACCOUNTS IN FORM NO.10AA ON OR BEFORE 30.6.2004 TO DGIT(E), NEW DELHI AS REQUIRED U/S 80G(5C)(V) OF THE I.T. ACT 1961 READ W ITH RULE 18AAAA OF I.T. RULES 1962 WHEREAS SECTION 12(3) OF I.T. ACT, 1961 SPECIFICALLY MENTIONED ABOUT THE ACCOUNTS WHICH HAV E NOT BEEN RENDERED BEFORE THE PRESCRIBED AUTHORITY IN GIVEN T IME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF AO 3. IT IS, THEREFORE ,PRAYED THAT THE ORDER OF THE LD. CIT(A) MAY BE SET ASIDE AND THE ORDER OF THE AO BE RESTORED. 2. FACTS, IN BRIEF AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING NIL INCOME WAS FILED ON 16-10-2004 BY THE ASSESSEE, A PUBLIC C HARITABLE TRUST REGISTERED U/S 12AA OF THE INCOME-TAX ACT,1961[HEREINAFTER REFERRE D TO AS THE ACT].DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER[AO IN SHORT] NOTICED THAT THE ASSESSEE TRUST RECEIVED DONATIONS TOWARDS GUJARAT EARTHQUAKE RELIEF FUND AGGREGATING TO RS.15,04,600 IN THE AY 2001-02 AND SPENT RS.11,43,535 DURING THE PERIOD RELEVANT TO THE AY 2001-02 TO 200 4-05 AS DETAILED HEREUNDER: ITA 1128/AHD/2007 2 INCOME/EXPNS 2001-02 2002-03 2003-04 2004-05 TOTAL DONATIONS 15,04,600 - - - 15,04,600 EXPENSES 5,68,550 2,03,955 32,095 3,38,935 11,43,535 BALANCE 3,61,065 THE AO, APPLYING THE PROVISIONS OF SECTION 80G(2)(D ) R.W.S. 80G(5C) AND S. 12(3) OF THE ACT, TREATED THE ENTIRE AMOUNT OF DONATIONS OF RS.15,04,600 AS INCOME OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE (I) DI D NOT MAINTAIN NOR FURNISHED THE ACCOUNT IN FORM NO.10AA INCORPORATING THE INCOM E AND EXPENDITURE IN RESPECT OF EARTHQUAKE DONATION RECEIVED TO THE DGIT (EXEMPTION), NEW DELHI ON OR BEFORE 30-06-2004 AS REQUIRED BY THE PROVISIONS OF SECTION 80G(5C) OF THE ACT; (II) UTILIZED THE EARTHQUAKE RELIEF FUND IN REPAIR ING OF CHECK DAMS AND NOT FOR PROVIDING RELIEF TO EARTHQUAKE VICTIMS IN GUJARAT; AND (III) DID NOT FURNISH ANY CONVINCING EVIDENCE IN SUPPORT OF THE EXPENDITURE I NCURRED OUT OF THE DONATIONS RECEIVED. 3. ON APPEAL, THE LEARNED CIT(A) AFTER ADMITTING AD DITIONAL EVIDENCE AND HAVING A REPORT OF THE AO THEREON, FOUND THAT THE DONATIONS OF RS.15,04,600/- WERE RECEIVED IN NORMAL COURSE AND DID NOT FALL WIT HIN THE SCOPE OF SUB SECTION (2)(D) OF SECTION 80G OF THE ACT. THE LD. CIT(A) F URTHER OBSERVED THAT MERELY BECAUSE ON THE RECEIPTS ISSUED BY THE TRUST IT IS M ENTIONED THAT DONATIONS ARE COLLECTED TOWARDS GUJRAT EARTHQUAKE RELIEF FUND D OES NOT MEAN THAT DONATIONS WERE COLLECTED IN TERMS OF PROVISIONS OF SEC. 80G( 2)(D) OF THE ACT. ACCORDINGLY, THE LD. CIT(A) CONCLUDED THAT THE AO CLEARLY ERRED IN INVOKING THE PROVISIONS OF SECTION 12(3) READ WITH SUB SECTION (5C) OF SECTION 80G IN BRINGING TO TAX THE ENTIRE DONATIONS AS INCOME. THE LD. CIT(A) FURTHER OBSERVED THAT EVEN OTHERWISE THE AO IS NOT CORRECT IN BRINGING TO TAX THE ENTIRE DONATIONS AND IT WAS ONLY UNSPENT AMOUNT OF RS.361065/- THAT IS LIABLE TO TAX EVEN IF PROVISIONS OF SUB- SECTION (2D) AND (5C) OF SECTION 80G & 12(3) ARE AP PLICABLE IN A PARTICULAR CASE. WITH THESE OBSERVATIONS, THE LD. CIT(A) WHILE DELE TING THE ADDITION DIRECTED THE ITA 1128/AHD/2007 3 AO TO COMPUTE THE INCOME OF THE ASSESSEE U/S 11 OF THE ACT, AFTER VERIFYING WHETHER ASSESSEE FULFILLED THE CONDITIONS LAID DOW N IN SECS. 11 TO 13 OF THE ACT FOR THE YEAR UNDER CONSIDERATION. THE FINDINGS OF THE CIT(A) TO THIS EFFECT READ AS UNDER: 7. I HAVE CONSIDERED THE APPELLANTS CLAIMS AND CO NTENTIONS AND ASSESSING OFFICERS OBSERVATIONS MENTIONED IN T HE ASSESSMENT ORDER AND HIS REPORT AS ABOVE. NO DOUBT THE APPELL ANT TRUST HAS MENTIONED IN THE RECEIPTS ISSUED TO THE DONORS THAT THE DONATIONS ARE COLLECTED TOWARDS GUJARAT EARTHQUAKE RELIEF FU ND. HOWEVER, IT DOES NOT MEAN THAT THE DONATIONS ARE COLLECTED U NDER 80G(2)(D) OF THE ACT, UNLESS AND UNTIL IT IS SPECIFICALLY MEN TIONED IN THE RECEIPT THAT THEY ARE COLLECTED UNDER 80G(2)(D) OF THE ACT OR THAT THEY ARE ENTITLED FOR 100% DEDUCTION U/S 80G OF THE ACT IN T HE HANDS OF THE DONOR. IT CANNOT BE PRESUMED THAT ANY DONATION COL LECTED FOR PROVIDING EARTHQUAKE RELIEF IS A DONATION UNDER 80G (2)(D) OF THE ACT SO AS TO ATTRACT THE PROVISIONS OF SECTION 80G( 5C) AND 12(3) OF THE ACT. MERELY BECAUSE THE FUNDS ARE CREDITED IN THE NAME OF GUJARAT EARTHQUAKE RELIEF FUND THE ASSESSING OFFICER CANNOT PRESUME THAT THEY FALL WITHIN THE SCOPE OF SUB-SECT ION (2)(D) OF SECTION 80G. THE STATEMENT OF ACCOUNTS FILED EVERY ASSESSMENT YEAR CLEARLY SHOW THAT THE ASSESSEE IS COLLECTING D ONATIONS AND MAINTAINING A NUMBER OF FUNDS LIKE SADAVRUT NIBHAV JOGVAI FUND GAUSHALA NIBHAV JOGVAI FUND KELVANI AND SAHITYA VISAYAK JOGVAI FUND AND SOUGHT ACCUMULATION OF INCOME U/S 11(2) OF THE ACT AND UTILIZED THE SAME FOR SPECIFIC PURPOSE OF SUCH FUNDS. IN FA CT, THE ASSESSEE HAS FILED THE PARTICULARS OF THE DONATION AND ACCUM ULATION IN THE ABOVE THREE FUNDS UP TO 31-3-2005 BEFORE THE ASSESS ING OFFICER DURING THE ASSESSMENT PROCEEDINGS FOR ASSESSMENT YE AR 2004-05. 7.1 PROVIDING RELIEF TO VICTIMS OF NATURAL CALAMITI ES IS ONE OF THE OBJECTS OF THE TRUST. HENCE, THERE IS NO BAR / RES TRICTION ON THE ASSESSEE IN COLLECTING DONATIONS UNDER SECTION 80G OF THE ACT AND SPENDING THEM FOR PROVIDING EARTHQUAKE RELIEF TO TH E VICTIMS. THE DONATIONS RECEIVED ARE SPENT FOR PROVIDING RELIEF T O THE EARTHQUAKE VICTIMS AND THERE IS NO DISPUTE ABOUT THE SAME. TH E FACT THAT EXPENDITURE INCURRED WILL ALSO BE USEFUL FOR FUTURE REHABILITATION IS ALSO NOT A BAR FOR SPENDING THE AMOUNTS FOR PROVIDI NG SUCH RELIEF. HENCE, ASSESSING OFFICERS OBSERVATIONS IN THIS ASP ECT ARE NOT CORRECT AND DESERVE TO BE REJECTED. ITA 1128/AHD/2007 4 7.2 THE APPELLANT TRUST HAS FILED PARTICULARS OF EX PENDITURE ALONG WITH RETURN OF INCOME FILED FOR EACH OF THE ASSESSM ENT YEARS I.E. 2001-02 TO 2004-05, ALONG WITH AUDIT REPORT IN FORM NO.10B. HOWEVER, OUT OF THE TOTAL DONATION RECEIPTS OF RS. 15,04,600/-, THE UNSPENT AMOUNT IS RS.3,61,065/- AS ON 31-3-2004 AS PER THE APPELLANTS WRITTEN SUBMISSIONS. 7.3 ASSESSING OFFICERS VIEW IS THAT AS THE DONORS ARE OF INDIAN ORIGIN AND HENCE EVEN IF THEY HAVE NOT CLAIMED DEDU CTION U/S 80G(2)(D) IN THEIR INCOME-TAX RETURNS, DONATION REC EIPTS ARE TO BE DEALT WITH UNDER SECTION 80G(5C) READ WITH SECTION 12(3) (AS DONATIONS ARE RECEIVED FOR PROVIDING EARTHQUAKE REL IEF TO THE VICTIMS AS PER THE RECEIPTS ISSUED TO THEM). NO DOUBT, WHE THER THE DONORS HAVE CLAIMED DEDUCTION U/S 80G IN THEIR INCOME TAX RETURNS OR NOT, IS NOT RELEVANT. HOWEVER, WHAT IS RELEVANT IS WHET HER THERE IS EVIDENCE TO SHOW THAT THE DONATION RECEIPTS ARE REC EIVED U/S 80G(2)(D) OR NOT. IN THE APPELLANTS CASE, THE EVI DENCE ON RECORD CLEARLY SHOWS THAT THEY ARE NOT RECEIVED U/S 80G(2) (D), BUT THEY ARE RECEIVED IN THE NORMAL COURSE U/S 80G OF THE ACT AS DISCUSSED IN PARAGRAPH 7 & 7.1 ABOVE. HENCE, THE ASSESSING OF FICER IS NOT CORRECT IN CONCLUDING THAT THE DONATION RECEIVED IN THE NAME OF EARTHQUAKE RELIEF FUND ARE DONATIONS COMING WITHIN THE SCOPE OF SECTION 80G(2)(D) AND CONSEQUENTLY UNDER 80G(5C) AN D SECTION 12(3) OF THE ACT. THE ASSESSING OFFICER HAS NOT PR OPERLY ANALYZED AND APPRECIATED THE FACTS OF THE CASE, PROVISIONS O F THE ACT AND WRONGLY INVOKED SECTION 12(3) OF THE ACT. AS PROVI SIONS OF SECTION 10(23C) AND SECTION 12(3) ARE IDENTICAL, THE ASSESS ING OFFICERS REFERENCE TO SECTION 10(23C) IS MISPLACED AND IS IR RELEVANT IN THE PRESENT CONTEXT. 4. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LD. DR RELIED UPON THE ORDE R OF THE AO WHILE THE LD. AR SUPPORTED THE FINDINGS OF THE LD. CIT(A). 5. WE HAVE HEARD BOTH THE PARTIES AND GONE TH ROUGH THE FACTS OF THE CASE. AS IS EVIDENT FROM THE RECORDS ,OUT OF THE TOTAL DONAT IONS OF RS. 15,04,600 RECEIVED BY THE ASSESSEE, DONATION AGGREGATING TO RS.14,01,6 00 HAVE BEEN RECEIVED BY THE ASSESSEE ON THREE OCCASIONS FROM AN NRI, SHRI V P PATEL, BASED IN USA, WHO CONFIRMED THAT HE HAD NOT CLAIMED ANY DEDUCTION U/S 80G OF THE ACT. A COMBINED ITA 1128/AHD/2007 5 READING OF THE RELEVANT PROVISIONS OF SEC. 80G(2)(D );S. 80G(5C) AND S.12(3) OF THE ACT REVEAL THAT ANY AMOUNT OF DONATION RECEIVED B Y THE TRUST OR INSTITUTION IN TERMS OF CLAUSE (D) OF SUB-SECTION (2) OF SECTION 8 0G IN RESPECT OF WHICH ACCOUNTS OF INCOME HAVE NOT BEEN RENDERED TO THE AUTHORITY PRESCRIBED UNDER CLAUSE (V) OF SUB-SECTION (5C) OF THAT SECTION, IN THE MANNER SPE CIFIED IN THAT CLAUSE, OR WHICH HAS BEEN UTILIZED FOR PURPOSES OTHER THAN PROVIDING RELIEF TO THE VICTIMS OF EARTHQUAKE IN GUJARAT OR WHICH REMAINS UNUTILIZED I N TERMS OF SUB-SECTION (5C) OF SECTION 80G AND NOT TRANSFERRED TO THE PRIME MINIST ERS RELIEF FUND ON OR BEFORE THE 31 ST DAY OF MARCH, 2004 SHALL BE DEEMED TO BE THE INCOM E OF THE PREVIOUS YEAR AND SHALL ,ACCORDINGLY, BE CHARGED TO TAX. IN THE INSTANT CASE, THE LD. CIT(A) CONCLUDED THAT PROVIDING RELIEF TO VICTIMS OF NATURAL CALAMITIES IS ONE OF THE OBJECTS OF THE TRUST WHILE THERE IS NO BAR / RE STRICTION ON THE ASSESSEE IN COLLECTING DONATIONS AND SPENDING THEM FOR PROVIDIN G EARTHQUAKE RELIEF TO THE VICTIMS. IT WAS FURTHER MENTIONED BY THE LD. CIT(A ) THAT THE EVIDENCE ON RECORD CLEARLY SHOWS THAT THE DONATIONS WERE NOT RECEIVED U/S 80G(2)(D), BUT WERE RECEIVED IN THE NORMAL COURSE U/S 80G OF THE ACT . ACCORDINGLY, THE LD. CIT(A) DIRECTED THE AO TO COMPUTE THE INCOME OF THE ASSESS EE U/S 11 OF THE ACT, AFTER VERIFYING WHETHER ASSESSEE FULFILLED THE CONDITION S LAID DOWN IN SECS. 11 TO 13 OF THE ACT FOR THE YEAR UNDER CONSIDERATION. IN THE LIGHT OF THESE DIRECTIONS OF THE LD. CIT(A) ON THE BASIS OF EVIDENCE FOUND ON RECORDS A ND THERE BEING NO MATERIAL BEFORE US SO AS TO ENABLE US TO TAKE A DIFFERENT VI EW IN THE MATTER, WE ARE NOT INCLINED TO INTERFERE. THEREFORE , GROUND NO.1 IN THE APPEAL IS DISMISSED. 6. GROUND NOS. 2 & 3 ,BEING GENERAL IN NATURE ,DO NOT REQUIRE ANY SEPARATE ADJUDICATION AND ARE ,THEREFORE, DISMISSED. ITA 1128/AHD/2007 6 7. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED ON THIS 5TH DAY OF FEBRUA RY, 2010. SD/- SD/- (BHAVNESH SAINI) (A.N. PAHUJA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD, DATED: 5TH FEBRUARY, 2010 PK/- COPY TO: 1. THE ASSESSEE 2. DIT(EXEMPTION), AHMEDABAD 3. CIT(A)-XX, AHMEDABAD 4. DIT(EXEMPTION), AHMEDABAD 5. DR, C BENCH BY ORDER DEPUTY REGISTRAR, ITAT, AHMEDABAD