DDIT, Hyderabad V. Nalgonda Diocese Society, Nalgonda

ITA 1334/HYD/2008

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66131 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 23-03-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 05-08-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V SRINIVAS
• Assessee Lawyers: E S RANGANATHAN
• Keywords: Gift; Diversion of income
• Section: 12A; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 1166/HYD/2006 A.Y. 2003-04 ITA NO. 1334/HYD/2008 A.Y. 2004-05 DY. DIRECTOR OF INCOME - TAX (EXEMPTIONS)-2, HYDERABAD VS. M/S. NALGONDA DIOCESE SOCIETY, NALGONDA PAN: AAAAN1189Q ASSESSEE RESPONDENT APPELLANT BY: SHRI V. SRINIVAS RESPONDENT BY: SHRI E.S. RANGANATHAN DATE OF HEARING: 09 . 0 7 .2012 DATE OF PRONOUNCEMENT: 03.08.2012 O R D E R PER CHANDRA POOJARI, AM: THE ABOVE TWO APPEALS BY THE REVENUE ARE DIRECTED A GAINST THE DIFFERENT ORDERS OF THE CIT(A)-IV, HYDERABAD F OR ASSESSMENT YEARS 2003-04 AND 2004-05. 2. THE REVENUE RAISED THE FOLLOWING GROUNDS OF APPEAL: ITA NO. 1166/HYD/2006 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-IV IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. THE ID. CIT(A) ERRED IN HOLDING THAT THE FOREIGN DONATIONS RECEIVED AND DEPOSITED IN BISHOP'S SEPARATE BANK ACCOUNT COULD NOT BE LINKED TO THE ASSESSEE-SOCIETY. 3. THE ID. CIT(A) FAILED TO SEE THAT THE DONATIONS/ CONTRIBUTIONS SENT IN BY FOREIGN DONORS CANNOT BE KEPT OUTSIDE THE BOOKS OF ACCOUNT OF THE ONLY TAXABLE ENTITY AUTHORISED TO ACCOUNT FOR THEM, VIZ., THE ASSESSEE-SOCIETY. THE DIOCESE IS NOT A TAXABLE ENTITY AND IT DOES NOT HAVE REGISTRATION UNDER FOREIGN CONTRIBUTIONS REGULATION ACT. SIMILARLY, THE BISHOP DID NOT HAVE REGISTRATION ITA NOS. 1166/06 & 1334/ HYD/08 M/S. NALGONDA DIOCESE SOCIETY ========================= 2 UNDER THE FCRA EITHER IN HIS PERSONAL NAME OR AS HEAD OF THE NALGONDA DIOCESE. THUS, ALL FOREIGN CONTRIBUTIONS RECEIVED BY THE NALGONDA DIOCESE AND ITS BISHOP AS ALSO THE ASSESSEE- SOCIETY, HAVE GOT TO BE DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE-SOCIETY DESIGNATED UNDER FCRA RULES. 4. THE ID. CIT(A) OVERLOOKED THE FACT THAT THE ASSESSEE, VIZ. NALGONDA DIOCESE SOCIETY, BEING THE LEGAL FACE OF NALGONDA DIOCESE AND BEING AN ENTITY FORMED TO COMPLY WITH THE LAW OF THE LAND, IS ALONE AUTHORISED BY THE HOME MINISTRY TO RECEIVE, AND ACCOUNT FOR, FOREIGN DONATIONS/ CONTRIBUTIONS. 5. THE ID. CIT(A) FAILED TO SEE THAT THE ACTION OF BISHOP JOJI IN DEPOSITING RS. 2.59 LACS OF FOREIGN DONATIONS RIGHTFULLY BELONGING TO THE SOCIETY INTO A SEPARATE BANK ACCOUNT MAINTAINED BY HIM CONSTITUTED AN OFFENCE UNDER FCR ACT. 6. THE ID. CIT (A) GROSSLY ERRED IN OVERLOOKING THE FACT, AS BROUGHT OUT IN THE ASSESSMENT ORDER, THAT THOUGH THE CODE OF CANON LAW GOVERNING THE CONDUCT OF CATHOLIC PRIESTS ETC. DID NOT, AS SUCH, PRESCRIBE A VOW OF POVERTY FOR THE BISHOPS, THE BISHOPS CONFERENCE HAD ORDAINED SUCH CONDUCT FOR ALL THE BISHOPS OF INDIA AND IS UNASSAILABLE. 7. THE ORDER OF ID. CIT(A) RUNS COUNTER TO THE BOARD CIRCULAR OF 1959 WHEREIN IT WAS HELD THAT THE RECEIPTS IN THE HANDS OF NUNS, PRIESTS ETC. BELONG TO THE CONGREGATION THEY REPRESENT, ON THE PRINCIPLE OF DIVERSION OF INCOME BY OVERRIDING TITL E AND AS SUCH CANNOT BE TAXED IN INDIVIDUAL HANDS, ON THE GROUND THAT THEY TAKE A VOW OF POVERTY. 8. GIVEN THE ABOVE LEGAL POSITION, THE ID. CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO ASSESS THE SUM OF 2.59 LACS IN THE HANDS OF THE BISHOP AS, BISHOPS CANNOT HAVE ANY INCOME OF THEIR OWN. 9. THE ID. CIT(A) GROSSLY ERRED IN DIRECTING THE ASSESSING OFFICER TO ASSESS, PROTECTIVELY, THE IMPUGNED SUM OF RS. 2.59 LACS IN THE HANDS OF THE ASSESSEE-SOCIETY FOR THE SIMPLE REASON THAT DENIAL OF EXEMPTION UNDER SECTION 11 IN RESPECT OF THE ENTIRE INCOME OF THE ASSESSEE WOULD FOLLOW ITA NOS. 1166/06 & 1334/ HYD/08 M/S. NALGONDA DIOCESE SOCIETY ========================= 3 AS A NATURAL COROLLARY, FOR, EVEN IN A PROTECTIVE ASSESSMENT, THE IMPLICATIONS OF SEC. 13(1)(C) CANNOT BE GIVEN A GO-BY. ITA NO. 1334/HYD/2008 : A) THE LEARNED CIT(A) ERRED ON BOTH FACTS AND LAW. B) THE LEARNED CIT(A) IGNORED THE FACT THAT THE BISHOP WAS ALSO PRESIDENT OF M/S. NALGONDA DIOCESE SOCIETY AND HE DID NOT ENJOY ANY INDEPENDENT CAPACITY TO FILE A RETURN FOR THE FUNDS OF RD. 3,06 ,238 RECEIVED ON BEHALF OF THE SOCIETY. C) THE LEARNED CIT(A) OUGHT TO HAVE CONFIRMED THE ASSESSMENT ORDER AS THE DIVERSION OF FUNDS BY THE PRESIDENT DID AMOUNT TO CONTRAVENTION OF THE PROVISIONS CONTAINED IN SEC. 13(1)(C) R.W.S. 13(3) AS ALREADY HELD BY THE HONBLE ITAT IN ITS ORDER DATED 16.5.2008 IN ITA NO. 1166/HYD/2006 FOR THE A.Y. 2003-04 IN FAVOUR OF THE REVENUE. 3. THE CRUX OF THE ABOVE GROUNDS IS THAT EXEMPTION U/S . 11 IS DENIED IN VIEW OF VIOLATION OF PROVISIONS OF SECTIO N 13(1)(C) R.W.S. 13(3) OF THE INCOME-TAX ACT, 1961. FOR BREVITY, WE CONSIDER FACTS GIVEN IN ASSESSMENT YEAR 2003-04. 4. BRIEF FACTS OF THE ISSUE ARE THAT SMALL AMOUNTS OF DONATIONS/ GIFTS AGGREGATING TO RS. 2,59,150 WHICH RECEIVED BY THE BISHOP OF NALGONDA WHO IS ALSO THE PRESIDENT OF THE ASSESSEE SOCIETY, FROM PERSONS KNOWN TO HIM AND WERE DEPOSITED IN A SEPARA TE BANK ACCOUNT OTHER THAN THE BANK ACCOUNT MEANT FOR THE A SSESSEE SOCIETY. THE ASSESSEE BEFORE THE ASSESSING OFFICE R SUBMITTED THAT THE PURPOSE OF THESE DONATIONS IS FOR CONDUCTING MA SSES, CHARITY, ETC. THE ASSESSING OFFICER DID NOT ACCEPT THE CONT ENTION OF THE ASSESSEE AND HELD AS UNDER: 'FIRSTLY, THE ACCOUNT BEARING NO. SB-2350 IS NOT AN ACCOUNT IN A PERSONAL NAME. IT IS THE ACCOUNT OF T HE BISHOP OF NALGONDA. SECONDLY, IT IS A MATTER OF CO MMON KNOWLEDGE THAT WHILE FOREIGN INSTITUTIONAL DONORS T AKE DUE CARE TO SEND THEIR DONATIONS, PROPERLY AND CORR ECTLY MENTIONING THE DONEE'S NAME AS 'NALGONDA DIOCESE', ITA NOS. 1166/06 & 1334/ HYD/08 M/S. NALGONDA DIOCESE SOCIETY ========================= 4 SMALL INDIVIDUAL DONORS, BASING ON THEIR PERSONAL INTERACTION/CORRESPONDENCE WITH THE BISHOP, SEND TH EIR DRAFTS TO THE BISHOP OR TO THE NAME OF THE BISHOP. THIS DOES NOT MEAN THAT THESE DONATIONS, OFTEN IN THE RA NGE OF 100 AND 1000 US DOLLARS, ARE MEANT FOR THE PERSO NAL BENEFIT AND ENJOYMENT OF SRI JOJI. HOWEVER, THE AC TION OF SRI JOJI IN KEEPING THESE DONATIONS OUTSIDE THE DIOCESAN BOOKS IS CLEARLY IN VIOLATION OF THE CODE. A VERY SIGNIFICANT ASPECT OF THE MATTER IS THAT THE A CCOUNT NO. 2350 OPENED BY SRI JOJI IS CAPTIONED AS MOST RE V. GOVINDU JOJI, BISHOP OF NALGONDA DIOCESE, I.E., IN HIS CAPACITY AS A BISHOP AND NOT IN HIS PERSONAL CAPACI TY. THUS, THE MONEY DEPOSITED IN THIS ACCOUNT BELONGS T O THE BISHOP AND THEREFORE, TO THE DIOCESE. NOT ACCOUNTING FOR THE SAME IN THE BOOKS OF THE DIOCESE SOCIETY'S ACCOUNT AND KEEPING THE FUNDS OF THE SOCI ETY TO HIMSELF CONSTITUTES A CONTRAVENTION WHICH ATTRAC TS THE PROVISIONS OF SEC. 13(1)(C) R.W.S. 13(3).' 5. THE ASSESSING OFFICER ALSO OBSERVED THAT BISHOPS AR E NOT SUPPOSED TO HAVE ANY WORLDLY POSSESSIONS AS PER THE CODE OF CONDUCT CALLED 'THE CODE OF CANON LAW' AND, THEREFO RE, THE DONATIONS RECEIVED HAVE TO BE FOR THE ASSESSEE SOCI ETY AND NOT FOR THE BISHOP HIMSELF IN HIS INDIVIDUAL CAPACITY. 6. ON APPEAL, THE CIT(A) ALLOWED CLAIM OF THE ASSESSEE BY HOLDING THAT A BISHOP FUNCTIONS IN VARIOUS CAPACITI ES AND HE IS REQUIRED TO CARRY OUT OTHER RELIGIOUS AND SOCIAL AC TIVITIES. THE PRESIDENT CANNOT BE HELD TO BE HOLDING THE POSITION OF THE ASSESSEE SOCIETY ALONE. BEING SO, HE HAS OPENED A SEPARATE SB ACCOUNT IN HIS INDIVIDUAL CAPACITY WHICH CANNOT BE CONSTRUED A S A VIOLATION OF PROVISIONS OF SECTION 13(1)(C) OF THE ACT AND TH E BISHOP HAS DEPOSITED RS. 2,59,150 IN HIS INDIVIDUAL SB ACCOUNT CANNOT BE A REASON FOR DENYING EXEMPTION TO THE ASSESSEE SOCIET Y. AGAINST THIS THE REVENUE IS IN APPEAL BEFORE US. 7. THE LEARNED DR SUBMITTED THAT THE ASSESSEE WAS GRAN TED REGISTRATION UNDER SEC. 12A OF THE INCOME-TAX ACT, 1961. FOR THE ASST. YEAR UNDER CONSIDERATION, THE ASSESSING OFFIC ER REJECTED THE CLAIM OF THE ASSESSEE FOR EXEMPTION UNDER SEC. 11 O F THE INCOME- TAX ACT SINCE THERE WAS VIOLATION OF SEC. 13(1)(C) OF THE INCOME-TAX ITA NOS. 1166/06 & 1334/ HYD/08 M/S. NALGONDA DIOCESE SOCIETY ========================= 5 ACT. ACCORDING TO THE DR, THE ASSESSEE SOCIETY RECE IVED DONATIONS BUT THE ENTIRE DONATIONS WERE NOT ACCOUNTED IN THE BOOKS OF THE ASSESSEE SOCIETY. THE PRESIDENT OF THE SOCIETY KEPT THE FUNDS RECEIVED AS DONATIONS SEPARATELY FOR HIMSELF WITHOU T ACCOUNTING THE SAME IN THE BOOKS OF ACCOUNT OF THE SOCIETY. TH EREFORE, ACCORDING TO THE LEARNED DR, THERE IS CLEAR VIOLATI ON OF SEC. 13(1)(C) OF THE INCOME-TAX ACT. REFERRING TO THE ASSESSMENT ORDER, HE POINTED OUT THAT THE ASSESSEE BEING A RELIGIOUS SOC IETY, THE CANON LAW PROHIBITS THE INDIVIDUAL BISHOPS FROM KEEPING A NY PROPERTY OF THEIR OWN. ACCORDING TO THE DR, THE BISHOP IN HIS I NDIVIDUAL CAPACITY CANNOT POSSESS ANY ASSET. BISHOP G. JOJI, WHO IS THE PRESIDENT OF THE ASSESSEE SOCIETY RECEIVED DONATION S AND GIFTS FROM FOREIGN DONORS IN HIS CAPACITY OF THE ASSESSEE SOCI ETY TO THE EXTENT OF RS. 2,59,150. THE PURPOSE OF THE DONATIONS IS S TATED TO BE FOR CONDUCTING MASSES, CHARITY ETC. THESE AMOUNTS WERE RECEIVED BY BISHOP G. JOJI IN HIS CAPACITY AS PRESIDENT OF THE ASSESSEE SOCIETY. HOWEVER, BISHOP G. JOJI DEPOSITED THE DONATIONS IN HIS SAVINGS BANK ACCOUNT MAINTAINED IN INDIAN OVERSEAS BANK. F ROM TIME TO TIME, THE BISHOP WITHDREW THE AMOUNTS IN CASH BY IS SUING SELF CHEQUES. THESE WITHDRAWALS AND DEPOSITS WERE NOT E NTERED IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE SOCIETY . MOREOVER, THE ACCOUNT MAINTAINED BY THE BISHOP IN THE INDIAN OVERSEAS BANK IS A DESIGNATED ACCOUNT AUTHORISED TO RECEIVE FOREIGN DONATIONS UNDER THE CONTRIBUTIONS (REGULATION) ACT. THEREFORE, ACCORDING TO THE LEARNED DR SINCE THE FUNDS RECEIVE D BY THE ASSESSEE SOCIETY WERE USED FOR THE PERSONAL BENEFIT OF BISHIP G. JOJI, THERE IS CLEAR VIOLATION OF SEC. 13(1)(C). TH EREFORE, THE ASSESSEE SOCIETY IS NOT ENTITLED FOR EXEMPTION 8. THE LEARNED AR SUBMITTED THAT THE ASSESSEE SOCIETY WAS RECEIVING DONATIONS FROM FOREIGN DONORS. A SUM OF R S. 2,59,150 WAS RECEIVED BY BISHOP G. JOJI IN HIS INDIVIDUAL CA PACITY. THE GIFT DRAFTS WERE DRAWN IN FAVOUR OF BISHOP G. JOJI AND N OT IN FAVOUR OF THE SOCIETY. THE PURPOSE OF GIVING THE DONATIONS WA S TO CONDUCT MASSES AND CHARITY. SINCE THE CHEQUES WERE RECEIVED IN THE INDIVIDUAL NAME OF BISHOP G. JOJI, THEY WERE NOT AC COUNTED IN THE ITA NOS. 1166/06 & 1334/ HYD/08 M/S. NALGONDA DIOCESE SOCIETY ========================= 6 BOOKS OF THE ASSESSEE SOCIETY. ACCORDING TO THE AR , THE RECEIPT OF RS. 2,59,150 HAS NOTHING TO DO WITH THE ASSESSEE SO CIETY. MERELY BECAUSE BISHOP G. JOJI HAPPENED TO BE THE PRESIDENT OF THE SOCIETY, THE INDIVIDUAL AMOUNTS RECEIVED BY BISHOP G. JOJI CANNOT BE TAKEN INTO ACCOUNT BY THE ASSESSEE SOCIETY. THER EFORE, ACCORDING TO THE AR THERE WAS NO VIOLATION OF SEC. 13(1)(C) AT ALL. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. ON EARLIER OCCASION THIS ISSUE WAS DECIDED BY THE TRIBUNAL AGAINST THE ASSESSEE VIDE ORDER DATED 16 TH MAY, 2008 IN ITA NO. 1166/HYD/2006. LATER ON THE ASSESSEE FILED AN MA I N MA NO. 122/HYD/2009 SEEKING RECALL OF THE TRIBUNAL ORDER I N ITA NO. 1166/HYD/2006 DATED 16 TH MAY, 2008 STATING THAT THE ASSESSEE CAME ON APPEAL IN ITA NO. 1157/HYD/06 ON THE DIRECT ION OF THE CIT(A) TO ASSESS THE AMOUNT OF RS. 2,59,150 IN THE HANDS OF THE ASSESSEE SOCIETY ON PROTECTIVE BASIS AS HELD IN ITA NO. 1157/HYD/2006. THE TRIBUNAL DISPOSED OF THIS ASSE SSEE'S APPEAL VIDE ORDER DATED 4.4.2008 BY HOLDING AS FOLLOWS: ' 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THERE IS NO DISPUTE THAT AS P ER THE ORDER OF THE LD. CIT(A) THE BISHOP SRI G. JOJI HAS FILED HIS INDIVIDUAL RETURN FOR THE IMPUGNED ASSESSMENT YEAR 2003-04 ON 1.3.2007 SHOWING THE SAME DONATION OF RS . 2,59,150 AS HIS INCOME. UNDER THE INCOME-TAX ACT, THE INCOME IS ASSESSABLE IN ONE HAND WHICH THE ASSESSEE HAS ALREADY OFFERED IN THE HANDS OF BISHOP G. JOJI, THEREFORE, THE DIRECTION OF THE LD. CIT(A) TO ASSES S THE SAME ON PROTECTIVE BASIS IN THE HANDS OF THE APPELL ANT SOCIETY IS WITHOUT ANY MERIT AND ACCORDINGLY THE SA ME IS DELETED. THE GROUND TAKEN BY THE ASSESSEE IS, THEREFORE, ALLOWED TO THE EXTENT AS INDICATED ABOVE .'\ 10. THE TRIBUNAL WHILE DISPOSING THE DEPARTMENTAL APPEA L IN ITA NO. 1166/HYD/206 HAS NOT TAKEN NOTE OF THE ABOVE FI NDING OF THE TRIBUNAL IN ASSESSEE'S APPEAL. BEING SO, THE TRIBU NAL RECALLED ITS ORDER IN ITA NO. 1166/HYD/2006 DATED 16.5.2008 BY H OLDING AS FOLLOWS: ITA NOS. 1166/06 & 1334/ HYD/08 M/S. NALGONDA DIOCESE SOCIETY ========================= 7 '4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND T HAT THE ASSESSEE IN ITS PETITION DATED 30-4-2008 BROUGH T TO THE NOTICE OF THE TRIBUNAL THAT THE ORDER PASSED BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ITA NO. 1157/HYD/2006 DATED 4-4-2008 WHICH CONSIDERED THE SIMILAR AND COMMON POINT THAT THE DONATION RECEIVED BY THE BISHOP OF RS. 2,59,150/- CONSTITUTE THE INCOME OF THE BISHOP OR THE ASSESSEE-SOCIETY. HOWEVER, WE FIN D THAT THE TRIBUNAL DID NOT CONSIDER THE PETITION FIL ED BY THE ASSESSEE SOCIETY AND ALSO NOT CONSIDERED THE OR DER OF THE COORDINATE BENCH OF THE TRIBUNAL IN ITA NO. 1157/HYD/2006. THEREFORE, THERE IS AN ERROR ON THE FACE OF THE ORDER OF THE TRIBUNAL WHICH REQUIRES RECTIFICATION. IN OUR CONSIDERED VIEW, SINCE BOTH THE ISSUES WITH REGARD TO TAXABILITY OF THE AMOUNT OF R S. 2,59,150/- IN THE ASSESSEE'S APPEAL AS WELL AS THE APPLICABILITY OF SECTION 13(1)(C) OF THE ACT IN THE APPEAL OF THE REVENUE ARISES OUT OF THE SAME TRANSACTION O F RS. 2,59,150/- IN THE HANDS OF THE INDIVIDUAL, THE ORDE R OF THE TRIBUNAL IN THE ASSESSEE'S APPEAL HOLDING THE AMOUNT AS TAXABLE IN THE HANDS OF BISHOP, MAY HAVE A BEARING ON THE IMPUGNED ORDER IN THE APPEAL PREFERR ED BY THE REVENUE. ACCORDINGLY, IN THE INTEREST OF JUS TICE, WE FEEL IT PROPER AND JUST TO RECALL THE ORDER OF T HE TRIBUNAL IN ITA NO. 1166/HYD/2006 DATED 16.5.2008 AND DIRECT THE REGISTRY TO POST THE CASE IN ITS DUE COURSE.' 11. ACCORDINGLY, THE PRESENT APPEAL CAME FOR ADJUDICAT ION BEFORE US. 12. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE. THER E IS NO DISPUTE REGARDING THE FACT THAT BISHOP G. JOJI IS T HE PRESIDENT OF ASSESSEE SOCIETY. THE ASSESSEE SOCIETY MAINTAINED BANK ACCOUNT IN ITS NAME OPERATED BY BISHOP G. JOJI. SIMULTANEO USLY HE IS AUTHORISED TO RECEIVE FOREIGN DONATIONS. THE ADMIT TED FACT IS THAT BISHOP G. JOJI IN ADDITION TO KEEPING ACCOUNT OF TH E ASSESSEE SOCIETY ALSO MAINTAINED A SB ACCOUNT NO. 2530 IN HI S INDIVIDUAL NAME ALSO AS 'MOST REVEREND MR. GOVINDU JOJI, BISHO P OF NALGONDA DIOCESE SOCIETY' WITH INDIAN OVERSEAS BANK , NALGONDA. IT IS ALSO NOT DISPUTED THAT BISHOPS ARE NOT SUPPOS ED TO MAINTAIN ITA NOS. 1166/06 & 1334/ HYD/08 M/S. NALGONDA DIOCESE SOCIETY ========================= 8 INDIVIDUAL ASSETS OF THEIR OWN. TO CLARIFY THIS FA CT THE BENCH DIRECTED THE AR TO FILE A BYE-LAW OF THE ASSESSEE S OCIETY WHICH HE FAILED TO FILE. IT IS MEANS THAT THE ABOVE FACT IS ADMITTED. THERE IS NO DISPUTE ON THIS ISSUE. DONATIONS RECEIVED BY TH E ASSESSEE SOCIETY ARE FOR PUBLIC PURPOSE. ON THE OTHER HAND, THE DONATIONS WERE DEPOSITED IN INDIVIDUAL SB ACCOUNT OF BISHOP G . JOJI. THE DONATIONS RECEIVED IN THE INDIVIDUAL CAPACITY OF BI SHOP ARE ON BEHALF OF THE ASSESSEE SOCIETY. BEING A REPRESENTA TIVE OF THE SOCIETY, THE DONATION CHEQUES WERE DRAWN AND SENT I N THE NAME OF BISHOP G. JOJI. BECAUSE A CHEQUE IS IN THE INDIVID UAL NAME THAT CANNOT BE PUT IN INDIVIDUAL BANK ACCOUNT AND KEPT A WAY FROM THE SOCIETY FUND. THE BISHOP IS PART AND PARCEL OF THE ASSESSEE SOCIETY. HE CANNOT HAVE INDIVIDUAL IDENTITY. THE AMOUNT RECEIVED ON BEHALF OF THE SOCIETY, THOUGH IT IS IN THE INDIV IDUAL NAME, CANNOT BE DEPOSITED IN HIS INDIVIDUAL SB ACCOUNT SO AS TO MISUSE THE SAME. A BISHOP, AS A HOLY PERSON HAVING RENOUN CED ENTIRE WORLDLY THINGS, CANNOT KEEP THE ASSESSEE SOCIETY FU ND IN HIS OWN NAME BY OPENING A SB ACCOUNT IN A BANK. THE ACCOUN T SO MAINTAINED BY BISHOP G. JOJI IS TO RECEIVE THE FUND S ON BEHALF OF THE ASSESSEE SOCIETY AFTER OBTAINING CLEARANCE UNDE R FOREIGN CONTRIBUTION (REGULATION) ACT AND IT IS FOR THE PUR POSE OF ASSESSEE SOCIETY. IN THE PRESENT CASE BISHOP G. JOJI ACTING IN DUAL CAPACITY, ONE AS PRESIDENT OF THE SOCIETY AND ANOTHER IN HIS INDIVIDUAL CAPACITY AND DIVERTED FUNDS OF THE ASSESSEE SOCIETY , WHICH HE IS NOT EXPECTED TO DO SO. IN OUR OPINION THERE IS A C LEAR VIOLATION OF PROVISIONS OF SECTION 13(1)(C) OF THE ACT AND THE A SSESSEE SOCIETY IS NOT ENTITLED FOR EXEMPTION U/S. 11 OF THE ACT. FUR THER, THE TRIBUNAL IN ITS ORDER IN ASSESSEES OWN CASE FOR TH IS ASSESSMENT YEAR IN ITA NO. 1157/HYD/06, DELETED THE DIRECTION OF THE CIT(A) THAT THE AMOUNT SO DIVERTED AT RS. 2,59,150 CANNOT BE ASSESSED ON PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE SOCIE TY. THE DIRECTION BY THE TRIBUNAL AS ABOVE HAS NO IMPLICATION IN DENY ING EXEMPTION ITA NOS. 1166/06 & 1334/ HYD/08 M/S. NALGONDA DIOCESE SOCIETY ========================= 9 U/S. 11. THE TRIBUNAL HAS DELETED THIS DIRECTION O F THE CIT(A) SINCE THIS AMOUNT OF RS. 2,59,150 HAS BEEN ASSESSED IN THE HANDS OF BISHOP G. JOJI IN HIS INDIVIDUAL CAPACITY. THE REASON THAT THE AMOUNT DIVERTED WAS ASSESSED IN THE HANDS OF BISHOP G. JOJI CANNOT BE A REASON FOR GRANTING DEDUCTION U/S. 11 T O THE ASSESSEE SOCIETY. ON THE OTHER HAND, IT PROVES THAT BISHOP G. JOJI HAS DIVERTED THE FUNDS OF THE ASSESSEE SOCIETY TO HIS I NDIVIDUAL SB ACCOUNT. BEING SO, WE ARE INCLINED TO REVERSE THE ORDER OF THE CIT(A) REGARDING GRANTING OF EXEMPTION U/S. 11 OF T HE ACT. ACCORDINGLY, THE GROUND RAISED BY THE REVENUE IS AL LOWED. SINCE THE FACTS AND CIRCUMSTANCES IN BOTH THE ASSESSMENT YEARS ARE SAME, THE APPEAL FOR A.Y. 2004-05 IS ALSO ALLOWED. 13. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD AUGUST, 2012. SD/ - (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 3 RD AUGUST, 2012 COPY FORWARDED TO: 1. THE DEPUTY DIRECTOR OF INCOME-TAX (EXEMPTIONS)-2, A .P. OLYMPIC BHAVAN, LB STADIUM, BASHEERBAGH, HYDERABAD- 4. 2. M/S. NALGONDA DIOCESE SOCIETY, BISHOP'S HOUSE, R.P. ROAD, NALGONDA. 3. THE CIT(A)-IV, HYDERABAD. 4. THE DIT (EXEMPTIONS), HYDERABAD 5. THE DR A BENCH, ITAT, HYDERABAD. TPRAO