Appeal details
Counselvise Citation
[2012] 140 COUNSELVISE.COM (IT) 57442 (ITAT-BANGALORE)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 month(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
31-01-2012
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
A
Next Hearing Date
17-03-2015
Assessment Year
2003-2004
Appeal Filed On
30-12-2011
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH A BEFORE SHRI N.K SAINI, ACCOUNTANT MEMBER AND SMT. P MADHAVI DEVI, JUDICIAL MEMBER ITA NO.1382 & 1535 & /BANG/2010 (ASST. YEAR - 2004-05 & 2005-06 ) THE INCOME-TAX OFFICER, WARD-1(3), MYSORE. . APPELLANT VS. PEETADHIPATHI TRUST, SRI GANAPATHI SACHIDANANDA ASHRAM, OOTY ROAD, DATTA NAGAR, MYSORE. . RESPONDENT PAN NO.AADTP5861 A. CO NO.10 AND 11/BANG/2011 (ASST. YEAR - 2004-05 & 2005-06) (BY ASSESSEE) REVENUE BY : SMT. SUSAN THOMAS JOSE ASSESSEE BY : SHRI ASHOK A KULKARNI DATE OF HEARING : 03-01-2012 DATE OF PRONOUNCEMENT : -01-2012 ITA NOS.1382 & 1535/B/10 2 CO NOS. 10 & 11/B/11 O R D E R PER P MADHAVI DEVI, JUDICIAL MEMBER : THESE APPEALS ARE FILED BY THE REVENUE AND THE CROS S- OBJECTIONS ARE FILED BY THE ASSESSEE. THESE APPEALS ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEAL S) AT MYSORE DATED 15.09.2010. THE APPEALS ARISE OUT OF THE ASS ESSMENT COMPLETED U/S 143(3) OF THE INCOME-TAX ACT, 1961. 2. IN THE REVENUES APPEAL, THE GRIEVANCE IS AGAINS T THE ORDER OF THE CIT(A) IN DELETING THE ADDITION OF INCOME MADE BY THE AO ON ACCOUNT OF GIFTS RECEIVED BY THE PRIVATE TRUST, BY OVERLOOKING THE PROVISIONS OF SEC. 2(24)(IVA) READ WITH SEC. 160(1) (IV), AS PER WHICH, ANY BENEFIT OR PERQUISITE RECEIVED IS VERY MUCH TAX ABLE IN THE ASSESSEES HANDS. THE REVENUE HAS ALSO RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF DR. K GEORGE THOMAS VS. CIT FOR CONTENDING THAT THE PEETADHIPATHI OF THE TRUST BEING SOLE BENEFICIARY OF THE TRUST, ANY GIFTS RECEIVED FROM P REACHING AND PROPAGATING RELIGIOUS FAITH CONSTITUTES PROFESSIONA L INCOME. ITA NOS.1382 & 1535/B/10 3 CO NOS. 10 & 11/B/11 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS A TRUST. THE TRUST HAS BEEN CREATED VIDE TRUST DEED DATED 19.12. 2002 AND THE ONLY BENEFICIARY OF THE TRUST IS PEETADHIPATHI OF SRI GA NAPATI SACHCHIDANANDA AVADHOOTA DATTA PEETHA AT MYSORE. T HE OBJECT OF THE TRUST IS TO PROVIDE FOR THE MAINTENANCE, TRAVEL IN INDIA AND ABROAD, MEDICAL AID IN SICKNESS AND ALL THE WORLDLY REQUIRE MENTS OF THE BENEFICIARY I.E THE PEETADHIPATHI OF THE DATTA PEET HA AND FOR THE SUPPORT, SUSTENANCE AND SUBSISTENCE OF THE BENEFICI ARY. THE ASSESSEE TRUST WAS NOT ESTABLISHED FOR CHARITABLE OR RELIGIO US PURPOSES AND, THEREFORE, WAS NOT ENTITLED FOR REGISTRATION U/S 12 A OF THE ACT. THE ASSESSEE FILED ITS RETURN OF INCOME IN FORM 3A OF T HE INCOME-TAX RULES APPLICABLE FOR INSTITUTIONS SEEKING EXEMPTION U/S 1 1 OF THE ACT. THE STATUS OF THE ASSESSEE IN THE SAID RETURN WAS SHOWN AS AOP. THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 2003 -04 WAS NOT REJECTED BY THE REVENUE AUTHORITIES AND, THEREFORE, THE ASSESSEE PRESUMED THAT THE SAME HAS BEEN ACCEPTED. FOR THE ASST. YEAR 2004- 05, THE ASSESSEE FILED ITS RETURN OF INCOME DISCLOS ING THE TOTAL TAXABLE INCOME OF RS.46,296/- AND ADVANCE TAX ON THE SAME W AS ALSO PAID. IN THE RETURN OF INCOME, THE STATUS WAS INDICATED AS A OP. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE INCOME-TAX ACT, THE AO SOUGHT FOR LIST OF DONORS WITH RESPECT TO CERTAIN DONATIONS. THE ITA NOS.1382 & 1535/B/10 4 CO NOS. 10 & 11/B/11 ASSESSEE FILED PARTICULARS REGARDING RECEIPT OF GIF TS AGGREGATING OF RS.18,40,837/- SHOWN AS CORPUS FUND. THE ASSESSEE ALSO PRODUCED THE RECEIPTS ISSUED BY IT IN RESPECT OF THESE GIFTS AND ALSO LETTERS ISSUED BY THE DONORS CONFIRMING THE GIFTS TOGETHER WITH NAME AND FULL ADDRESS ETC. MAKING IT POSSIBLE FOR THE DEPARTMENT TO VERI FY AND CARRY ON INVESTIGATION IF NEED BE. THE AO HOWEVER TREATED T HE SUM OF RS.18,40,837/- AS TAXABLE INCOME AND DISALLOWED THE EXPENSES OF RS.77,444/- CLAIMED TOWARDS TRAVELING CHARGES AND R EPAIR CHARGES OF RS.92,431/- ON THE GROUND THAT THEY WERE PERSONAL E XPENDITURE. 4. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT(A) STATING THAT THE AMOUNTS IN QUESTION ARE DONATIONS FROM THE DONORS FOR THE BENEFIT OF THE TRUST AND, THEREFORE, ARE NOT TA XABLE. HE ALSO QUESTIONED THE DISALLOWANCE OF EXPENSES FOR TRAVELI NG AND REPAIRS. 5. THE CIT(A) AFTER CONSIDERING THE ASSESSEES CON TENTION AT LENGTH AND ALSO THE CONTENTS OF TRUST DEED, CAME TO THE CONCLUSION THAT FOR BRINGING GIFTS/DONATIONS TO TAX, IT HAS TO BE S HOWN THAT THE RECEIPTS ARE IN THE NATURE OF INCOME TAXABLE UNDER THE ACT. HE ALSO CONCLUDED THAT THE GIFTS/DONATIONS PER SE ARE NOT TAXABLE INC OME UNDER ANY OF THE HEADS OF INCOME UNDER THE INCOME-TAX ACT AS SUCH RE CEIPTS CONSTITUTES ITA NOS.1382 & 1535/B/10 5 CO NOS. 10 & 11/B/11 NEITHER SALARY NOR INCOME FROM HOUSE PROPERTY NOR P ROFITS OR GAINS OF BUSINESS NOR CAPITAL GAINS. THUS, THE CIT(A) DELET ED THE ADDITION AND ALLOWED ASSESSEES APPEAL. 6. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 7. THE LEARNED DR WHILE SUPPORTING THE ORDER OF TH E AO, SUBMITTED THAT THE DEFINITION OF INCOME GIVEN AT SUB SEC. 24(IVA) OF SEC.2 INCLUDES THE VALUE OF ANY BENEFIT OR PERQUIS ITE WHETHER CONVERTIBLE INTO MONEY OR NOT, OBTAINED BY ANY REPR ESENTATIVE ASSESSEE MENTIONED IN CLAUSE (III) OR CLAUSE (IV) OF SUB SEC . (1) OF SEC. 160 OR BY ANY PERSON ON WHOSE BEHALF OR FOR WHOSE BENEFIT ANY INCOME IS RECEIVABLE BY THE REPRESENTATIVE ASSESSEE. HE ALSO DREW OUR ATTENTION TO THE DEFINITION OF THE REPRESENTATIVE ASSESSEE PR OVIDED U/S 160 OF THE INCOME-TAX ACT. ACCORDING TO THE CLAUSE (IV) OF SU B SEC. (1) OF SEC. 160, REPRESENTATIVE ASSESSEE MEANS IN RESPECT OF INCOME WHICH A TRUSTEE APPOINTED UNDER A TRUST DECLARED BY A DULY EXECUTED INSTRUMENT IN WRITING WHETHER TESTAMENTARY OR OTHERWISE [INCLU DING ANY WAKF DEED WHICH IS VALID UNDER THE MUSSALMAN WAKF VALIDA TING ACT OF 1913] RECEIVES OR IS ENTITLED TO RECEIVE ON BEHALF OR FOR THE BENEFIT OF ANY PERSON, SUCH TRUSTEE OR TRUSTEES. ITA NOS.1382 & 1535/B/10 6 CO NOS. 10 & 11/B/11 8. SHE SUBMITTED THAT THE ASSESSEE TRUST HAS BEEN FOUNDED SOLELY FOR THE PURPOSE OF TAKING CARE OF THE PEETADHIPATH I AND, THEREFORE, IT IS NOT FOR ANY CHARITABLE OR RELIGIOUS PURPOSES BUT FO R THE INDIVIDUAL BENEFIT OF THE PEETADHIPATHI AND AS PER THE DEFINIT ION U/S 160 OF THE INCOME-TAX ACT, THE TRUST WHICH RECEIVES THE CONTRI BUTIONS OR DONATIONS IS A REPRESENTATIVE ASSESSEE AND AS PER S EC. 2(24) (IVA) OF THE INCOME-TAX ACT THE CONTRIBUTIONS RECEIVED ARE INCOM E OF THE ASSESSEE. 9. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTH ER HAND SUPPORTED THE ORDERS OF THE CIT(A) AND SUBMITTED TH AT AS PER CLAUSE(IV)(A) SUB SEC. 24 OF SEC. 2 OF THE INCOME-T AX ACT ONLY DONATIONS OR GIFTS RECEIVED IN KIND ARE TO BE TREA TED AS INCOME OF THE ASSESSEE AND NOT THE CONTRIBUTIONS RECEIVED IN CASH . HE SUBMITTED THAT ALL THE CONTRIBUTIONS RECEIVED BY THE ASSESSEE TRUS T ARE IN THE FORM OF CASH OR CHEQUES AND THE DETAILS OF THE DONORS AND T HEIR PAN NO. WERE ALL PROVIDED TO THE AO. HE ALSO DREW OUR ATTENTI ON TO THE COPY OF THE TRUST DEED FILED IN THE PAPER BOOK DEMONSTRATING T HAT IT IS A TRUST REGISTERED ON THE 19 TH OF DEC, 2002 AND AT PAGE 31 OF THE PAPER BOOK ARE THE DETAILS OF DONATIONS RECEIVED DURING 2004-0 5 TO DEMONSTRATE THAT ALL THE DONATIONS RECEIVED WERE IN CASH OR BY CHEQUES. HE ALSO ITA NOS.1382 & 1535/B/10 7 CO NOS. 10 & 11/B/11 DREW OUR ATTENTION TO ANNEXURE C AT PAGES 32 TO 3 5 OF THE PAPER BOOK WHICH IS A LETTER OF ITO TO THE CIT(A) GIVING A REMAND REPORT ON THE DETAILS FILED BY THE ASSESSEE. THUS, ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE, THE ORDER OF THE CIT(A) I S TO BE UPHELD. 10. HE ALSO PLACED RELIANCE UPON THE DECISION OF T HE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MYSORE COMMERICAL UNION LTD. REPORTED 126 ITR 340 WHICH HAS BEEN UPHE LD BY THE HONBLE SUPREME COURT IN THE CASE OF MAFTLAL GAGHA BHAI REPORTED IN 219 ITR 644. HE SUBMITTED THAT THIS ISSUE IS ALSO BEEN CLARIFIED BY THE CBDT BOARD CIRCULAR, WHICH IS AVAILABLE AT 98 ITR STATUTE 97. 11. HAVING HEARD BOTH THE PARTIES AND HAVING CONSI DERED THE RIVAL CONTENTIONS, WE FIND THAT THE BASIC ISSUE BEFORE US IS AS TO WHETHER THE CONTRIBUTIONS/DONATIONS RECEIVED BY THE ASSESSEE AR E TO BE TREATED AS INCOME OF THE ASSESSEE U/S 2(24(IVA) OF THE INCOME- TAX ACT. SUB SEC. (24) OF SEC. 2 GIVES THE MEANING OF INCOME. FOR T HE PURPOSE OF CLARITY, THE RELEVANT PART OF PROVISION IS REPRODUC ED HEREUNDER : SECTION 2(24) INCOME INCLUDES ITA NOS.1382 & 1535/B/10 8 CO NOS. 10 & 11/B/11 (I) PROFITS AND GAINS (II) DIVIDEND ; -------- (IVA) THE VALUE OF ANY BENEFIT OR PERQUISITE WHETHER CONVERTIBLE INTO MONEY OR NOT, OBTAINED BY ANY REPRESENTATIVE ASSESSEE MENTIONED IN CLAUSE (III) OR CLAUSE (IV) OF SUB SEC. (1) OF SEC. 160 OR BY ANY PERSON ON WHOSE BEHALF OR FOR WHOSE BENEFIT ANY INCOME IS RECEIVABLE BY THE REPRESENTATIVE ASSESSEE (SUCH PERSON BEING HEREAFTER IN THIS SLUB-CLAUSE REFERRED TO AS THE BENEFICIARY) AND ANY SUM PAID BY THE REPRESENTATIVE ASSESSEE IN RESPECT OF ANY OBLIGATION WHICH, BUT FOR SUCH PAYMENT, WOULD HAVE BEEN PAYABLE BY THE BENEFICIARY; 12. ON GOING THROUGH THE ABOVE PROVISIONS, IT CAN BE SEEN THAT ONLY BENEFIT OR PERQUISITE RECEIVED IN KIND BY ANY REPRE SENTATIVE ASSESSEE OR ANY PAYMENT MADE BY THE REPRESENTATIVE ASSESSEE I N RESPECT OF ANY OBLIGATION WHICH, BUT FOR SUCH PAYMENT, WOULD HAVE BEEN PAYABLE BY THE BENEFICIARY IS TO BE TREATED AS INCOME CHARGE ABLE TO TAX. 13. IN THE CASE BEFORE US, IT IS THE CONTRIBUTIONS RECEIVED IN CASH AND NOT ANY PAYMENT MADE ON BEHALF OF THE BENEFICIARY. WE FIND THAT THIS ITA NOS.1382 & 1535/B/10 9 CO NOS. 10 & 11/B/11 ISSUE OF PERQUISITE WHETHER CONVERTIBLE INTO MONEY OR NOT - HAS BEEN CONSIDERED BY THE HONBLE HIGH COURT OF KARNATAKA I N THE CASE OF CIT VS. MYSORE COMMERCIAL UNION LTD., 126 ITR 340 WHERE IN IT HAS BEEN HELD THAT PROVISIONS OF ANY PERQUISITE WHICH MAY BE ONE THAT IS CONVERTIBLE INTO MONEY OR NOT I.E IS A PROVISION OF SOMETHING IN KIND WHICH MAY BE CAPABLE TO BEING CONVERTED INTO MONEY OR NOT BUT NOT MONEY ITSELF IS NOT A PERQUISITE WITHIN THE MEAING OF SEC. 2(24)(IV) OF THE ACT. THIS VIEW HAS BEEN APPROVED BY THE HONBL E SUPREME COURT IN THE CASE OF CIT VS. MAFATLAL GANGABHAI REPORTED IN 219 ITR 644. 14. THUS, IT CAN BE SEEN THAT ONLY A BENEFIT OR P ERQUISITE IN KIND CAN BE TREATED AS INCOME. DONATIONS IN THE FORM OF CASH CANNOT BE TREATED AS A BENEFIT OR PERQUISITE. THEREFORE AS RIGHTLY POINTED OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE, THE DONATIONS RECEIVED BY THE ASSESSEE DO NOT BECOME INCOME CHARGEABLE TO TAX. T HE ISSUE OF REPRESENTATIVE ASSESSEE WILL COME ONLY WHEN THE INC OME IS CHARGEABLE TO TAX. THEREFORE, WE DO NOT SEE ANY REASON TO INT ERFERE WITH THE ORDER OF THE CIT(A). 15. THE ASSESSEE HAS RAISED CROSS-OBJECTION AGAINS T THE ORDER OF HE CIT(A). ITA NOS.1382 & 1535/B/10 10 CO NOS. 10 & 11/B/11 16. THE ONLY GRIEVANCE OF THE ASSESSEES IS AGAINS T THE OBSERVATION OF THE CIT(A) AT PARA 18 OF HIS ORDER. PARA 18 OF THE ORDER OF THE CIT(A) IS AS UNDER : THE ONLY QUESTION WHICH STILL REMAINS IS WHETHER THE DONATIONS RECEIVED CAN BE TREATED AS IN THE NATURE OF BENEFIT OR PERQUISITE OF THE PROFESSION IF WE CONSIDER THE RELIGIOUS PREACHING AND DISCOURSE AS A PROFESSION. IT IS APPARENT THAT SUCH AN ISSUE CAN BE CONSIDERED ONLY IN THE CASE OF THE PEETADHIPATHI HIMSELF WHO IS THE SOLE BENEFICIARY OF THIS TRUST. THE TRUST CANNOT BE CONSIDERED TO BE CARRYING OUT ANY PROFESSION. IT IS THE PEETADHIPATHI WHO GIVES RELIGIOUS DISCOURSE AND PREACHING. THE QUESTION OF TREATING THE GIFTS/DONATIONS AS PROFESSIONAL RECEIPTS CAN BE CONSIDERED ONLY IN THE HANDS OF THE PEETADHIPATHI. THIS IS FOR THE AO TO MAKE ENQUIRIES AND REACH HIS OWN CONCLUSION ON THIS ISSUE. THE ADDITION MADE IN THE CASE OF THE APPELLANT TRUST CANNOT BE SUSTAINED ON THIS GROUND ALSO. SIMILARLY THE ISSUE AS TO WHETHER THE GIFTS CAN BE CONSIDERED AS ACTUALLY RECEIPTS OF THE ITA NOS.1382 & 1535/B/10 11 CO NOS. 10 & 11/B/11 PEETADHIPATHI AND HENCE INCLUDIBLE IN HIS INCOME U/S 56(2) CAN ALSO BE CONSIDERED IN THE CASE OF PEETADHIPATHI ONLY. 17. THOUGH THE LEARNED COUNSEL FOR THE ASSESSEE VE HEMENTLY ARGUED THAT THE SAID OBSERVATION IS NOT WARRANTED, WE FIND THAT THE SAID OBSERVATION OF THE CIT(A) IS ONLY TO STRENGTHEN HIS FINDING THAT THE CONTRIBUTIONS ARE NOT CHARGEABLE TO TAX IN THE HAND S OF THE ASSESSEE. THERE IS NO DIRECTION BY THE CIT(A) TO THE AO TO TA KE ANY ACTION ON THE BASIS OF SAID OBSERVATIONS. IN FACT, WE FIND T HAT THE SAID OBSERVATIONS ARE IN FAVOUR OF THE ASSESSEE HEREIN. IN VIEW OF THE SAME, WE DO NOT SEE ANY SUBSTANCE IN THE CROSS-OBJECTION AND THEY ARE ALSO DISMISSED. 18. IN THE RESULT, THE APPEALS FILED BY THE REVEN UE AND THE CROSS- OBJECTIONS FILED BY THE ASSESSEE ARE DISMISSED. ITA NOS.1382 & 1535/B/10 12 CO NOS. 10 & 11/B/11 ORDER PRONOUNCED IN THE OPEN COURT ON 31ST JAN, 2012. SD/- SD/- (N.K SAINI) (P MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER VMS. BANGALORE DATED : 31/01/2012 COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER ASST. REGISTRAR, I TAT, BANGALORE.
Mehul