M/s Viswanadha Educational Trust, Visakhapatnam V. THE CIT (EXEMTIONS), Hyderabad

ITA 144/VIZ/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6664 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 24-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R GOVINDARAJAN
• Keywords: Charitable institution; Opportunity of being heard
• Section: 80G; 12AA

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T .A.NO. 144 /VIZ/ 201 5 ( / ASSESSMENT YEAR: NA ) M/S VISWANADHA EDUCATIONAL TRUST D.NO.9 - 36 - 6/A PITHAPURAM COLONY MADDILAPALEM VISAKHAPATNAM [ PAN : A A BTV8270E ] COMMISSIONER OF INCOME TAX (EXEMPTIONS) HYDERABAD ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI G.V.N.HARI, AR / RESPONDENT BY : S HRI R.GOVINDARAJAN , DR / DATE OF HEARING : 0 5 .0 9 .2017 / DATE OF PRONOUNCEMENT : 13 . 0 9 .2017 / O R D E R PER D.S. SUNDER SINGH , ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX ( EXEMPTIONS ) [CIT( E ) ] , HYDERABAD VIDE F. NO. CIT(E)/HYD/36(08)/80G/2014 - 15 DATED 25 .0 2 .2015. 2 ITA NO. 144 /VIZ/201 5 M/S VISWANADHA EDUCATIONAL TRUST, VISAKHAPATNAM 2. ALL GROUNDS OF APPEAL ARE RELATED TO THE REJECTION OF APP ROVAL U/S 80G OF I.T.ACT. THE ASSESSEE IS A TRUST GRANTED REGISTRATION U/S 12AA OF I.T.ACT , FILED FORM NO.10G ON 28.08.2014 SEEKING APPROVAL UNDER SUB SE CTION 5 OF SECTION 80G I.T.ACT. LD.CIT(E) HAS CALLED FOR THE DETAILS AND THE EVIDENCE S WITH REGARD TO APPLICA TION OF FUNDS FOR CHARITABLE PURPOSE AND THE STEPS TAKEN BY THE ASSESSEE AFTER GRANT OF APPROVAL U/S 12AA FOR SETTING UP OF THE INSTITUTION , BUT THE ASSESSEE FAILED TO FURNISH THE SAME . HENCE, LD.CIT(E) HELD THAT THE ASSESSEE HAS N OT COMPLIED WITH THE REQUIREMENT S AS PER CLAUSE ( II) OF SUB - RULE(2) OF RULE 11AA OF THE INCOME TAX RULES, 1962. THE LD.CIT FURTHER OBSERVED THAT THE ASSESSEE WA S NOT MAINTAINING THE REGULAR BOOKS OF ACCOUNTS AND DOES NOT FULFILL THE CONDITIONS STIPULATED U /S SECTION 80G, SUB SEC.(5), CLAUSE (IV) OF I.T.ACT AND ACCORDINGLY REJECTED THE APPLICATION MADE BY THE ASSESSEE. AGGRIEVED BY THE ORDER OF THE LD. CIT(E), THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 3. APPEARING FOR THE ASSESSEE, THE LD.AR ARGUED T HAT THE ASSESSEE HAS INCORPORATED THE TRUST IN 2014 AND IT IS IN TAKING OFF STAGE. SINCE 3 ITA NO. 144 /VIZ/201 5 M/S VISWANADHA EDUCATIONAL TRUST, VISAKHAPATNAM THE INSTITUTION WAS INCORPORATED IN THE YEAR 2014, THE TRUST IS MAKING NEGOTIATIONS FOR ACQUIRING THE PROPERTIES FOR ACHIEVING THE GOALS OF THE S OCIETY. THE ONLY TRANSACTION DURING THE YEAR WAS DONATION RECEIVED FROM VISWANADHA EDUCATIONAL SOCIE TY RS.3,09,05,000/ - WHICH WAS PAID AS AN ADVANCE FOR PURCHASE OF THE SITE. LD. A R REFERRING TO PAGE N O.8 OF THE PAPER BOOK I.E. BANK ACCOUNT OF SYND ICATE BANK STATED THAT TH ERE WERE THREE TRANSACTIONS DURING THE YEAR I.E. RECEIPT OF DONATION FROM VISWA NADHA EDUCATIONAL TRUST AND THE PAYMENT OF RS.1,50,00,000/ - EACH TO MR. V . NAGESWARA RAO AND MR. V . DHANANJAYA RAO AS AN ADVANCE FOR ACQUIRING THE SITE. SINCE THE ENTIRE TRANSACT IONS ARE VERY CLEAR, THE PASS BOOK ITSELF IS AN ACCOUNT AND THE ASSESSEE ALSO MAINTAINED SEPARATE BOOKS OF ACCOUNTS WHICH WERE PLACED BEFORE THE LD.CIT. SUBSEQUENTLY, THE ASSESSEE FILED THE RETURN OF INCOME ON 30.01.2015. THE LD.AR ARGUED THAT THE ASSESS EE HAS FILED THE BALANCE SHEET AND EXPLAINED THE TRANSACTIONS IN THE BANK BOOK HENCE THE ASSESSEE HAS COMPLIED WITH ALL THE TERMS FOR GRANT OF APPROVAL U/S 80G AND THERE IS NO CASE FOR REJECTION OF APPROVAL . FURTHER, IN THE BALANCE SHEET AND STATEMENT OF A FFAIRS IT WAS CLEARLY RECORDED , THE AMOUNT RECEIVED AS A DONATION AND APPLIED FOR THE PURPOSE OF GIVING THE ADVANCES. SINCE THE BOOKS OF 4 ITA NO. 144 /VIZ/201 5 M/S VISWANADHA EDUCATIONAL TRUST, VISAKHAPATNAM ACCOUNTS ARE MAINTAINED AND THE ASSESSEE HAS APPLIED THE FUNDS FOR THE PURPOSE OF ITS ACTIVITY, LD.AR ARGUED THAT THE REJECTION OF APPROVAL IS NOT IN ACCORDANCE WITH THE LAW AND ACCORDINGLY REQUESTED TO SET ASIDE THE ORDER OF LD.CIT(E) AND GRANT APPROVAL U/S SUB SECTION 5 OF SECTION 80G OF I.T.ACT. 4. ON THE OTHER HAND, LD.DR RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED ON RECORD. THE ASSESSEE IS A TRUST APPLIED FOR APPROVAL U/S 80G (5) OF I.T.ACT ON 28.08.2014. THE TRUST WAS I NCORPORATED IN 2014 AND MAKING THEIR EFFORTS TO COLLECT THE DONATIONS AND TO START THEIR CHARITABLE ACTIVITIES. IN THE PROCESS , IT HAS RECEIVED THE DONATION OF RS.3,09,05,000/ - FROM VISWANADHA EDUCATIONAL SOCIETY, WHICH WAS DULY DEPOSITED IN THE BANK ACCO UNT AND THE PAYMENT WAS MADE TO MR.V.NAGESWARA RAO AND MR.V.DHANANJAYA RAO @ RS.1,50,00,000/ - EACH. ALL THE THREE TRANSACTIONS ARE VERIFIABLE FROM THE BANK PASS BOOK AND THE BOOKS OF ACCOUNTS . BY PAYING THE DONATION AMOUNT AS AN 5 ITA NO. 144 /VIZ/201 5 M/S VISWANADHA EDUCATIONAL TRUST, VISAKHAPATNAM ADVANCE TO ACQUIRE THE S ITE, THE ASSESSEE HAS SHOWN ITS INTENTION TO START THE ACTIVITIES OF THE TRUST. THE STATEMENT OF AFFAIRS ALSO CLEARLY SHOWS THAT THE A SSESSEE TRUST HAS RECEIVED THE DONATION WHICH WAS APPLIED FOR ACQUIRING THE SITE. THEREFORE, THERE IS NO CASE FOR NON MA INTENANCE OF BOOKS OF ACCOUNTS, AND NON APPLICATION OF FUNDS FOR THE PURPOSE OF THE TRUST. IT APPEARS THAT THE LD.CIT(E) HAS NOT PROPERLY VERIFIED THE BOOKS OF ACCOUNTS AND LANDED IN WRONG CONCLUSION AND HELD THAT THE ASSESSEE HAS NOT COMPLIED WITH THE R EQUIREMENTS OF CLAUSE (II) OF SUB - RULE(2) OF RULE 11AA OF THE INCOME TAX RULES, 1962 BUT WE FIND THAT THE ASSESSEE TRUST HAS COMPLIED WITH ALL THE REQUIREMENTS FOR APPROVAL AND RECOGNITION U/S 80G(5) AND RULE 11AA OF I.T.RULES. HENCE, WE ARE OF THE CONSIDERED OPINION THAT THE CASE SHOULD BE REMITTED BACK TO THE FILE OF THE CIT(E) TO PROPERLY APPRISE THE BOOKS OF ACCOUNTS AND THE TRANSACTIONS AND TO RECONSIDER THE ISSUE FOR GRANTING APPROVAL U/S 80G OF I.T.RULES. ACCORDINGLY, T HE ENTIRE ISSUE IS REMITTED BACK TO THE FILE OF THE CIT(E) TO DECIDE THE ISSUE AFRESH ON MERITS. THE LD.CIT SHOULD GIVE AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6 ITA NO. 144 /VIZ/201 5 M/S VISWANADHA EDUCATIONAL TRUST, VISAKHAPATNAM 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. T HE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 13 TH SEP 20 17 . SD/ - SD/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 13 . 0 9 .2017 L. RAMA, SPS /COPY OF THE ORDER FORWARDED TO: - 1. / THE APPELLANT M/S VISWANADHA EDUCATIONAL TRUST, D.NO.9 - 36 - 6/A, PITHAPURAM COLONY, MADDILAPALEM, VISAKHAPATNAM 2 . / THE RESPONDENT COMMISSIONER OF INCOME TAX (EXEMPTIONS),HYDERABAD 3 . THE COMMISSIONER OF INCOME - TAX - 1, VISAKHAPATNAM 4 . ( ) / THE CIT (A) , VISAKHAPATNAM 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM