The ITO,Ward (Exemp.), Bhavnagar V. Swashray Foundation, Bhavnagar

ITA 1495/AHD/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5699 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 12-07-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 21-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Assessee Lawyers: M J SHAH

Judgement Text

, *MH *MH*MH *MH* ** * IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD IZEKSN DQEKJ IZEKSN DQEKJ IZEKSN DQEKJ IZEKSN DQEKJ BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER I.T.A. NO. 1495/AHD/2013 ( / ASSESSMENT YEAR : 2008-09) INCOME TAX OFFICER WARD. (EXEMPTION) BHAVNAGAR VS. SWASHRAY FOUNDATION PLOT NO.2576 DIAMOND CHOWK BHAVNAGAR. ! PAN/GIR NO. : AADTS 2754 A ( ' / APPELLANT ) .. ( #' RESPONDENT ) '$ APPELLANT BY : SHRI V.K. SINGH, SR. D.R. #'% $ / RESPONDENT BY : SHRI M. J. SHAH, A.R. & ' (%) * / DATE OF HEARING 12/07/2017 +,-. %) * / DATE OF PRONOUNCEMENT 14/07/2017 / O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)- XXI, AHMEDABAD , DATED 04/03/2017 FOR THE ASSESSMENT YEAR (AY) 2008-09. 2. DEPARTMENT HAS TAKEN THE FOLLOWING GROUND OF APP EAL: THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF UNDISCLOSE D FOREIGN DONATION OF ITA NO.1495/AHD /2013 ITO VS. SWASHRAY FOUNDATION ASST.YEAR 2008-09 - 2 - RS.80,93,741/-(US$ 2,00,000) WHICH WAS NOT SHOWN IN THE RETURN OF INCOME /BALANCE SHEET FOR THE YEAR UNDER CONSIDERAT ION. 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- THE ASSESSEE, DURING THE COURSE OF THE ASSESSMENT , REOPENED U/S.148 CLAIMED THAT THE SAID DONATION WAS A CORPUS DONATION AND THEREFORE WAS EXEMPTED U/S.11(1)(D) OF THE ACT. THE AO HAS TREATED THE SAME AS UNDISCLOSED INCOME OF THE ASSESSEE AND ADDE D THE SAME TO THE RETURNED INCOME. 3.2 THE CIT(A) VIDE ORDER REFERRED ABOVE DELETED TH E SAID ADDITION AS THE ASSESSEE SUBMITTED A LETTER FROM THE DONOR WHIC H HAD A SPECIFIC DIRECTION THAT THE SAID DONATION BE TREATED AS CORP US DONATION. THE CIT(A) THEREFORE HELD THAT THE SUM RECEIVED WAS IN THE NATURE OF CORPUS DONATION AND HENCE NOT BEING IN THE NATURE OF INCOM E IS EXEMPT U/S.11(1)(D) OF THE ACT. 3.3 APPELLANT STATED THAT ASSESSEE IS FOLLOWING CAS H SYSTEM OF ACCOUNTING FOR THE DONATION RECEIVED IN THE YEAR OF RECEIPT, I.E. A.Y.2008- 09. IT IS SEEN THAT THE ASSESSEE HAD MADE 3 FDR OUT OF ACTUAL DONATION RECEIVED OF RS.1,44,46,541/- (HOWEVER, THE AO HAS M ADE ADDITION OF ONLY RS.80,93,741/-) AND HAD ALSO HAD CREATED INTEREST O N THE FIXED DEPOSIT TO THE P&L ACCOUNT. THE ASSESSEES SUBMISSION WAS THAT THE APPROVAL FROM MINISTRY OF HOME AFFAIRS WAS RECEIVED ONLY ON 01/04 /2009 AND ITA NO.1495/AHD /2013 ITO VS. SWASHRAY FOUNDATION ASST.YEAR 2008-09 - 3 - THEREFORE, THE SAID DONATION WAS SHOWN IN A.Y. 2009 -10 IS NOT ACCEPTABLE SINCE THE DONATION FROM SWAMINARAYAN GURUKUL, USA W AS RECEIVED IN THE F.Y. 2007-08 AND THE SAME WAS PLACED ON FDR IN THE F.Y.2007-08. THEREFORE, THE SAID DONATION SHOULD HAVE BEEN ACCOU NTED FOR IN THE F.Y.2007-08 IRRESPECTIVE OF THE APPROVAL OF THE MHA WITH RESPECT TO THE FOREIGN DONATION. EVEN THOUGH THE SAID FOREIGN DONA TION WAS CORPUS DONATION, THE ASSESSEE SHOULD HAVE ACCOUNTED FOR TH E SAME IN F.Y. 2007- 08. 4. WE HAVE HEARD THE RIVAL SUBMISSION, IN THIS CASE LEARNED CIT HELD, WHICH IS REPRODUCED AS UNDER: I FIND THAT THE APPELLANT HAS PRIMARILY SUBMITTED THAT THE FOREIGN DONATION AMOUNTING TO US$ 3,60,000 WAS A CORPUS DON ATION WITHIN THE MEANING OF SECTION 11(1)(D). ACCORDING TO THE A PPELLANT, SINCE IT IS A CORPUS DONATION WHICH IS AMPLY PROVED BY TH E WRITTEN SPECIFIC DIRECTION, IT IS NOT IN THE NATURE OF INCO ME AND HENCE CANNOT BE ADDED AS INCOME, AS WAS DONE BY THE AO. I T IS WORTHWHILE TO TAKE A LOOK AT SECTION 11(1)(D), WHIC H IS REPRODUCED HEREIN AS UNDER:- INCOME IN THE FORM OF VOLUNTARY CONTRIBUTIONS MADE WITH A SPECIFIC DIRECTION THAT THEY SHALL FORM PART OF THE CORPUS OF THE TRUST OR INSTITUTION. 4.2 IT IS PERTINENT TO NOTE THAT THERE IS NO FORM P RESCRIBED FOR WRITTEN SPECIFIC DIRECTION UNDER INCOME-TAX ACT. HOWEVER, T HE SPECIFIC DIRECTION SHOULD BE WRITTEN AND IT SHOULD CONTAIN THE AMOUNT WHICH IS TO BE TAKEN AS A CORPUS FUND BY THE DONEE. LEARNED CIT FURTHER HELD THAT HE FIND BOTH ITA NO.1495/AHD /2013 ITO VS. SWASHRAY FOUNDATION ASST.YEAR 2008-09 - 4 - THE CONDITIONS ARE MET BY THE WRITTEN SPECIFIC DIRE CTION ISSUED BY THE DONOR, THE COPY OF WHICH IS PLACED AT PAGE NO.6 OF THE PAPER BOOK AND HE WAS INCLINED TO AGREE THAT THE SUM RECEIVED BY T HE APPELLANT TO THE TUNE OF US$ 360000 WAS IN THE NATURE OF CORPUS DONA TION FROM SWAMINARAYAN GURUKUL, USA. SINCE IT IS CORPUS DONAT ION IT CANNOT BE INCOME AS PER SECTION 11(1)(D) OF THE INCOME TAX AC T. 4.3 LEARNED AR STATED THAT THEY HAVE WRITTEN SEVERA L LETTERS TO THE MINISTRY OF HOME AFFAIRS FOR GRANT OF PERMISSION FR OM THE HOME AFFAIRS AND SAME WAS PENDING WITH THE MINISTRY OF HOME AFFA IRS AND REQUISITE PERMISSION UNDER FCRA WAS RECEIVED ON 01/04/2009 BY THE ASSESSEE, THE COPY OF WHICH IS PLACED AT PAGE NO.94 TO 94A OF THE PAPER BOOK. VIDE THIS LETTER, THE MINISTRY OF HOME AFFAIRS HAS CONVE YED IT APPROVAL TO THE APPELLANT TRUST AND COPY OF THIS LETTER WAS MARKED TO STATE BANK OF SAURASHTRA WHEREIN THE AMOUNT OF FOREIGN DONATION W AS DEPOSIT IN ACCOUNT NO.56007004934. SUBSEQUENTLY, THE APPELLANT RECEIVED A REGISTRATION UNDER FCRA VIDE LETTER DATED 25/06/200 9 ISSUED FROM MINISTRY OF HOME AFFAIRS GIVING IT A REGISTRATION N UMBER OF 041980064. 5. AFTER GOING THROUGH THE SUBMISSION, WE ARE OF TH E CONSIDERED VIEW THAT THERE IS NO INFIRMITY IN THE ORDER PASSED BY T HE LEARNED CIT(A). THEREFORE, WE DISMISS THE APPEAL OF THE DEPARTMENT. ITA NO.1495/AHD /2013 ITO VS. SWASHRAY FOUNDATION ASST.YEAR 2008-09 - 5 - 6. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMI SSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 14/07/2017 SD/- SD/- IZEKSN DQEKJ IZEKSN DQEKJ IZEKSN DQEKJ IZEKSN DQEKJ EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN YKS[KK LN YKS[KK LN YKS[KK LN YKS[KK LNL; L; L; L; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; (PRAMOD KUMAR) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 14/07/2017 PRITI YADAV, SR.PS !'# $#! COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #' / THE RESPONDENT. 3. 012) & 3) / CONCERNED CIT 4. & 3) 45 / THE CIT(A)-XXI, AHMEDABAD. 5. 67 8)'12 *12. 0 / DR, ITAT, AHMEDABAD 6. 8 9: ( GUARD FILE. % & / BY ORDER, # 6)) //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD TRUE COPY 1. DATE OF DICTATION 12/07/2017 (DICTATION-PAD 4 PA GES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 13/07/2017 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 17/0 7/2017 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER