Dy Commissioner of income Tax, C-1 (E), Chandigarh V. All India Pingalwara Society, Amritsar

ITA 1572/CHANDI/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 8628 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 13-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AAKARSHAN SINGH
• Keywords: Charitable institution
• Section: 12AA; 13; 22; 10(23C)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCH A, CHANDIGARH .., !' '# $, % &' BEFORE: SHRI. N.K.SAINI, VP & SHRI , SANJAY GARG, J M ITA NO. 1571 & 1572/CHD/2018 ASSESSMENT YEAR : 2014-15 & 2015-16 DY. CIT, CIRCLE-1(EXEMPTION),CHANDIGARH ALL INDIA PINGALWARA SOCIETY G.T. ROAD NEAR OLD TEHSIL, AMRITSAR, PUNJAB PAN NO: AAATA2237R APPELLANT RESPONDENT !' ASSESSEE BY : SHRI SANAT KAPOOR, ADVOCATE #!' REVENUE BY : SHRI AAKARSHAN SINGH, CIT(DR) $ %! & DATE OF HEARING : 02/09/2019 '()*! & DATE OF PRONOUNCEMENT : 05/09/2019 &(/ ORDER PER N.K. SAINI, VICE PRESIDENT THESE TWO APPEALS BY THE DEPARTMENT ARE DIRECTED AGAIN ST THE SEPARATE ORDERS EACH DATED 28/09/2018 OF THE LD. CIT(A)-2, AMRITSAR. 2. SINCE THE ISSUES INVOLVED ARE COMMON AND THE APPEALS WERE HEARD TOGETHER SO THESE ARE BEING DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 3. COMMON GROUND RAISED IN THESE APPEALS READ AS UNDER : I. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW BY WRONGLY APPLYING SECTION 115BBC(2) INSPITE OF THE F ACT THE SECTION 115BBC(1) IS UNAMBIGUOUS AND CLEARLY APPLIES TO THE CASE IN HAND . II. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS ERRED IN LAW IN DECIDING THE ISSUES IN FAVOUR OF THE ASSESSEE EVEN WHEN THE DONATIONS RECEIVED IN GOLAKS WERE NOT SUBJECT TO ANY KIND OF VERIFICATION BEING FROM ANONYMOUS SOURCES. III. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN LAW IN DECIDING THE ISSUES IN FAVOUR OF THE ASSESSEE EVEN WHEN IT WAS REGISTERED AS A CHARITABLE SOCIETY U/S 12AA AND NOT AS A RELIGIOUS SOCIETY OR RELIGIOUS-CUM-CHARITABLE SOCIETY. 2 IV. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ORDER PASSED BY THE LD. CIT(A) IS CONTRARY TO THE EVIDENCE AND MATE RIAL ON THE RECORD OF THE CASE AND THEREFORE, PERVERSE. V. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ORDER OF THE LD. CIT(A) IS SUFFERING FROM NON-APPLICATION OF MIND AN D IS UNREASONABLE AND ARBITRARY. 4. DURING THE COURSE OF HEARING THE LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET STATED THAT AN IDENTICAL ISSUE HAS ALREADY BEEN DECIDE D IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE EARLIER ORDER DT. 25/02/20 16 IN ITA NOS. 212 & 213/ASR/2014 FOR THE A.Y. 2010-11 & 2011-12 RESPECTIVELY IN ASSESS EES OWN CASE WHICH HAS BEEN FOLLOWED IN ITA NO. 1316 & 1317 / CHD/2016 FOR THE A.Y . 2012-13 AND 2013-14 RESPECTIVELY VIDE ORDER DT. 07/09/2017 BY ITAT, DIVISION BENCH, CHA NDIGARH, COPIES OF THE SAID ORDERS WERE FURNISHED WHICH ARE PLACED ON RECORD. 5. IN HIS RIVAL SUBMISSIONS THE LD. CIT DR STRONGLY SU PPORTED THE ORDER OF THE A.O. AND REITERATED THE OBSERVATIONS MADE THEREIN. 6. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIE S AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE IT IS NOTICED THAT AN IDENTICAL ISSUE HAVING SIMILAR FACTS HAS ALREADY BEEN DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE DEPARTMENT IN THE PRECEDING YEARS 2010-11 TO 2013-14 V IDE AFORESAID REFERRED TO ORDERS DT. 25/02/2016 AND 07/09/2017. THE RELEVANT FINDINGS HAVE BEEN GIVEN IN PARA 22 TO 29 OF THE ORDER DT. 25/02/2016 IN ITA NO. 212 & 213 / AS R/ 2014 WHICH READ AS UNDER: 22. THIS SECTION WAS INSERTED IN THE INCOME TAX ACT BY FINANCE ACT, 2006 AND SUB CLAUSES (I) & (II) OF SUB-SECTION (1) WERE SUBSTITUTED W.E.F. 0 1.04.2010. THE OBJECT OF BRINGING THIS LAW IN THE STATUTE BOOK W.E.F. 01.04.2006 IS WELL EXPLAINE D IN THE MEMORANDUM EXPLAINING THE PROVISIONS OF THE FINANCE BILL, 2006, REPORTED IN 2 81 ITR (ST.) PAGE 148 AND (ST.) PAGE 185. FOR SAKE OF CONVENIENCE, IT IS REPRODUCED AS UNDER: INCOME OF WHOLLY CHARITABLE OR RELIGIOUS TRUSTS OR INSTITUTIONS OR PARTLY CHARITABLE OR RELIGIOUS TRUSTS OR INSTITUTIONS IS EXEMPT UNDER TH E INCOME-TAX ACT SUBJECT TO FULFILLMENT OF CERTAIN CONDITIONS. IN ORDER TO TAX UNACCOUNTED MONEY BEING CONTRIBUTED TO THESE INSTITUTIONS BY WAY OF RELIGIOUS TRUSTS OR INSTITUTIONS IS EXEMPT UNDER THE INCOME TAX ACT SUBJECT TO FULFILLMENT OF CERTAIN CONDITIONS. IN ORDER TO TAX UNACCOUNTED MONEY BEING CONTRIBUTED TO THESE INSTITUTIONS BY WAY OF ANONYMOUS DONATIONS, IT IS PROPOSED TO INSERT A NEW SECTION 115BBC SO AS TO PROVIDE THAT ANY INCOME BY WAY OF ANONYMOUS DONATIO NS OF THE ENTITIES REFERRED TO IN THAT SECTION SHALL BE INCLUDE IN THE TOTAL IN COME AND TAXED AT THE RATE OF 30 PER CENT. 3 23. FROM THE ABOVE, IT IS CLEAR THAT THE OBJECT WAS TO CATCH THE UNACCOUNTED MONEY WHICH WAS BROUGHT IN AS TAX FREE INCOME IN THE HAND S OF THE CHARITABLE TRUSTS AND THIS LAW WAS NEVER MEANT FOR TAXING THE PETTY CHARITIES. THE LEGISLATURE INTENDED TO TAX THE UNACCOUNTED MONEY OR BLACK MONEY WHICH WAS BROUGHT IN THE BOOKS OF CHARITABLE TRUSTS IN BULK AND THIS LAW WAS NOT MEANT FOR TAXING THE S MALL AND GENERAL CHARITIES COLLECTED BY THE GENUINE CHARITABLE TRUSTS. 24. THE OBJECT OF THE AMENDMENT HAS FURTHER BEEN MA DE CLEAR BY THE HONBLE FINANCE MINISTER, IN HIS BUDGET SPEECH, REPORTED AT 281 ITR (ST.) 57 IN THE SAID ITR. THE RELEVANT PARA 168 THEREOF READS AS UNDER:- THE STANDING COMMITTEE ON FINANCE HAS EXPRESSED CO NCERN THAT MANY CHARITABLE INSTITUTIONS MISUSE THE PROVISIONS OF TH E INCOME-TAX ACT. I PROPOSE TO FOCUS ON ONE MISUSE, NAMELY, RECEIVING ANONYMOUS OR PSEUDONYMOUS DONATIONS. ACCORDINGLY, I PROPOSE THAT ANONYMOUS OR PSEUDONYMO US DONATIONS TO WHOLLY CHARITABLE INSTITUTIONS WILL BE TAXED AT THE HIGHES T MARGINAL RATE. SUCH DONATIONS TO PARTLY RELIGIOUS AND PARTLY CHARITABLE INSTITUTIONS / TRUSTS WILL BE TAXED ONLY IF THE DONATION IS SPECIFICALLY FOR AN EDUCATIONAL OR MEDI CAL PURPOSE. HOWEVER, I MAKE IT CLEAR THAT SUCH DONATIONS TO WHOLLY RELIGIOUS INSTI TUTIONS AND RELIGIOUS TRUSTS WILL NOT BE COVERED BY THE NEW PROVISION. 25. FURTHER, CBDT CIRCULAR 14 DATED 28.12.2006 EXPL AINS THE PROVISIONS OF SECTION 115BBC, AS FOLLOWS: 25.2 WITH A VIEW TO PREVENT CHANNELISATION OF UNAC COUNTED MONEY TO THESE INSTITUTIONS BY WAY OF ANONYMOUS DONATIONS, A NEW S ECTION 115BBC HAS BEEN INSERTED TO PROVIDE THAT ANY INCOME OF A WHOLLY CHA RITABLE TRUST OR INSTITUTION BY WAY OF ANONYMOUS DONATION SHALL BE INCLUDED IN ITS TOTAL INCOME AND TAXED AT THE RATE OF 30 PER CENT. ANONYMOUS DONATION MADE TO WHO LLY CHARITABLE AND RELIGIOUS TRUSTS OR INSTITUTIONS, I.E. MIXED PURPOSE TRUSTS O R INSTITUTIONS SHALL BE TAXED ONLY IF IT IS FOR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OTHER MEDICAL INSTITUTION RUN BY THEM. ANONYMOUS DONATION TO WHOL LY RELIGIOUS TRUSTS OR INSTITUTIONS WILL NOT BE TAXED. 25.3 ANONYMOUS DONATION HAS BEEN DEFINED IN THE NEW SECTION TO MEAN ANY VOLUNTARY CONTRIBUTION REFERRED TO IN SECTION 2(24) ( IIA) OF THE ACT, WHERE A PERSON RECEIVING SUCH CONTRIBUTION DOES NOT MAINTAIN A REC ORD OF THE IDENTITY INDICATING THE NAME AND ADDRESS OF THE PERSON MAKING SUCH CONT RIBUTION AND SUCH OTHER PARTICULARS AS MAYBE PRESCRIBED. 25.4 CONSEQUENTIAL AMENDMENTS HAVE BEEN MADE IN SEC TION 10(23C) AND SECTION 13 TO PROVIDE THAT ANY INCOME BY WAY OF ANY ANONYMO US DONATION WHICH IS TAXABLE UNDER SECTION 115BBC, SHALL BE INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE. 26. MOREOVER, AS CONTENDED, THE CONCEPT AND IMPORTA NCE OF CHARITY, AGAINST THE BACKDROP OF THE INDIAN SOCIETY, HAS BEEN IN EXISTEN CE FROM TIME MEMORIAL IN ALL RELIGIONS, WITHOUT EXCEPTION. THE ASSESSEE, IN THIS REGARD, HA S CITED ZAKAAT FROM ISLAM, DASVAND FROM SIKHISIM AND THE RECOGNITION OF THIS CONCEPT FROM M ANU-SAMRITI, THE ORIGINAL MAGNUM OPUS ON THE INDIAN SOCIAL SYSTEM. THAT THIS CONCEPT HAS CONTINUED TO BE ACCEPTED AND PRACTICED IN INDIA ALL ALONG DOWN THE AGES, AND THU S IT IS FIRMLY ENTRENCHED IN OUR SOCIETY, CANNOT BE QUESTIONED. 27. ALL THE ABOVE HAS BEEN EXTENSIVELY CONSIDERED I N THE ABOVE DECISIONS CITED. TWO OF THEM, I.E., BARKATE SAIFIYAH SOCIETY (SUPRA) AND PT. RAM CHANDRA SHUKLA (SUPRA) HAVE BEEN FOLLOWED BY THE LD. CIT(A). THE LD. CIT(A), TH OUGH, DID NOT HAVE THE BENEFIT OF BHAGWAN SHREE LAXMI NARAIN (SUPRA), SINCE THIS DE CISION WAS RENDERED POST THE CIT(A)S ORDER. THE DECISION OF THE ITAT, DELHI BENCH IN THE CASE OF BHAGWAN SHREE LAXMI NARAIN 4 (SUPRA), AS CONFIRMED BY THE HONBLE HIGH COURT, HA S CONSIDERED THIS MATTER IN MUCH DETAIL. DAWOODI BOHRA JAMAT (SUPRA), HANDED DOWN BY THE HONBLE SUPREME COURT, HAS BEEN FOLLOWED. THE DEPARTMENT HAS REMAINED UNABLE T O PERSUADE US TO DEVIATE THEREFROM. 28. ACCORDINGLY, WE HOLD THAT THE LD. CIT(A) HAS CO RRECTLY DELETED THE ADDITION FOR BOTH THE ASSESSMENT YEARS UNDER CONSIDERATION. OUR OBSERVATI ONS ARE, MUTATIS MUTANDIS, SQUARELY APPLICABLE TO BOTH THE YEARS, SINCE THE ISSUES IN B OTH THE APPEALS ARE COMMON, AS NOTED IN THE OPENING PORTION OF THIS ORDER. 29. IN VIEW OF THE ABOVE, FINDING THE GRIEVANCE OF THE DEPARTMENT TO BE SHORN OF MERIT, IT IS REJECTED. BOTH THE ORDERS UNDER APPEAL ARE UPHELD. THE SAID ORDER HAS BEEN FOLLOWED IN ITA NO. 1316 & 1317 /CHD/2016 FOR THE A.YS 2012-13 & 2013-14 RESPECTIVELY VIDE ORDER DT. 07/09 /2017. 7. SO RESPECTFULLY FOLLOWING THE AFORESAID REFERRED T O ORDERS DT. 25/02/2016 AND 07/09/2017 IN ASSESSEES OWN CASE, WE DO NOT SEE ANY ME RIT IN THESE APPEALS OF THE DEPARTMENT. 8. IN THE RESULT, APPEALS OF THE DEPARTMENT ARE DISMISS ED. (ORDER PRONOUNCED IN THE OPEN COURT ON 05/09/2019 ) SD/- SD/- '# $ .., (SANJAY GARG ) ( N.K. SAI NI) % &'/ JUDICIAL MEMBER / VICE PRESIDENT AG DATE: 05/09/2019 (+! ,-.- COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. $ / CIT 4. $ / 01 THE CIT(A) 5. -2 45&456789 DR, ITAT, CHANDIGARH 6. 8:% GUARD FILE (+ $ BY ORDER, ; # ASSISTANT REGISTRAR