ITO, Bhubaneswar V. M/s Kalinga Relief and Charitable Trust, Bhubaneswar

ITA 172/CTK/2012

• Counselvise Citation: 17222114 RSA 2012
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2012
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 18-12-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 05-03-2012
• Court: TRIBUNAL
• Keywords: Charitable institution; Principle of natural justice; Maximum Marginal Rate; Question of law; Assessment record
• Section: 131; 12; 11; 143(3); 12AA

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , H ONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO. 172 AND 173/CTK/2012 C.O.NOS.22 AND 23/CTK/2012 (FILED BY THE ASSESSE) / ASSESSMENT YEAR S 2007 - 08 AND 2008 - 09 INCOME - TAX OFFICER, WARD 2(1), BHUBANESWAR. - - - VER SUS - M/S.KALINGA RELIEF AND CHARITABLE TRUST, KIIT CAMPUS - 1, PA T IA, BHUBANESWAR PAN: AAATK 9485 H ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI P.S.PANDA/S.K.AGRAWAL/K.K.AGRAWAL,ARS / FOR THE RESPONDENT: / S MT. PARAMITA TRIPATHY, CIT - DR / DATE OF HEARING: 18.12.2012 / DATE OF PRONOUNCEMENT: 21.12.2012 / ORDER . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER. THE REVENUE HAS FILED THES E APPEALS RAISING THE COMMON ISSUE S FOR BOTH THE ASSESSMENT YEARS 2007 - 08 AND 2008 - 09 DISPUTING THE ORDERS OF THE LEARNED CIT(A) - (1) IN DELETING THE ADDITIONS OF 17,50,000 AND 10,05,00,218 MADE BY THE ASSESSING OFFICER U/S.115BBC OF THE I.T.ACT, 1961 . (2) IN DELETING THE ADDITIONS OF 17,84,370 AND 81,75,000 DISALLOWED BY THE ASSESSING OFFICER ON ACCOUNT OF ADMINISTRATIVE EXPENSES. (3) IN ALLOWING CARRY FORWARD LOSS TO THE ASSESSEE SOCIETY. 2. THE ASSESSEE HAS FILED THE CROSS OBJECTIONS IN BOTH T HE APPEALS OF THE REVENUE SUPPORTING THE IMPUGNED ORDERS OF THE LEARNED CIT(A). 3. THE ASSESSEE, NAMELY KALINGA RELIEF & CHARITABLE TRUST (IN SHORT KRCT) IS A TRUST REGISTERED UNDER THE INDIAN TRUST ACT AND IS REGISTERED U/S.12AA OF THE I.T.ACT AND THUS EN JOYING THE BENEFIT OF SECTION 11 . IT STARTED I.T.A.NO. 172 AND 173/CTK/2012 C.O.NOS.22 AND 23/CTK/2012 2 IN 2003 AND HAS ESTABLISHED THE BIGGEST RESIDENTIAL TRIBAL INSTITUTE IN SOUTH ASIA THAT PROVIDES FREE ACCOMMODATION, FOOD, HEALTHCARE AND EDUCATION FROM STANDARD - I TO POST GRADUATION LEVEL AND ALL BASIC AMENITIE S OF LIFE ABSOLUTELY FREE WITH A JOB ASSURANCE AFTER COMPLETION OF EDUCATION AND VOCATIONAL TRAINING. BESIDES EDUCATING THE STUDENTS THE INSTITUTE HAS TAKEN UP THE RESPONSIBILITY OF EMPOWERING THEM WITH VARIOUS TECHNICAL KNOWLEDGE. IT ENVISAGES TO MAKE THE M SELF SUFFICIENT IN FUTURE. WITH THIS AIM THE INSTITUTE HAS BEEN PROVIDING VOCATIONAL TRAINING, COMPUTER KNOWLEDGE ETC. THERE BY THE STUDENTS HAVE BEEN GETTING KNOWLEDGE ON KNITTING, APPLIQUE, HORTICULTURE, PISCICULTURE ETC. THE VOCATIONAL UNIT HAS ALSO B EEN PREPARING CANDLE AND PHENYL FOR INTERNAL AND EXTERNAL CONSUMPTION. THE ONLY SOURCE OF INCOME OF THE TRIBAL SCHOOL IS FROM DONATION. IN THE IMPUGNED ASSESSMENTS FOR BOTH THE AYS UNDER CONSIDERATION , THE ASSESSING OFFICER BROUGHT TO TAX THE DONATIONS TO THE EXTENT AS INDICATED ABOVE HOLDING THE SAME AS ANONYMOUS DONATIONS UNDER THE PROVISIONS OF SECTION 115BBC OBSERVING THAT THE DETAILS OF DONATION FOR THE ASSESSMENT YEAR 2007 - 08 FURNISHED BY THE ASSESSEE ARE NOT VERIFIABLE BECAUSE THE DETAILS WITH BLANK NAMES AND CERTAIN NAMES HAVING INCOMPLETE ADDRESSES. SIMILAR WAS THE OBSERVATION OF THE ASSESSING OFFICER IN THE ASSESSMENT YEAR 2008 - 09 AND FURTHER OBSERVING THAT OUT OF 100 CASES LETTERS WERE ISSUED ONLY 8 PERSONS CONFIRMED THE DONATION AND 65 LETTERS WE RE RETURNED UNSERVED WITH THE POSTAL REMARK INCOMPLETE ADDRESS OR PERSON NOT KNOWN. FURTHER THE ASSESSING OFFICER DISALLOWED 10% OUT OF THE CLAIM ON ADMINISTRATIVE EXPENDITURE IN BOTH THE AYS UNDER CONSIDERATION, ON THE OBSERVATION THAT A NUMBER OF VOU CHERS WERE PAID BY KIIT AND CERTAIN VOUCHERS WERE NOT PROPERLY MAINTAINED ACCORDINGLY AND THE VERACITY OF THE SAME COULD NOT BE EXAMINED. I.T.A.NO. 172 AND 173/CTK/2012 C.O.NOS.22 AND 23/CTK/2012 3 4. AGGRIEVED, THE ASSESSEE APPEALED BEFORE THE FIRST APPELLATE AUTHORITY, WHO DELETED THE ADDITIONS AND ALSO DIRECTED THE ASSESSING OFFICER TO CARRY FORWARD THE LOSS. IT IS AGAINST SUCH ORDER OF THE LEARNED CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LEARNED CIT - DR SUPPORTED THE IMPUGNED ORDERS OF THE ASSESSING OFFICER WHEREAS T HE LEARNED COUNSEL OF THE ASSESSEE SUPPORTED THE IMPUGNED ORDERS OF THE LEARNED CIT(A). 6 . AS REGARDS ISSUE NO .1 RAISED BY THE REVENUE DISPUTING THE DELETION OF ADDITION MADE BY THE ASSESSING OFFICER U/S.115BBC HOLDING ANONYMOUS DONATION, THE LEARNED COUNS EL OF THE ASSESSEE REITERATED THE SUBMISSIONS AS WERE MADE BEFORE THE LEARNED CIT(A) AND CONTENDED THAT IN RESPECT OF ASSESSMENT YEAR 2007 - 08 O UT OF THE TOTAL DONATIONS RECEIVED, THE APPELLANT HAS RECEIVED A SUM OF 4,94,2,584 FROM KIIT AND RS, 18,50,000 FROM OTHERS. THESE 18,50,000 WAS RECEIVED ON 16 DATES FROM 9 PERSONS. IN VIEW OF THIS ASSESSING OFFICER S STATEMENT IN THE ASSESSMENT ORDER THAT HE HAD SENT LETTERS TO 100 PERSONS HAS NO FACTUAL BASIS AT ALL. IT WAS ALSO CONTEND ED THAT IN THE ORDER SHEET NOTING DT. 24.12.2010 THE ASSESSING OFFICER HAS WRITTEN THE A/R WAS CLARIFIED THAT ONLY A LIST OF DONORS HAVING INCOMPLETE ADDRESS WAS SUBMITTED. APART FROM THIS THERE WAS NO NAMES AND ADDRESSES OF 7 ALLEGED DONORS. TO THIS THE A/R STATES THAT ALTHOUGH THE DATE OF TRANSACTION WAS GIVEN WITH MODE OF PAYMENT AND NAME OF THE BANK, THE NAMES AND ADDRESSES OF 7 DONORS ARE NOT READILY AVAILABLE. WHEN FURTHER HEARING TOOK PLACE ON 27.12.2010 THE AO HAS NOTED IN THE ORDER SHEET THAT, NO DONATION REGISTER COULD BE SUBMITTED BY THE ASSESSEE. THE A/R STATES THAT THE IDENTITY OF THE DONORS MAY BE ACCEPTED AS THE DONATIONS WERE MADE IN CHEQUE. THE CASE WAS HEARD. THE LEARNED COUNSEL OF THE ASSESSEE CONTENDED THAT IT IS C LEAR FROM THE ABOVE THAT BY 20.12.2010 THE ASSESSING OFFICER HAS GOT THE I.T.A.NO. 172 AND 173/CTK/2012 C.O.NOS.22 AND 23/CTK/2012 4 FULL LIST OF THE DONORS. THE ONLY LACUNAE IN THE LIST WERE ABSENCE OF NAMES FROM SL. NO. 1 TO 7. HOWEVER, AGAINST THOSE SERIAL NUMBERS, AS MENTIONED ABOVE, DATE OF DONATION, AMOUNT, M ODE OF PAYMENT, CHEQUE/DD NUMBER WAS PROVIDED. IF THE AO HAD ANY DOUBT HE WAS FREE TO ENQUIRE FROM THE CONCERNED BANK. NO SUCH ENQUIRY WAS MADE. THE ENTIRE DONATION WAS ONLY 18,50,000 FROM NINE PERSONS. WITHOUT MAKING ANY MEANINGFUL VERIFICATION, THE AO IS WRITING IN THE SHOW CAUSE NOTICE DT. 27.12.2010 THAT LETTERS WERE SENT TO MORE THAN 100 PERSONS. THIS IS ABSURD. 6 .1. IN RESPECT OF THE ASSESSMENT YEAR 2008 - 09 ON THIS ISSUE, THE LEARNED COUNSEL OF THE ASSESSEE ALSO REITERATED THE SUBMISSIONS AS WERE MA DE BEFORE THE LEARNED CIT(A) AND CONTENDED THAT D URING THE COURSE OF HEARING BEFORE THE A.O. IT HAD PRODUCED CERTAIN REGISTER INCLUDING DONATION REGISTER AND DOCUMENTS THAT WERE PRODUCED ON 22.10.2010 AND THE SAME HAS BEEN DULY CONFIRMED BY THE LEARNED CI T (A) IN THE PRESENCE OF THE ASSESSING OFFICER . THE ASSESSING OFFICER ADMITTED IN THE ASSESSMENT ORDER THAT ONLY A BUNCH OF PAPER, CONTAINING LIST OF AROUND 4000 NAMES AND CERTAIN NAMES HAVING I NCOMPLETE ADDRESS WERE PRODUCED. THIS CLEARLY SHOWS THAT THE RESPONDENT HA D PRODUCED THE LIST OF DONORS WITH ADDRESS AND SOME OF THE DONORS WERE FOUND TO HAVE INCOMPLETE ADDRESSES. WHICH OF THE DONORS ARE HAVING INCOMPLETE ADDRESS IS NOWHERE MENTIONED EITHER IN THE ASSESSMENT ORDER, IN THE ORDER SHEET OR ANYWHERE I N THE RECORD. DURING THE COURSE OF HEARING BEFORE THE LEARNED CIT (A), THE LIST PRODUCED BY THE ASSESSEE IN THE SUBMISSION WAS GIVEN TO THE AO. THE ASSESSING OFFICER AND THE A/R VERIFIED THE LIST CONTAINED IN THE SUBMISSION AND THE LIST AVAILABLE IN THE A OS FILE. NO DISCREPANCY COULD BE POINTED OUT. THE OS OF THE OFFICE OF LEARNED CIT (A) HAD ALSO EXAMINED THE LIST AND HAS PREPARED THE NAMES AND ADDRESSES OF THE PERSONS TO WHOM LETTERS WERE SENT BY THE ASSESSING OFFICER . THE LEARNED I.T.A.NO. 172 AND 173/CTK/2012 C.O.NOS.22 AND 23/CTK/2012 5 COUNSEL OF THE ASSESSE E CONTENDED THAT IT IS CLEAR FROM THE ABOVE THAT BY 20.12.2010 THE ASSESSING OFFICER HAS GOT THE FULL LIST OF THE DONORS AND OUT OF WHICH HE HAS SENT LETTERS TO 100 DONORS. SINCE THESE FACTS ARE NOT WELL DOCUMENTED IN THE ORDER SHEET, THE ASSESSING OFFICER WAS ASKED ABOUT THE SAME BY THE LEARNED CIT (A). IN RESPONSE IT, THE ASSESSING OFFICER PRODUCED AN AUXILIARY FOLDER WHICH CONTAINED DETAILS OF DONATION RECEIVED DURING THE F.Y. 2007 - 08, THE FILE COPIES OF THE LETTERS ISSUED BY THE ASSESSING OFFICER , THE L ETTERS WHICH CAME BACK UN - SERVED AND THE REPLIES RECEIVED TO THE LETTERS. THERE IS NO ORDER SHEET ATTACHED TO THIS FILE. THERE IS NOTING IN THE FILE AS TO WHOM THE LETTERS HAVE BEEN ISSUED, WHICH LETTERS WERE SERVED, WHICH WERE UN - SERVED AND TO WHICH REPLI ES WERE RECEIVED. ALL THAT CAN BE FOUND FROM THE FILE PRODUCED BY THE ASSESSING OFFICER IS THAT THE RESPONDENT HAS PRODUCED THE DETAILS OF DONATIONS RECEIVED DURING THE FINANCIAL YEAR 2007 - 08 AND THE ASSESSING OFFICER HAS ISSUED LETTERS FROM THE LIST. IT IS SEEN THAT LETTERS WERE ISSUED BY THE ASSESSING OFFICER MOSTLY ON 10/12/2010 AND THE UNDELIVERED LETTERS CAME BACK BETWEEN 15 AND 16TH DECEMBER, 2010. THE ASSESSING OFFICER HAS NOT LISTED OUT WHICH OF THE LETTERS CAME BACK UN - SERVED EITHER IN THE ASSE SSMENT ORDER, ORDER SHEET OR IN THE ASSESSMENT RECORD. THE LEARNED COUNSEL OF THE ASSESSEE FURTHER SUBMITTED THAT THE ASSESSEE HAD PRODUCED NAMES AND ADDRESSES OF 4918 DONORS BEFORE THE ASSESSING OFFICER . IT IS SEEN FROM THE RECORDS PRODUCED BY THE ASSESSI NG OFFICER THAT DETAILS OF DONATIONS RECEIVED DURING THE F.Y. 2007 - 08 WITHOUT SERIAL NUMBER IS AVAILABLE IN THE AUXILIARY RECORD OUT OF WHICH LETTERS WERE ISSUED BY THE ASSESSING OFFICER . THE ASSESSING OFFICER HAS NOT COUNTED HOW MANY DONORS ARE LISTED. T HE ASSESSING OFFICER HAS NOT ALSO VERIFIED WHICH DONOR IS WITHOUT ADDRESS OR WITH INCOMPLETE ADDRESS. THIS IS ELEMENTARY. THE LEARNED COUNSEL OF THE ASSESSEE FURTHER SUBMIT THAT, IF IT HAD NOT I.T.A.NO. 172 AND 173/CTK/2012 C.O.NOS.22 AND 23/CTK/2012 6 SUBMITTED THE DONATION REGISTER BEFORE THE ASSESSING OFFICER TH EN HOW THE ASSESSING OFFICER COULD GET THE ADDRESS AND ON WHICH BASIS HE ISSUED THE LETTERS TO THE DONORS. AS A MATTER OF FACT , THE LEARNED COUNSEL OF THE ASSESSEE CONTINUED, THE ASSESSEE HAD SUBMITTED THE DONATION REGISTER WHICH CONTAINED THE COMPLETE LIS T OF DONORS ALONG WITH THEIR NAME & ADDRESS. IN RARE CASE THE DONATIONS REGISTER DID NOT CONTAIN THE ADDRESS OF THE DONORS OR THE COMPLETE ADDRESS OF THE DONORS WHICH IS EVEN LESS THAN 1% OF THE TOTAL DONATIONS RECEIVED. HOWEVER THE ASSESSING OFFICER ALSO DID NOT ASK THE RESPONDENT TO PRODUCE THE ADDRESS OF THE DONORS WHICH DID NOT CONTAIN THE ADDRESS OR COMPLETE ADDRESS AS BECAUSE HE WAS AT A PRECONCEIVED NOTION TO TAX ALL THE DONATIONS. THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT T HE LIST WITH NAME S AND ADDRESS ES PROVIDED BY THE ASSESSEE DURING THE COURSE OF HEARING BEFORE THE LEARNED CIT (A) IN THE SUBMISSION IS ALSO QUOTED IN ITS ENTIRETY IN HIS ORDER. 6 .2. THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT T HE ISSUE OF ADDITIONS BASED ON SUCH VE RIFICATION EXERCISE AS WAS DONE BY THE AO WAS SETTLED WAY BACK BY THE APEX COURT IN THE CASE OF CIT VS. ORISSA CORPORATION PVT. LTD. 159 ITR 78(SC). THE VERIFICATION DONE BY THE AO IN THAT CASE IS IDENTICAL T O THE VERIFICATION DONE BY THE ASSESSING OFFICER IN THE CASE OF THE PRESENT ASSESSEE . THE FACTS IN THAT CASE ARE THAT THE ASSESSEE, AT THE RELEVANT TIME, WAS A PRIVATE LIMITED COMPANY AND MAINTAINED ACCOUNTS ACCORDING TO THE CALENDAR YEAR. FOR THE ACCOUNTING YEAR ENDING ON DECEMBER 31, 1961, CORRESPONDI NG TO THE ASSESSMENT YEAR 1962 - 63, THE INCOME TAX OFFICER DID NOT ACCEPT THE ASSESSEES ACCOUNTS SHOWING CASH CREDITS OF 1,50,000. THREE AMOUNTS WERE SHOWN TO HAVE BEEN RECEIVED BY WAY OF LOANS FROM THREE INDIVIDUAL CREDITORS OF CALCUTTA UNDER HUNDIS. TH E ASSESSEE PRODUCED BEFORE THE INCOME TAX OFFICER, THE LETTERS OF CONFIRMATION, THE DISCHARGED HUNDIS I.T.A.NO. 172 AND 173/CTK/2012 C.O.NOS.22 AND 23/CTK/2012 7 AND PARTICULARS OF THE DIFFERENT CREDITORS WHOSE GENERAL INDEX NUMBERS WERE WITH THE INCOME TAX DEPARTMENT. ATTEMPTS HAD BEEN MADE TO BRING THOSE CREDITOR S BEFORE THE INCOME TAX OFFICER BY ISSUE OF NOTICES UNDER SECTION 131 OF THE ACT, BUT THE SAID NOTICES WERE RETURNED WITH THE ENDORSEMENT LEFT. THE INCOME TAX OFFICER, THEREFORE, TREATED THE ENTIRE AMOUNT OF 1,50.000 AS UNPROVED CASH CREDIT AND ADDED THE SAME TO THE IN COME OF THE ASSESSEE. THE APPEAL OF THE ASSESSEE TO THE APPELLATE ASSISTANT COMMISSIONER WAS DISMISSED. THEREAFTER, THERE WAS A FURTHER APPEAL TO THE TRIBUNAL. CONSIDERING THESE FACTS AT LENGT H, HONBLE APEX COURT DECIDED THE CASE IN FAVOUR OF THE ASSESSEE WITH THE FOLLOWING FINDING: - IN THIS CASE, THE ASSESSEE HAD GIVEN THE NAMES AND ADDRESS OF THE ALLEGED CREDITORS. IT WAS IN THE KNOWLEDGE OF THE REVENUE THAT THE SAID CREDITORS WERE INCOME TAX ASSESSEES. THERE INDEX NUMBERS ERE IN THE FILE OF THE REVENUE. THE REVENUE, APART FROM ISSUING NOTICES UNDER SECTION 131 AT THE INSTANCE OF THE ASSESSEE, DID NOT PURSUE THE MATTER FURTHER. THE REVENUE DID NOT EXAMINE THE SOURCE OF INCOME OF THE SAID AL LEGED CREDITORS TO FIND OUT WHETHER THEY WERE CREDITWORTHY OR WERE SUCH WHO COULD ADVANCE THE ALLEGED LOANS. THERE WAS NO EFFORT MADE TO PURSUE THE SO CALLED ALLEGED CREDITORS. IN THOSE CIRCUMSTANCES, THE ASSESSEE COULD NOT DO ANYTHING FU RTHER . IN THE PREM ISES, IF THE TRIBUNAL CAME TO THE CONCLUSION THAT THE ASSESSEE HAS DISCHARGED THE BURDEN THAT LAY ON HIM, THEN IT WOULD NOT BE SAID THAT SUCH A CONCLUSION WAS UNREASONABLE OR PERVERSE OR BASED ON NO EVIDENCE. IF THE CONCLUSION IS BASED ON SOME EVIDENCE ON WHICH A CONCLUSION COULD BE ARRIVED AT, NO QUESTION OF LAW AS SUCH ARISES. 6.3. IN THE PRESENT CASE ON HAND , WE FIND THAT THE ASSESSING OFFICER HAS STATED TO HAVE ISSUED LETTERS TO THE DONORS AND KEPT THE RETURNED LETTERS IN THE FILE. THE ASSESSING OFFICE R DID NOT PURSUE THE MATTER FURTHER. THERE IS NO INDICATION ANYWHERE IN THE ASSESSMENT ORDER OR IN THE RECORD OF THE ASSESSING OFFICER THAT ANY OF THE DONATIONS ARE NOT GENUINE. THE APPELLANT I.T.A.NO. 172 AND 173/CTK/2012 C.O.NOS.22 AND 23/CTK/2012 8 HAVING SUBMITTED THE NAMES AND ADDRESSES OF THE DONORS HAVE COMP ILED WITH THE REQUIREMENT OF SECTION 115BBC OF THE ACT. 6 .4. FURTHER F ROM THE FACTS AS BROUGHT ON RECORD, WE FIND THAT W HILE DOING THE ASSESSMENT, THE ASSESSING OFFICER HAD NEITHER EXAMINED THE DONORS NOR ASKED THE RESPONDENT TO PRODUCE THE DONORS FOR VER IFICATION. WITHOUT TAKING ANY ACTION THE ASSESSING OFFICER TREATED THE VOLUNTARY CONTRIBUTION AS ANONYMOUS DONATION WHICH , IN OUR CONSIDERED VIEW, IS NOT JUSTIFIED . THE ASSESSING AUTHORITY ASSESSED THE ASSESSEE SOCIETY IGNORING THE DONATIONS GIVEN BY DIF FERENT PERSONS IN FAVOUR OF THE SOCIETY, HOLDING THE DONORS AS BOGUS. THE CIT(A) REVERSED THE ORDER OF ASSESSMENT S, IN OUR CONSIDERED VIEW, HOLDING THAT ALL THE DONORS WERE NEITHER EXAMINED NOR SOME OF THEM WHO WERE EXAMINED, WERE CROSS - EXAMINED TO COME TO A CONCLUSION AS TO WHETHER THEY WERE BOGUS DONORS. HONBLE HIGH COURT OF RAJASTHAN IN THE CASE OF CIT VS. GEETANJALI EDUCATION SOCIETY (2008) 174 TAXMAN 440 (RAJ) , AS RELIED ON BY THE LEARNED COUNSEL OF THE ASSESSEE, ON SIMILAR FACTS AND CIRCUMSTANCES HAS HELD - THE TRIBUNAL ON APPRECIATION OF FACTS AND PLEADINGS OF THE PARTIES CONCURRED WITH THE VIEWS OF THE CIT(A) AND REITERATED THE SAME VIEW AND HELD THAT THE DONORS COULD NOT HAVE BEEN DECLARED TO BE BOGUS, AS ON TOTALITY OF IT THE DONORS WERE NOT EXAM INED NOR THOSE WHO WERE EXAMINED WERE ALLOWED TO BE CROSS - EXAMINED. IT FURTHER HELD THAT SINCE THE SOCIETY IS A REGISTERED SOCIETY UNDER THE PROVISIONS OF S. 12AA OF THE IT ACT, IT ENJOYED THE EXEMPTION AS PROVIDED UNDER S.11 OF THE ACT GIVEN IN FAVOUR OF THE SOCIETY WHICH COULD NOT HAVE BEEN HELD TO BE BOGUS WITHOUT EXAMINING THE DONORS AND SUBJECTING THEM TO CROSS - EXAMINATION. THE VERACITY OF GENUINENESS MUST BE TESTED AT THE TOUCHSTONE OF EVIDENCE AND NOT OTHERWISE. WE ARE SATISFIED THAT REGISTRATION OF THE SOCIETY HAS NOT BEEN WITHDRAWN EVEN ON ACCOUNT OF FINDING THE DONORS AS IN GENUINE. IF THE REGISTRATION IS ALLOWED, THE SOCIETY WOULD BE ENTITLED TO GET THE EXEMPTION AS PROVIDED UNDER S.11 OF THE ACT. IN THE GIVEN I.T.A.NO. 172 AND 173/CTK/2012 C.O.NOS.22 AND 23/CTK/2012 9 FACTS AND CIRCUMSTANCES OF THE CASE, THEREFORE THE FINDING RECORDED BY THE CIT(A) AND TRIBUNAL, IN OUR VIEW, CANNOT BE FAULTED. 6.5. IN THE CASE OF HANS RAJ SAMARAK SOCIETY VS. ADIT (EXM.), TRUST CIRCLE - II, LAXMINAGAR, THE ITAT, DELHI BENCH C, IN ITA NO.882/DEL/2011 FOR ASSESSMENT YEAR 200 7 - 08 VIDE ORDER 30.09.2011 HAS INTERPR ETED SECTION 115BBC OF THE ACT, AND EXAMINING THE MATTER AT LENGTH HAS REACHED TO A CONCLUSION - SUB - SECTION (3) DEFINES THE EXPRESSION ANONYMOUS DONATION IN AN EXHAUSTIVE MANNER TO BE A CASE WHERE THE INSTITUTOR ET C. DOES NOT MAINTAIN RECORD OF IDENTITY INDICATING THE NAME AND ADDRESS OF THE PERSON MAKING THE CONTRIBUTION. NO FURTHER PARTICULARS REMAINED TO BE MAINTAINED HAVE BEEN PRESCRIBED UNDER THIS SUB - SECTION. THE LEARNED DR HAS RELIED ON THE BOARD CIRCULAR NO. 14 (2007) 88 ITR (ST.) 9, TITLED AS FINANCE ACT, 2006 - EXPLANATORY NOTES ON PROVISIONS RELATING TO DIRECT TAXES. PARAGRAPH NO.25(2) IS IMPORTANT IN THIS RESPECT. IT IS MENTIONED THAT WITH A VIEW TO PREVENT CHANNELISATION OF UNACCOUNTED MONEY BY WAY OF ANO NYMOUS DONATION, A NEW PROVISION HAS BEEN INSERTED TO TAX ANONYMOUS DONATIONS IN RESPECT OF A WHOLLY CHARITABLE INSTITUTION ETC. @ 30%. HOWEVER, ANONYMOUS DONATION MADE TO WHOLLY CHARITABLE AND RELIGIOUS INSTITUTIONS ETC. SHALL BE TAXED ONLY IF IT IS FOR A NY UNIVERSITY, EDUCATIONAL INSTITUTION, HOSPITAL OR MEDICAL INSTITUTION. ANONYMOUS DONATIONS TO WHOLLY RELIGIOUS TRUST WILL NOT BE TAXED. IN PARAGRAPH NO.25.3, A REFERENCE IS MADE TO THE DEFINITION OF THE EXPRESSION ANONYMOUS DONATION AS THE CONTRIBUTION IN RESPECT OF WHICH RECORD OF IDENTITY IS NOT MAINTAINED INDICATING THE NAME AND ADDRESS OF THE PERSON. AT THIS JUNCTURE, WE MAY ALSO REFER TO THE PROVISION CONTAINED IN SECTION 13(7). IT EXCLUDES THE APPLICABILITY OF THE PROVISION CONTAINED IN SECTIONS 11 AND 12 IN RESPECT OF ANONYMOUS DONATIONS. ON CONSIDERATION OF VARIOUS PROVISIONS APPLICABLE TO THE ISSUE AT HAND WE FIND THAT THE DEFINITION OF THE EXPRESSION ANONYMOUS DONATION REQUIRES PROPER INTERPRETATION. THIS EXPRESSION HAS BEEN DEFINED IN AN EXHA USTIVE MANNER AND, THEREFORE, NO OTHER WORD CAN BE READ IN SECTION 115BC(3) OTHER THAN THE WORDS FINDING PLACE THEREIN. THE DEFINITION IS THAT IT MEANS A VOLUNTARY CONTRIBUTION REFERRED TO IN SECTION 2(24)(IIA), WHERE A PERSON RECEIVING SUCH CONTRIBUTION D OES NOT MAINTAIN A RECORD OF THE IDENTITY INDICATING THE NAME AND ADDRESS OF THE CONTRIBUTOR AND I.T.A.NO. 172 AND 173/CTK/2012 C.O.NOS.22 AND 23/CTK/2012 10 SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED. NO OTHER PARTICULAR HAS BEEN PRESCRIBED UNDER THIS PROVISION. THEREFORE, THE RECEIVER HAS THE OBLIGATION TO MAINTA IN THE IDENTITY INDICATING THE NAME AND ADDRESS ONLY AND NOTHING MORE. THE ID. COUNSEL HAS CLEARLY BROUGHT OUT THAT BOTH THE DETAILS ARE MENTIONED IN THE DONATION RECEIPTS. THESE RECEIPTS ARE STILL IN THE CUSTODY OF THE DEPARTMENT AS THE RECEIPT BOOKS WERE IMPOUNDED IN THE COURSE OF SURVEY. THIS FACT HAS NOT BEEN, REBUTTED BY THE ID. DR. THE AO HAS TAXED THE AMOUNT BY MENTIONING THAT CONFIRMATION LETTERS FROM THE DONORS HAVE NOT BEEN FILED. SUCH CONFIRMATIONS ARE NOT REQUIRED TO BE FILED FOR COMING TO THE C ONCLUSION AS TO WHETHER THE DONATION WAS ANONYMOUS OR NOT. THEREFORE, THE CASE OF THE REVENUE REGARDING TAXATION OF THIS AMOUNT UNDER SUB - SECTION (2) FAILS ON THIS ROUND ITSELF. 6.6. IN THE PRESENT CASE ON HAND, THE ASSESSEE HAS MAINTAINED THE IDENTITY IN DICATING THE NAME AND ADDRESS AS IS EVIDEN T AS QUOTED BY THE LEARNED CIT(A) ON THE BODY OF ITS ORDERS . THE ASSESSEE HAS FURNISHED BOTH BEFORE THE ASSESSING OFFICER AS WELL AS THE CIT (A) , LIST OF DONORS CONTAINING THE NAMES AND ADDRESSES , WHICH WAS SUBJECT ED TO VERIFICATION BY THE ASSESSING OFFICER . THE ASSESSING OFFICER HAS NOT POINTED OUT ANY SPECIFIC DEFECT IN THE NAME S AND ADDRESSES IN THE GIVEN LIST. T HERE IS NO MATERIAL ON RECORD TO SUGGEST THAT ASSESSING OFFICER HAS FOUND THAT THE ASSESSEE HAS NOT MA INTAINED PARTICULARS OF NAMES AND ADDRESSES OF THE DONORS. WE FIND THAT THE ASSESSING OFFICER HAS TAXED THE AMOUNT BY MENTIONING THAT CONFIRMATION LETTERS FROM THE DONORS WERE NOT FORTHCOMING. IN OUR CONSIDERED VIEW, S UCH CONFIRMATIONS ARE NOT REQUIRED TO BE FILED FOR COMING TO THE CONCLUSION AS TO WHETHER TH E DONATION WAS ANONYMOUS OR NOT IN THE LIGHT OF THE DECISION OF ITAT, DELHI CBENCH IN THE CASE OF HANS RAJ SAMARAK SOCIETY VS. ADIT(EXM.) (SUPRA) . 6.7 . CONSIDERING THE FACTS AND CIRCUMSTANCES AS BROUGHT OUT ON RECORD AND SPECIFICALLY WHEN THE ASSESSEE HAS UNDISPUTEDLY FURNISHED THE DETAILS OF I.T.A.NO. 172 AND 173/CTK/2012 C.O.NOS.22 AND 23/CTK/2012 11 NAMES AND ADDRESSES OF THE PERSONS MAKING DONATION TO THE ASSESSEE TRUST, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKIN G ADDITION U/S.155BBC IN BOTH THE ASSESSMENT YEARS UNDER CONSIDERATION, WHICH THE LEARNED CIT(A) HAS RIGHTLY DELETED BY PASSING ELABORATE AND WELL REASONED ORDERS ON THIS ISSUE. THEREFORE, FINDING NO INFIRMITY IN THE ORDERS OF THE LEARNED CIT(A) ON THIS IS SUE, WE UPHOLD THE SAME AND DISMISS THE GROUND RAISED BY THE REVENUE IN THIS REGARD. 7 . AS REGARD S THE SECOND ISSUE RAISED BY THE REVENUE RELATING TO DELETION OF DISALLOWANCE OUT OF ADMINISTRATIVE EXPENSES IN BOTH THE ASSESSMENT YEARS UNDER CONSIDERATION, WE FIND THAT THE ASSESSING OFFICER THOUGH ADMITTED THE ASSESSEE TO HAVE PRODUCED THE VOUCHERS IN SUPPORT OF EXPENSE UNDER THIS HEAD, OBSERVED TO HAVE FOUND THAT A NUMBER OF VOUCHERS WERE PAID BY KIIT AND CERTAIN VOUCHERS WERE NOT MAINTAINED ACCORDINGLY THE VERACITY OF THE SAME COULD NOT HAVE BEEN EXAMINED. 7 .1. HERE AGAIN THE LEARNED COUNSEL OF THE ASSESSEE REITERATED THE SUBMISSIONS AS WERE MADE BEFORE THE LEARNED CIT(A), WHEN THE LEARNED CIT - DR RELIED ON THE ORDER OF THE ASSESSING OFFICER. 7 .2. WE FIND T HAT IT WAS PUT FORTH BY THE LEARNED COUNSEL OF THE ASSESSEE THAT W HICH ARE THE VOUCHERS NOT PROPERLY MAINTAINED HAS NOT BEEN SPELT OUT BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER S . IN ABSENCE OF SPECIFIC DEFECTS DETECTED IN ANY VOUCHER TO ALLEGE THAT THE VERACITY OF THE VOUCHERS CANNOT BE EXAMINED IS NOT BORNE OUT BY THE RECORDS OF THE CASE. THE AOS OBSERVATION IS GENERAL AND IS BASED ON SURMISES AND CONJECTURES. THE ASSESSEE IS A REGISTERED TRUST U/S.12AA OF THE ACT AND AS SUCH, AS PER THE PROVISION S OF SECTION 13(1)(C)/13(1)(D) OF THE ACT ARE LIABLE TO BE TAXED AT THE MAXIMUM MARGINAL RATE. THE ASSESSING OFFICER HAS NOT POINTED OUT ANY SUCH I.T.A.NO. 172 AND 173/CTK/2012 C.O.NOS.22 AND 23/CTK/2012 12 VIOLATION IN THE ASSESSMENT ORDER. W HILE DOING THE ASSESSMENT UNDER THE PROVISIONS OF SECTION 143(3) OF THE AC T, THE ASSESSING OFFICER HAS TO VERIFY THE EXPENDITURE CLAIMED BY THE ASSESSEE IN ITS FINAL ACCOUNTS AND IF THE ASSESSING OFFICER FOUND THAT ANY EXPENDITURE WHICH WAS NOT INCURRED FOR THE ACTIVITIES AS PER THE OBJECTS OF THE TRUST DEED , THEN HE HAS TO DISA LLOW THE SPECIFIC EXPENDITURE. FURTHER THE ASSESSING OFFICER IS NOT EMPOWERED TO ESTIMATE THE EXPENDITURE WHILE COMPLETING THE AS SESSMENT U/S.143(3) OF THE ACT WITHOUT SPECIFICALLY POINTING OUT ANY DEFECT IN CLAIMING SUCH EXPENDITURE. HERE THE ASSESSING OF FICER HAS MADE AD HOC DISALLOWANCES IN THE SAME SPIRIT AND IN THE SAME MANNER AS IS DONE IN THE CASE OF PERSONS DERIVING INCOME FROM BUSINESS. THE ASSESSING OFFICER HAS NOT MADE OUT ANY CASE FOR SUSTAINING THE DISALLOWANCE IN THE CASE OF A CHARITABLE TRUST . THE EXPENSES WERE RECORDED IN THE BOOKS OF ACCOUNTS ON A DAY - TO - DAY BASIS AND WHEN THE ASSESSEE FURNISHE D ALL THE DETAILS, THE AD HOC DISALLOWANCE MADE BY THE ASSESSING OFFICER , IN OUR VIEW, IS NOT JUSTIFIED. LAW IS WELL SETTLED THAT P ROVIDING VALID AND COGENT REASON IS INDISPENSABLE COMPONENTS IN A QUASI JUDICIAL ORDER AFFECTS THE ASSESSEE PREJUDICIALLY. THIS IS ALSO IN ACCORDANCE WHICH PRINCIPLES OF NATURAL JUSTICE. THE REASONS IN SUPPORT OF A DECISION MUST BE COGENT, CLEAR AND SUCCINCT . AN APOLOGY OF A REASON OR A RUBBER STAMP REASON CANNOT BE CALLED VALID REASON AND THE SAME CANNOT BE PART OF A VALID DECISION MAKING PROCESS. SINCE IN THE INSTANT CASE, THE ORDER OF THE ASSESSING OFFICER FOR ADDITION OF 17,84,376 AND 81,75,000 IN THE ASSESSMENT YEAR 2007 - 08 AND 2008 - 09 RESPECTIVELY ON ESTIMATE BASIS LACKS COGENT, CLEAR AND SUCCINCT REASONS, WE ARE OF THE CONSIDERED VIEW THAT THE SAID ADDITION IS LIABLE TO BE DELETED. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE IMPUGNED ORDER OF THE LEARN ED CIT(A) IN DELETING THE IMPUGNED ADDITIONS MADE BY THE ASSESSING OFFICER ON THIS COUNT. WE, I.T.A.NO. 172 AND 173/CTK/2012 C.O.NOS.22 AND 23/CTK/2012 13 THEREFORE, UPHOLD THE ORDERS OF THE LEARNED CIT(A) AND DISMISS THE GROUND RAISED BY THE RAISED IN THIS REGARD. 8 . AS REGARDS THE LAST ISSUE RAISED BY THE REVENUE INSOFAR AS THE LEARNED CIT(A) HAS ALLOWED CARRY FORWARD LOSS TO THE ASSESSEE SOCIETY, WE FIND THAT THE ASSESSING OFFICER HAS NOT GIVE ANY FINDING IN HIS ORDER REGARDING DENIAL OF CARRY FORWARD OF DEFICIT AMOUNT BUT THE CALCULATION OF THE ASSESSING OFFICER STARTS WITH THE NET DEFICIT SHOWN BY THE ASSESSEE. THE LEARNED CIT(A) HAS DEALT WITH THE ISSUE IN BOTH THE AYS UNDER CONSIDERATION IN A SIMILAR MANNER, AS IN PARAGRAPH 10.1 TO 10.4 OF HIS ORDER (ASSESSMENT YEAR 2007 - 08) WHICH IS REPRODUCED AS UNDER : 10 .1. A S PER PROV ISIONS OF SECTION 11(1)(A) OF THE ACT, INCOME DERIVED FROM THE PROPERTY HELD UNDER TRUST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSE, TO THE EXTENT TO WHICH SUCH INCOME IS APPLIED TO SUCH PURPOSE IN INDIA IS TO BE EXCLUDED FOR THE PURPOSE OF COMPUTING THE INCOME OF THE TRUST FOR THE PURPOSE OF ASSESSMENT. HERE THE MEANING OF THE WORD APPLIED TO PUT TO USE OR TO TURN TO USE OR TO PUT TO PRACTICAL USE. FROM THIS IT IS CLEAR THAT WHEN THE INCOME OF A TRUST IS USED OR PUT TO USE TO MEET THE EXPENSES INCURRED FOR RELIGIOUS OR CHARITABLE PURPOSE, IT IS APPLIED FOR CHARITABLE OR RELIGIOUS PURPOSE. THE SAID APPLICATION OF THE INCOME FOR CHARITABLE OR RELIGIOUS PURPOSE TAKES PLACE IN THE YEAR IN WHICH THE INCOME IS ADJUSTED TO MEET THE EXPENSES I NCURRED FOR CHARITABLE OR RELIGIOUS PURPOSE. IN OTHER WORDS, EVEN IF EXPENSES ARE INCURRED FOR CHARITABLE OR RELIGIOUS PURPOSE IN EARLIER YEARS AND THE SAID EXPENSES ADJUSTED IN THE SUBSEQUENT YEARS, THE INCOME FOR THE SAID YEAR CAN BE SAID TO HAVE BEEN AP PLIED FOR CHARITABLE & RELIGIOUS PURPOSE IN THE YEAR IN WHICH IT IS ADJUSTED. THEREFORE, CARRY FORWARD DEFICIT AROUSED OUT OF EXPENDITURE OVER INCOME FOR THE EARLIER YEARS ARE TO BE ADJUSTED AGAINST THE INCOME OF THE CURRENT YEAR. 10.2. T HAT THERE IN NOTHI NG IN LANGUAGE OF SECTION 11(1) (A) OF THE ACT TO INDICATE THAT THE INCOME FROM THE TRUST PROPERTY SHOULD HAVE BEEN APPLIED FOR CHARITABLE OR RELIGIOUS PURPOSE ONLY IN THE YEAR IN WHICH IT I.T.A.NO. 172 AND 173/CTK/2012 C.O.NOS.22 AND 23/CTK/2012 14 HAD ARISEN. THE INCOME OF THE TRUST IS TO BE ARRIVED AT HAVING DUE REGARD TO THE COMMERCIAL PRINCIPLES, I.E. AFTER DEDUCTING THE EARLIER YEAR DEFICIT ARISING OUT OF EXPENDITURE OVER INCOME, THEN IT IS TO BE TAXED. THE RESPONDENT HAS BROUGHT TO MY NOTICE THE FOLLOWING CASE LAWS WHICH SUPPORT THE ABOVE FINDING : CIT VS. SHR I PLOT SWETAMBER MURTI PUJAK JAIN MANDAL, (1994) 119 CTR (GUJ) 144: (1995) 211 ITR 293 (GUJ) GONVINDU NAICKER ESTATE VS. ASST. DIRECTOR OF INCOME TAX, (2001) 167 CTR (MAD) 303 : (2001) 248 ITR 368 (MAD) COMMISSIONER OF INCOME TAX VS. INSTITUTE OF BANKING , (2003) 264 ITR 110 (BOM.) COMMISSIONER OF INCOME TAX VS. MATRISEVA TRUST, (1999) 242 ITR 20 (MAD) DIRECTOR OF INCOME TAX VS. RAGHUVANSHI CHARITABLE TRUST & ORS, (2010) 44 DTR (DEL) 223 10.3. FURTHER MORE THE JURISDICTIONAL ITAT WHILE DECIDING THIS ISS UES IN RESPECT OF THE CASE OF THE ASSESSEE KALINGA INSTITUTE OF INDUSTRIAL TECHNOLOGY, IN IT (SS) A - 76,77,78, 82,83,84 (CTK)/2009, HAD HELD THE SAME FINDING AS UNDER AND ALLOWED THE CARRY FORWARD OF DEFICIT OF EARLIER YEARS : 11.4 SO FAR AS THE SECOND ISSUE IS CONCERNED, WE CONSIDER IT NECESSARY FIRST TO CONSIDER THE DECISIONS RELIED UPON BY THE ASSESSEE: (I) CIT VS. SHRI PLOT SWEAMBER MURTI PUJAK JAIN MANDAL, 211 ITR 293 (GUJ.) IN THIS CASE, THE HON'BLE GUJARAT HIGH COURT, ON THE FACTS AND IN THE CIRCU MSTANCES OF THE CASE, HAS HELD THAT EXCESS OF EXPENDITURE EARLIER YEARS CAN BE ADJUSTED AGAINST INCOME OF SUBSEQUENT YEAR AND SUCH ADJUSTMENT IS TO BE TREATED AS APPLICATION OF INCOME IN SUBSEQUENT YEAR FOR CHARITABLE I.T.A.NO. 172 AND 173/CTK/2012 C.O.NOS.22 AND 23/CTK/2012 15 PURPOSES. THE RELEVANT PART AS CONSIDE RED IN HEAD NOTES A PAGES 293 - 294 READS AS UNDER: - A BARE PERUSAL OF SECTION 11 OF THE INCOME - TAX ACT, 1961, SHOWS THAT THE INCOME DERIVED FROM PROPERTY HELD UNDER TRUST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES TO THE EXTENT TO WHICH SUCH INCOME IS AP PLIED TO SUCH PURPOSES IN INDIA IS TO BE EXCLUDED FOR THE PURPOSES OF COMPUTING THE INCOME OF THE TRUST FOR THE PURPOSE OF ASSESSMENT. THERE ARE NO WORDS OF LIMITATION IN THIS SECTION PROVIDING THAT THE INCOME SHOULD HAVE BEEN APPLIED FOR CHARITABLE OR REL IGIOUS PURPOSES ONLY IN THE YEAR IN WHICH THE INCOME HAD ARISEN. THE WORD APPLY MEANS TO PUT TO USE OR TO TURN TO USE OR TO MAKE USE OR TO PUT TO PRACTICAL USE'. HAVING REGARD TO THE PROVISIONS OF SECTION 11 OF THE ACT, IT IS CLEAR THAT WHEN THE I NCOME OF A TRUST IS USED OR PUT TO USE TO MEET THE EXPENSES INCURRED FOR RELIGIOUS OR CHARITABLE PURPOSES, IT IS APPLIED FOR CHARITABLE OR RELIGIOUS PURPOSES. THE APPLICATION OF THE INCOME FOR CHARITABLE OR RELIGIOUS PURPOSES TAKES PLACE IN THE YEAR IN WHI CH THE INCOME IS ADJUSTED TO MEET THE EXPENSES INCURRED FOR CHARITABLE OR RELIGIOUS PURPOSES. IN OTHER WORDS, EVEN IF EXPENSES FOR CHARITABLE AND RELIGIOUS PURPOSES HAVE BEEN INCURRED FOR THE EARLIER YEAR AND THE SAID EXPENSES ARE ADJUSTED AGAINST THE INCO ME OF A SUBSEQUENT YEAR, THE INCOME OF THAT YEAR CAN BE SAID TO HAVE BEEN APPLIED FOR CHARITABLE AND RELIGIOUS PURPOSES IN THE YEAR IN WHICH THE EXPENSES INCURRED FOR CHARITABLE AND RELIGIOUS PURPOSES HAD BEEN ADJUSTED. THERE IS NOTHING IN THE LANGUAGE OF SECTION 11(1)(A) OF THE ACT TO INDICATE THAT THE EXPENDITURE INCURRED IN THE EARLIER YEAR CANNOT BE MET OUT OF THE INCOME OF THE SUBSEQUENT YEAR AND UTILIZATION OF SUCH INCOME FOR MEETING THE EXPENDITURE OF THE EARLIER YEAR, WOULD NOT AMOUNT TO SUCH INCOME BEING APPLIED FOR CHARITABLE OR RELIGIOUS PURPOSES. INCOME DERIVED FROM TRUST PROPERTY HAS TO BE DETERMINED ON COMMERCIAL PRINCIPLES AND IF COMMERCIAL PRINCIPLES FOR DETERMINING THE INCOME ARE APPLIED, IT IS BUT NATURAL THAT THE ADJUSTMENT OF THE EXPENSES INCURRED BY THE TRUST FOR CHARITABLE AND RELIGIOUS PURPOSES IN THE EARLIER YEAR AGAINST INCOME EARNED BY THE TRUST IN THE SUBSEQUENT YEAR WILL HAVE TO BE REGARDED AS APPLICATION OF INCOME OF THE TRUST FOR CHARITABLE AND RELIGIOUS PURPOSES IN THE SUBSEQUEN T YEAR IN WHICH SUCH ADJUSTMENT HAS BEEN MADE HAVING REGARD TO THE BENEVOLENT PROVISIONS CONTAINED IN SECTION 11 OF THE ACT AND WILL HAVE TO BE EXCLUDED FROM THE INCOME OF THE TRUST UNDER SECTION 11 (L)(A). ' I.T.A.NO. 172 AND 173/CTK/2012 C.O.NOS.22 AND 23/CTK/2012 16 (II) GOVINDU NAICKER ESTATE VS. ASSISTANT DIRE CTOR OF INCOME - TAX, 248 ITR 369 (MAD.) SECTION 11 OF THE INCOME - TAX ACT, 1961, IS A BENEVOLENT PROVISION. THE INCOME OF A CHARITABLE TRUST HAS TO BE ARRIVED AT HAVING DUE REGARD TO COMMERCIAL PRINCIPLES. THE OBJECT OF THE CHARITABLE TRUST CAN ONLY BE ACH IEVED BY INCURRING EXPENDITURE, AND IN ORDER TO INCUR THAT EXPENDITURE, THE TRUST SHOULD HAVE AN INCOME. SO LONG AS THE EXPENDITURE INCURRED IS ON RELIGIOUS OR CHARITABLE PURPOSES, IT IS EXPENDITURE PROPERLY INCURRED BY THE TRUST, AND THE INCOME FROM OUT O F WHICH THAT EXPENDITURE IS INCURRED, WOULD NOT BE LIABLE TO TAX. IF EXPENDITURE INCURRED IN AN EARLIER YEAR IS ADJUSTED AGAINST THE INCOME OF A LATTER YEAR, IT HAS TO BE HELD THAT THE TRUST HAD INCURRED EXPENDITURE ON A RELIGIOUS AND CHARITABLE PURPOSES F ROM THE INCOME OF THE SUBSEQUENT YEAR, EVEN THOUGH THE ACTUAL EXPENDITURE WAS IN THE EARLIER YEARS IF IN THE BOOKS OF ACCOUNT OF THE TRUST, SUCH EARLIER EXPENDITURE HAD BEEN SET OF F AGAINST THE INCOME OF THE SUBSEQUENT YEAR. THE EXPENDITURE THAT CAN BE SO ADJUSTED CAN ONLY BE EXPENDITURE ON RELIGIOUS AND CHARITABLE PURPOSES AND NO OTHER: HELD, THAT, IN THE INSTANT CASE, THE DEFICITS CLAIMED BY THE ASSESSEE WERE BY REASON OF THE PAYMENT OF INTEREST, AND PART OF THE PRINCIPAL TO THE BANK FROM WHICH IT HAD OB TAINED A SUBSTANTIAL LOAN FOR PUTTING UP A NEW BUILDING IN PLACE OF THE OLD BUILDING THAT WAS OWNED BY IT, THE NEW BUILDING SO PUT UP BEING A MULTI - STOREYED COMMERCIAL COMPLEX, FROM WHICH IT DERIVED RENTAL INCOME. THOUGH THE DIRECTOR OF EXEMPTIONS HAD OBSE RVED THAT THE REPAYMENT OF THE PRINCIPAL WOULD NOT QUALIFY FOR BEING REGARDED AS EXPENDITURE ON RELIGIOUS OR CHARITABLE PURPOSES, THERE WAS NO FINDING THAT THE INTEREST PAID ON THE LOAN COULD NOT BE SO REGARDED. THERE WAS ALSO NO FINDING AS TO WHETHER THE PUTTING UP OF THE COMMERCIAL BUILDING AND THE EARNING OF THE RENTAL INCOME THERE FROM COULD BE REGARDED AS EXPENDITURE INCURRED FOR RELIGIOUS OR CHARITABLE PURPOSE. [MATTER REMANDED.} 11.5. SINCE REVENUE HAS NOT BROUGHT TO OUR NOTICE ANY DECISION CONTRARY TO AFORESAID DECISIONS RELIED UPON BY THE ID. A.R., WE RESPECTFULLY FOLLOWING THE SAME, ARE OF THE OPINION THAT SO FAR AS DEFICIT CLAIMED BY THE ASSESSEE IS ON ACCOUNT OF APPLICATION OF AMOUNT AVAILABLE WITH THE ASSESSEE (EITHER BY WAY OF RECEIPT OR INCOM E OR BORROWED FUNDS) STANDS APPLIED FOR CHARITABLE PURPOSES - BE IT FOR CONSTRUCTION OR ACQUISITION OF IMMOVABLE PROPERTY OR OTHER I.T.A.NO. 172 AND 173/CTK/2012 C.O.NOS.22 AND 23/CTK/2012 17 CHARITABLE ACTIVITIES IN CONSONANCE WITH THE ASSESSEES OBJECTS, THE EXCESS IN A PARTICULAR YEAR CAN BE SET OFF AGAINST RECEI PT/INCOME FOR A SUBSEQUENT YEAR; MEANING THEREBY THAT THE ASSESSEE IS ENTITLED TO CARRY FORWARD THE DEFICIT HAVING BEEN SUFFERED ON ACCOUNT OF CHARITABLE ACTIVITIES AND ADJUST THE SAME AGAINST RECEIPT/INCOME OF A SUBSEQUENT YEAR. 11.6. COMING TO THE ASSES SEES CASE, SINCE THE REVENUE HAS NOT DISPUTED THE FACT THAT DEFICIT IN EACH YEAR WAS ON ACCOUNT OF THE AMOUNT SPENT IN CONSTRUCTION/PURCHASE OF THE BUILDING, THE SAME, AS ALREADY HELD BY US, WAS FOR CHARITABLE PURPOSES AND THEREFORE, THE ASSESSEE IS ENTIT LED TO SET OFF OF THE SAME I.E. YEAR - WISE DEFICIT OR LOSS AS MAY BE ADJUSTED AGAINST THE RECEIPT/INCOME OF A SUBSEQUENT YEAR. WE, THEREFORE, DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 10.4. THE DECISION OF THE JURISDICTIONAL ITA T IS BINDING ON ME. RESPECTFULLY FOLLOWING THE ABOVE COURT RULINGS THE ISSUE IS DECIDED IN FAVOUR OF THE APPELLANT AND THE A.O.IS DIRECTED TO ALLOW THE CARRY FORWARD DEFICIT AS PER LAW. 8 .1. FROM THE ABOVE, WE FIND THAT THE LEARNED CIT(A) HAS DIRECTED TH E ASSESSING OFFICER TO ALLOW THE CARRY FORWARD DEFICIT AS PER LAW, BASED ON DIFFERENT JUDICIAL PRONOUNCEMENTS ON THE ISSUE, SPECIFICALLY RELYING ON THE DECISION OF THE ITAT, IN THE CASE OF KALINGA INSTITUTE OF INDUSTRIAL TECHNOLOGY (SUPRA) , THE FACTS OF W HICH ARE AKIN TO THAT OF THE PRESENT ASSESSEE . THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A). WE UPHOLD THE SAME AND DISMISS THE GROUND RAISED BY THE REVENUE IN THIS REGARD. 9 . TO CONCLUDE, WE OBSERVE THAT IN VIEW OF THE DISCUS SIONS MADE IN TH E FOREGOING PARAGRAPHS, WE DO FIND THAT T HE LEARNED CIT(A) HAS BEEN ABLE TO BRING ON RECORD THE MAIN ISSUES WHICH WERE TO BE DEALT WITH IN ACCORDANCE WITH THE FACTS BROUGHT ON RECORD BY COMPLYING TO THE PROVISIONS OF THE INCOME - TAX ACT AND ALSO THE CITED CASE LAWS. WE HAVE ALSO PERUSED THE ORDERS OF THE AUTHORITI ES BELOW WHICH FACTS BROUGHT ON RECORD HAVE BEEN I.T.A.NO. 172 AND 173/CTK/2012 C.O.NOS.22 AND 23/CTK/2012 18 SUPPORTED BY THE FINANCIAL STATEMENTS AND ANNEXURE THERETO SUPPLIED BY THE LEARNED COUNSEL OF THE ASSESSEE IN THE PAPER BOOK. WE ALSO DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) KEEPING IN V IEW THE RIVAL SUBMISSIONS MADE BEFORE US WHICH HAVE BEEN DEALT WITH IN ACCORDANCE WITH THE PROVISIONS OF THE INCOME - TAX ACT AND THE CITED CASE LAWS AS WELL. 10 . IN VIEW OF THE ABOVE, WE DISMISS BOTH THE APPEALS OF THE REVENUE FOR THE ASSESSMENT YEAR S 2007 - 08 AND 2008 - 09 , FINDING NO MERIT ON THE GROUNDS RAISED BY THE REVENUE. 1 1 . SINCE WE HAVE DISMISSED THE APPEALS OF THE REVENUE BY UPHOLDING THE IMPUGNED ORDERS OF THE LEARNED CIT(A), THE CROSS OBJECTIONS FILED BY THE ASSESSEE SUPPORTING THE IMPUGNED ORDER OF THE LEARNED CIT(A) ARE DISPOSED OF ACCORDINGLY. 12 . IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED AND THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DISPOSED OF ACCORDINGLY. S D/ - S D/ - ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( ) DATE: 21.12.2012 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : 2 / THE RESPONDENT: 3 . / THE CIT, 4 . ( )/ THE CIT(A), ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY. I.T.A.NO. 172 AND 173/CTK/2012 C.O.NOS.22 AND 23/CTK/2012 19 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 18.12.2012 . 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 20.12.2012 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 21.12.2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ..... ........... 9. DATE OF DESPATCH OF THE ORDER ..