Vasupujya Maharaj Dehrasar Trust, Ahmedabad V. The ITO(E), Ward-2, Ahmedabad

ITA 1841/AHD/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6241 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 30-09-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 04-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Earning of tax free income
• Section: 12A; 12AA; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI WASEEM AHMED, ACCOUNTANT MEMBER) ( THROUGH VIRTUAL COURT ) ITA. NO: 1841/AHD/2017 (ASSESSMENT YEAR: 2013-14) VASUPUJYA MAHARAJ DEHRASAR TRUST, SARKHEJ GAM, OPP. SARKHEJ AMTS BUS STOP, SARKHEJ, AHMEDABAD-382210 V/S INCOME TAX OFFICER, (E) WARD-2, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAATV1533J APPELLANT BY : NONE RESPONDENT BY : SHRI DILEEP KUMAR, SR. D.R. ( )/ ORDER DATE OF HEARING : 10 -09-2020 DATE OF PRONOUNCEMENT : 21-09-2020 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-9, AHMEDABAD DATED 11.05.2017 PERTAINING TO A.Y. 2013-14 AND FOLLOWING GROUNDS HAVE BEEN TAKEN: ITA NO. 1841/AHD/2017 . A.Y. 2013-14 2 1.THE LEARNED CIT-(A)-9, & ASSESSING OFFICER HAS ERRED IN MAKING ADDITION OF RS.17,83,549/- ON ACCOUNT OF ADMINISTRATIVE EXPENSE, DONATION AND EXPENSES INCURRED FOR THE OBJECT OF THE TRUST. THE LEARNED ASSESSING OFFICER HAS FAILED TO CONSIDER THE FACT THAT THE TRUST IS DULY REGISTERED U/S 12AA HAVING REGISTRATION NO. H.Q.-IV-9/V-54/AR-III-74 AND ALL THE EXPENSES ARE INCURRED FOR THE OBJECT OF THE TRUST. IT IS THEREFORE SUBMITTED THAT THE ADDITION MADE IS ILLEGAL AND THEREFORE REQUIRES TO BE DELETED. IT IS SUBMITTED THAT IT BE SO DELETED NOW. 2. THE LEARNED CIT-(A) & ASSESSING OFFICER HAS ERRED IN MAKING ADDITION OF RS.50,53,755/- ON ACCOUNT OF VOLUNTARY CONTRIBUTION RECEIVED BY THE TRUST. AS PER SECTION LL(L)(D) OF THE INCOME TAX ACT 1961 VOLUNTARY CONTRIBUTIONS RECEIVED BY THE TRUST OR CHARITABLE INSTITUTIONS WITH A SPECIFIC DIRECTION THAT THE CONTRIBUTION SHALL FORM PART OF THE CORPUS OF THE TRUST OR INSTITUTION SHALL NOT BE TREATED AS INCOME OF THE TRUSTS OR INSTITUTION. THE TRUST IS DULY REGISTERED U/S 12AA HENCE VOLUNTARY CONTRIBUTIONS RECEIVED BY IT CANNOT BE CONSIDERED AS THE INCOME OF THE TRUST. THE LEARNED ASSESSING OFFICER HAS PASSED ORDER ON THE PRESUMPTION WITHOUT CONSIDERING FACTS ON RECORD AND THEREFORE ADDITION REQUIRES TO BE DELETED. IT IS SUBMITTED THAT IT BE SO DELETED NOW. 3. THE APPELLANT ALSO REQUESTS YOU TO WAIVE THE INCOME TAX AMOUNT OF RS. 26,25,410/- AND INTEREST, PENALTY AND ANY OTHER LEVIED AMOUNT. 4. THE APPELLANT CRAVES FOR LEAVE TO ADD, ALTER OR AMEND ANY OF THE GROUND OF APPEAL ON OR BEFORE THE FINAL DATE OF HEARING. 5. TO STAY THE DEMAND TILL THE DISPOSAL OF INCOME TAX APPELLATE TRIBUNAL AHMADABAD BENCHES, AHMADABAD. 2. IN THIS CASE, ASSESSE IS AOP (TRUST) CARRYING ON VARIOUS RELIGIOUS AND CHARITABLE ACTIVITIES. 3. PERUSAL OF THE INCOME AND EXPENDITURE ACCOUNT AND COMPUTATION OF INCOME IT REVEALS THAT THE ASSESSE TRUST HAS SHOWN INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. THE DETAIL OF SOURCE OF INCOME IS AS UNDER: 1. VOLUNTARY CONTRIBUTION RS. 10,00,315/ - 2. MISC. INCOME A. MATA NI CHUNDADI INCOME RS. 66,050/ - ITA NO. 1841/AHD/2017 . A.Y. 2013-14 3 B. BROKRAGE INCOME RS. 2,250/ - C. INTEREST INCOME RS.4, 16,565/ - RS. 4,84,865/ - TOTAL RS. 14,85,180/ - DETAILS OF EXPENDITURE INCURRED ARE AS UNDER: 1 ADMINISTRATIVE EXP.(AS PER ANNEXURE - 3, INCOME EXPENDITURE ACCOUNT) RS. 2,70,380/ - 2 DONATION RS. 16,626/ - 3 FOR THE OBJECT OF THE TRUST. (AS PER ANNEXURE - 4, INCOME EXPENDITURE ACCOUNT) RS. 14,96,543/ - TOT AL RS. 17,83,549/ - 4. AS MENTIONED ABOVE ASSESSEE HAS EARNED INCOME AND HAD SHOWN THE SAME UNDER THE HEAD 'INCOME FROM OTHER SOURCES'. ASSESSEE CLAIMED HUGE EXPENDITURE FROM SUCH INCOME AS DISCUSSED ABOVE. THE ASSESSEE TRUST, IN ABSENCE OF REGISTRATION U/S. 12A IS TREATED AS NORMAL AOP AND IS TAXED AT MAXIMUM RATE AND THE INCOME OF THE ASSESSEE IS CONSIDERED TO BE ONLY FROM 'INCOME FROM OTHER SOURCES' AND EXPENDITURE RELATABLE TO EARNING OF SUCH INCOME ARE ONLY ALLOWED AS DEDUCTIONS. 5. THE EXPENDITURE WHICH IS LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF MAKING OR EARNING SUCH INCOME IS TO BE ALLOWED AS DEDUCTIONS WHILE COMPUTING 'INCOME FROM OTHER SOURCES'. FROM THE TABLE SHOWN ABOVE, NONE OF THE EXPENDITURE IS LAID OUT OR EXPENDED WHOLLY OR EXCLUSIVELY FOR THE PURPOSE OF MAKING OR EARNING THE INCOME TABULATED ABOVE. THESE EXPENDITURE CANNOT BE STATED TO BE EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF EARNING INCOME FROM 'OTHER SOURCE'. RELIANCE IS PLACES ON THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF SMT. VIRMATI RAMKRISHANNA'S CASE ITA NO. 1841/AHD/2017 . A.Y. 2013-14 4 (1981) 131 ITR 659 (GUJ), IT HAS BEEN HELD THAT THE PURPOSE OT MAKING OR EARNING INCOME MUST BE THE SOLE PURPOSE FOR WHICH THE EXPENDITURE MUST HAVE BEEN INCURRED, THAT IS TO SAY, THE EXPENDITURE SHOULD NOT HAVE BEEN INCURRED TOR SUCH PURPOSE AS ALSO FOR ANOTHER PURPOSE, OR FOR A MIXED PURPOSE. IT HAS ALSO BEEN HELD THAT THE DISTINCTION BETWEEN PURPOSE AND MOTIVE MUST ALWAYS BE BORNE IN MIND, FOR, WHAT IS RELEVANT IS THE MANIFEST AND IMMEDIATE PURPOSE AND NOT THE MOTIVE OR PERSONAL CONSIDERATIONS WEIGHING IN THE MIND OF THE ASSESSEE FOR INCURRING THE EXPENDITURE. RELIANCE IS ALSO PLACED ON KASTURBHAI LALBHAI'S CASE (1968) 70 ITR 267 (GUJ). 6. IN VIEW OF THE ABOVE DISCUSSIONS THE ASSESSEE IS NOT ENTITLED/ELIGIBLE FOR DEDUCTION/EXPENSES OF RS. 17,83,549/- AS CLAIMED BY THE ASSESSEE AS THEY ARE NOT RELATABLE TO THE INCOME. THEREFORE, THESE EXPENSES OF RS. 17,83,549/- IS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME. PENALTY PROCEEDINGS ARE SEPARATELY INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME. (ADDITION OF RS. 17,83,549/-). 7. PERUSAL OF THE BALANCE SHEET IT IS OBSERVED THAT ASSESSEE HAD SHOWN DONATIONS OF RS. L,12,67,002/-RECEIVED UNDER THE HEAD ' OTHER ESTABLISHED FUND' (AS PER ANNEX-A). DURING THE YEAR UNDER CONSIDERATION, ASSESSEE HAD RECEIVED VOLUNTARY CONTRIBUTIONS OF RS. 50,53,755/- IN THE NAME OF VARIOUS FUNDS. FURTHER, AS DISCUSSED IN PRECEDING PARA(S), IN ABSENCE OF REGISTRATION U/S 12A OF THE I.T. ACT THE EXEMPTIONS CLAIMED/ ENJOYED BY THE ASSESSEE ARE DENIED AND REJECTED. THEREFORE, VOLUNTARY CONTRIBUTIONS OF RS. 50,53,755/- RECEIVED IN THE NAME OF VARIOUS FUNDS AND IS CONSIDERED AS THE CORPUS DONATION BY THE ASSESSEE AND IS DIRECTLY TAKEN IN THE BALANCE SHEET CONSIDERING IT TO BE EXEMPT INCOME U/S 11 (L)(D) OF THE ACT, IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. PENALTY ITA NO. 1841/AHD/2017 . A.Y. 2013-14 5 PROCEEDINGS U/S 271(L)(C) OF THE IT ACT ARE SEPARATELY INITIATED FOR FURNISHING INACCURATE PARTICULARS OF INCOME. (ADDITION OF RS. 50,53,755/-) 8. WITHOUT PREJUDICE TO THE ABOVE, PERUSAL OF THE BALANCE SHEET REVEALS THAT ASSESSEE ITSELF HAD SHOWN THE RECEIPTS OF DONATION OF RS. 50,53,755/- AS 'VOLUNTARY CONTRIBUTIONS' IN THE ANNEX-A OF 'OTHER ESTABLISHED FUNDS'. THUS, THE ASSESSEE, TOO HAVE ACCEPTED THE FACT THAT THESE DONATIONS ARE NOT CORPUS DONATIONS, IN FACT IT IS GENERAL DONATION WHICH SHOULD HAVE BEEN ROUTED THROUGH INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR UNDER CONSIDERATION. WHICH THE ASSESSEE HAD NOT DONE SO. 9. AND LD. A.O. MADE ADDITION OF RS. 67,23,488/-. 10. AGAINST THE ORDER OF THE LD. A.O., ASSESSE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD. CIT(A) BUT COULD NOT FILE ELECTRONICALLY APPEAL AS PER CBDT CIRCULAR NO. 20/2016 DATED 26 TH MAY, 2016. THEREFORE, LD. CIT(A) DID NOT ACCEPT BEFORE APPEAL AND SAME WAS DISMISSED AS NON-EST AND NOT ENTERTAINED. 11. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGNED ORDERS. IN THIS CASE, LD. CIT(A) DISMISSED THE APPEAL BECAUSE ASSESSE COULD NOT FILE ITS APPEAL ELECTRONICALLY AND APPEAL WAS DISMISSED AS NON-EST AND ON MERIT APPEAL OF THE ASSESSE WAS NOT HEARD. 12. IN OUR CONSIDERED OPINION, ASSESSE SHOULD HAVE BEEN GIVEN A CHANCE TO RECTIFY HIS OMISSION FOR FILING PHYSICAL APPEAL INSTEAD OF E-APPEAL AND LD. CIT(A) ITA NO. 1841/AHD/2017 . A.Y. 2013-14 6 SHOULD HAVE DECIDED THE MATTER ON MERIT INSTEAD OF DISMISSING ASSESSEES APPEAL IN LIMINE. 13. IN THE INTEREST OF JUSTICE, WE ACCEPT THE PLEA OF THE ASSESSE AND ASSESSE SHALL FILE E-APPEAL BEFORE THE LD. CIT(A) AND INTERVENING PERIOD OF DELAY IS CONDONED AND LD. CIT(A) IS DIRECTED TO DECIDE ASSESEES APPEAL ON MERIT. 14. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 21- 09- 2020 SD/- SD/- (WASEEM AHMED) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 21/09/2020 RAJESH COPY OF THE ORDER FORWARDED TO:- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD