The Director of Income tax(Exemption), Ahmedabad V. K.Verma Charitable Trust, Ahmedabad

ITA 1860/AHD/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9187 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 12-08-2009
• Assessment Year: 2001-2002
• Appeal Filed On: 04-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P M SHUKLA SENIOR
• Assessee Lawyers: JYOTISH M SHAH
• Keywords: Charitable institution; Capital receipt; Revised return
• Section: 143(3); 80G; 11

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'B' (BEFORE S/SHRI P K BANSAL AND MAHAVIR SINGH) ITA NO.1860/AHD/2009 (ASSESSMENT YEAR: 2001-02) THE DEPUTY COMMISSIONER OF INCOME- TAX (EXEMPTIONS), AHMEDABAD V/S K VERMA CHARITABLE TRUST, HARIOM AVENUE, 31-B, GOVERNMENT SERVANTS SOCIETY, NAVRANGPURA, AHMEDABAD (APPELLANT) (RESPONDENT) PAN NO.: AAATK 8142 L APPELLANT BY :- SHRI P M SHUKLA, SENIOR DR RESPONDENT BY:- SHRI JYOTISH M SHAH O R D E R PER P K BANSAL (ACCOUNTANT MEMBER) : THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A ) DATED 16 TH MARCH, 2009 BY TAKING THE FOLLOWING EFFECTIVE GROUN DS OF APPEAL:- 1 THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOL DING THAT THE ASSESSEE TRUST IS ENTITLED TO EXEMPTION U/S 11 OF T HE I.T. ACT. 2 THE LD. CIT(A) HAS NOT DEALT WITH THE INCOME VS. AP PLICATION FOR CHARITIES (EARTHQUAKE RELIEF) AND ALSO TOTALLY OMIT TED TO CONSIDER THE ISSUE OF SECTION 11(5) OF THE I.T. ACT VIOLATIO N DEALT CLEARLY IN THE ASSESSMENT ORDER. 2 2 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E SUBMITTED THE RETURN AT RS.49,160/- ALONG WITH FORM NO.10 AND AUDIT REPORT IN FORM NO.10B WHICH WAS SUBSEQUENTLY REVISED AT A LOSS OF RS.1,26,459/-. THE ASSESSEE HAS CLAIMED IN THE REVISED RETURN DONATION FOR EARTHQUAKE RELIEF RS.1835,003 /- AND DONATION FOR BUILDING FUND RS.2,20,500/- AS SPECI FIC DONATIONS BEING CAPITAL RECEIPTS. THE ASSESSEE HAS CLAIMED AN EXPENDITURE OF RS.1,26,483/- BEING INCURRED FOR THE OBJECT OF T HE TRUST. THE ASSESSING OFFICER ON THE BASIS OF THE ORIGINAL RETU RN OBSERVED THAT THE ASSESSEE HAS CLAIMED AN AMOUNT OF RS.5,09, 547/- I.E. 25% OF THE GROSS RECEIPTS ACCUMULATED IN TERMS OF S ECTION 11(1). FURTHER, A SUM OF RS.5,50,313/- CLAIMED AS APPLIED FOR EARTHQUAKE RELIEF IN ADDITION TO THE OTHER EXPENDIT URE OF RS.1,09,252/-. THE ASSESSEE SOUGHT ACCUMULATION FOR RS.8,20,000/- U/S 11(2) BY FILING FORM NO.10. THE A SSESSING OFFICER AFTER NOTING THAT THE ASSESSEE HAS ADVANCED A SUM OF RS.5 LACS TO MADHUSUDAN DHYANYOG NIKETAN TRUST AND RS.10 LACS TO HARI OM FIN STOCK (P) LTD., OBSERVED THAT THE ASSES SEE VIOLATED THE PROVISIONS OF SECTION 13(1)(C), 13(1)(D) AND 13 (2)(4) AND, THEREFORE, HE TOOK THE VIEW THAT THE ASSESSEE HAS V IOLATED THE PROVISIONS OF SECTION 11(5). THE PLEA OF THE ASSESS EE THAT THE DONATIONS RECEIVED FOR EARTHQUAKE RELIEF AND BUILDI NG FUND ARE TO BE EXCLUDED U/S 11(1)(D), WAS NOT CONSIDERED. TH E ASSESSEE HAS SPENT OUT OF THE EARTHQUAKE RELIEF DONATION RS. 5,50,313/- DURING THE YEAR AND THE BALANCE DONATION OF RS.13,1 9,509/- WERE SPENT IN THE SUBSEQUENT YEAR. THE AMOUNT FROM HARI OM FIN STOCK (P) LTD. WAS DULY RECOVERED AND WAS GIVEN FOR THE PURPOSE OF EARTHQUAKE RELIEF. THE ASSESSING OFFICER ULTIMAT ELY DENIED THE EXEMPTION TO THE ASSESSEE U/S 11. THE MATTER UL TIMATELY 3 TRAVELED TO THE TRIBUNAL. THE TRIBUNAL SET-ASIDE TH E ASSESSMENT ORDER BY OBSERVING AS UNDER:- 4 WE HAVE HEARD BOTH THE PARTIES. THIS TRIBUNAL IN THE CASE OF M/S HARI OM SARJAK, M/S HARI OM ASSOCIATES AND HARI OM FINSTOCK LTD. IN ITA NO.3870/AHD/2003, 2436 & 3440/AHD/2004 FOR ASST. YEAR 2001-02 VIDE ITS EVEN DATED ORDER HAS HELD THA T DONATIONS MADE BY THOSE CONCERNS TO ASSESSEE TRUST ARE ELIGIBLE FO R DEDUCTION UNDER SECTION 80G AS THE TRUST IS HAVING VALID REGISTRATI ON CERTIFICATE FOR THE YEAR UNDER CONSIDERATION AND DEDUCTION CLAIMED BY T HEM COULD NOT BE DENIED AS THEY HAVE FULFILLED THE CONDITIONS LAID U NDER SECTION 80G. THESE DONATIONS ARE MADE PART OF DISALLOWANCE ON T HE GROUND THAT IN THOSE CASES THESE DONATIONS HAVE NOT BEEN ACCEPTED TO BE ELIGIBLE FOR DEDUCTION UNDER SECTION 80G, SO THE FACTS DISCUSSED IN THE CASES OF M/S HARI OM SARJAK, M/S HARI OM ASSOCIATES AND HARI OM FINSTOCK LTD. WILL BE RELEVANT WHILE DECIDING THE ISSUE THAT WHETHER THESE DONATIONS CAN BE CONSIDERED TO BE THE INCOME OF ASS ESSEE TRUST. THE LOWER AUTHORITIES HAD NO OCCASION TO EXAMINE THE FA CTS OF THE CASE IN THE LIGHT OF ABOVE ORDERS OF ITAT. IT IS, THEREFORE , CONSIDERED JUST AND PROPER TO RESTORE THIS APPEAL TO THE FILE OF ASSESS ING OFFICER TO MAKE DE NOVO ASSESSMENT AFTER GIVING A REASONABLE OPPORT UNITY OF HEARING TO THE ASSESSEE. WE DIRECT ACCORDINGLY. 3 AGAIN THE ASSESSING OFFICER PASSED AN ORDER U/S 143(3) READ WITH SECTION 254 DATED 31-12-2008 DENYI NG THE EXEMPTION TO THE ASSESSEE U/S 11. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). THE CIT(A) TOOK THE VIEW THAT TH E ASSESSEE IS ENTITLED TO EXEMPTION U/S 11 AND ACCORDINGLY DIRECT ED THE ASSESSING OFFICER TO GRANT THE EXEMPTION U/S 11, BY OBSERVING AS UNDER:- 7 I HAVE CONSIDERED THE ASSESSMENT ORDER AND THE A BOVE SUBMISSIONS. I HAVE ALSO PERUSED THE ORDER OF THE I TAT REFERRED TO ABOVE DATED 9-3-2007. IT IS NOTICED THAT THE ITAT H AS IN THE ABOVE REFERRED ORDER ACCEPTED THE FACT THAT THE APPELLANT TRUST IS A REGISTERED CHARITABLE TRUST WITH THE COMMISSIONER OF INCOME-TA X AND ALSO UNDER THE PROVISIONS OF SECTION 80G OF THE ACT. THIS FACT IS NOT EVEN IN DISPUTE. THE ITAT HAS IN THE APPELLANTS CASE, THER EFORE, DIRECTED THAT IN THE LIGHT OF THE DECISION GIVEN IN THE CASES OF THE THREE DONORS REFERRED TO ABOVE, THE ASSESSING OFFICER SHOULD DEC IDE WHETHER THE 4 DONATIONS RECEIVED CAN BE CONSIDERED TO BE THE INCO ME OF THE APPELLANT TRUST. THEREFORE, I HAVE ALSO PERUSED THE ORDER OF THE ITAT NO.3870/AHD/2003 DATED 9-3-2007 IN THE CASE OF HARI OM SARJAK, ITA NO.3439/AHD/2004 & ITA NO.180/AHD/2006 IN THE C ASE OF M/S HARI OM ASSOCIATES, ITA NO.2436 & 3440/AHD/2004 IN THE CASE OF HARI OM FINSTOCK LTD. THE ITAT HAS IN THESE CASES S TATED THAT THE FACT THAT THE SAID DONORS HAD GIVEN DONATIONS TO THE APP ELLANT TRUST WHICH HOLDS A VALID CERTIFICATE AS CHARITABLE TRUST AND I S ENTITLED TO RECEIVE EXEMPTION U/S 80G. IT WAS ALSO OBSERVED BY THE TRIB UNAL THAT THEY HOLD RECEIPTS OF SUCH DONATIONS. THEREFORE, ACCORDI NG TO THE TRIBUNAL THESE WERE VALID DONATIONS GIVEN TO THE ASSESSEE TR UST. IN THIS VIEW OF THE MATTER THERE IS NO REASON FOR HOLDING THAT THE DONATIONS SHOWN BY THE APPELLANT SHOULD HAVE BEEN TREATED AS NOT GENUI NE. THE ASSESSING OFFICER WAS TO VERIFY THE GENUINENESS OF THE APPLIC ATION OF SUCH FUNDS FOR THE PURPOSE OF OBJECTS OF THE TRUST. THE ASSESS EE HAS FILED REVISED RETURN AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDIN GS WHEREBY IT HAS SHOWN THAT THERE WAS DEFICIT OF RS.1,26,460/-. THE SAID RETURN IS ACCOMPANIED BY AUDITORS REPORTS DULY CERTIFIED. THE ASSESSING OFFICER HAS NOT GIVEN ANY REASON WHY SPECIFIC DONAT IONS ARE NOT TO BE EXCLUDED FROM TOTAL INCOME. THERE IS NO REASON FOR TAKING SPECIFIC DONATIONS AS PART OF TOTAL INCOME. ASSESSING OFFICE R HAS NOT MENTIONED REGARDING EARTH QUAKE RELIEF EXPENDITURE OF RS.5,50,313/- DULY CERTIFIED IN AUDITORS REPORT AND REASONS FOR N OT CONSIDERING THEM AS GENUINE. IT IS QUITE SURPRISING ON THE FACTS THA T REMAINING AMOUNT OF EARTH QUAKE RELIEF EXPENDITURE RS.13,39,509/- INCUR RED IN AY 2002-03 IS ACCEPTED AS GENUINE BY ASSESSING OFFICER. ASSESS ING OFFICER HAS NOT MENTIONED ANY THING REGARDING THIS ALSO. THIS S HOWS THAT THERE WAS APPLICATION OF INCOME. THE ASSESSEE HAS SHOWN THAT THE DONATIONS WERE RECEIVED FROM THE SAID 3 DONORS AND WERE APPLI ED FOR EARTHQUAKE RELIEF ACTIVITY IN THIS YEAR AS ALSO IN THE SUBSEQU ENT YEAR. CONSIDERING THIS ASPECT IT IS HELD THAT THE ASSESSEE TRUST HAS UTILIZED THE DONATIONS RECEIVED FOR THE PURPOSE OF THE OBJECTS OF THE TRUS T. ACCORDINGLY THERE WAS NO JUSTIFICATION BY TAKING THE INCOME ORIGINALL Y ASSESSED. IT IS NOT CORRECT ON THE PART OF ASSESSING OFFICER TO COMPUTE INCOME ORIGINALLY ASSESSED, WITHOUT GIVING DETAILS FOR IT. THE INCOME ASSESSED ORIGINALLY WITHOUT GIVING SHOW CAUSE NOTICE AND REASONS IS INC ORRECT. CONSIDERING THE ABOVE FACTS THE APPELLANT IS ALSO E NTITLED TO EXEMPTION U/S 11 IN RESPECT OF DONATIONS SO RECEIVED. THE ASS ESSING OFFICER IS DIRECTED TO GRANT EXEMPTION ACCORDINGLY U/S 11. THE ASSESSING OFFICER IS DIRECTED TO COMPUTE TAXABLE INCOME CONSIDERING A BOVE DIRECTIONS, AS PER THE PROVISIONS OF THE ACT. 4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERED THE SAME ALONG WITH THE ORDER OF THE AUT HORITIES 5 BELOW. IN OUR OPINION, NO INTERFERENCE IS CALLED FO R IN THE ORDER OF THE CIT(A). THE CIT(A) HAS DEALT WITH THE PLEA O F THE REVENUE IN EXHAUSTIVE MANNER BY PASSING A WELL-REAS ONED ORDER. NO COGENT MATERIAL OR EVIDENCE WAS BROUGHT TO OUR K NOWLEDGE WHICH MAY COMPEL US TO TAKE A VIEW DIFFERENT FROM T HAT OF THE CIT(A). WE, THEREFORE, CONFIRM THE FINDINGS GIVEN B Y THE CIT(A). 5 IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 04-09-2009 SD/- SD/- (MAHAVIR SINGH) JUDICIAL MEMBER (P K BANSAL) ACCOUNTANT MEMBER DATE : 04-09-2009 COPY OF THE ORDER FORWARDED TO : 1. K VERMA CHARITABLE TRUST, HARIOM AVENUE, 31-B, GOVERNMENT SERVANTS SOCIETY, NAVRANGPURA, AHMEDABAD 2. THE DCIT (EXEMPTIONS), AHMEDABAD 3. THE CIT CONCERNED 4. THE CIT(A)-XXI, AHMEDABAD 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY.R/AR, ITAT, AHMEDABAD