Appeal details
Counselvise Citation
[2021] 107 COUNSELVISE.COM (IT) 9863 (ITAT-CHENNAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 11 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
22-07-2021
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
C
Next Hearing Date
24-06-2021
Assessment Year
2014-2015
Appeal Filed On
11-07-2019
Judgement Text
, , IN THE INCOME TAX APPELLATE TRIBUNAL , C B ENCH, CHENNAI . , ! . , ! ' BEFORE SHRI DUVVURU RL REDDY, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./ I.T.A.NO.2064/CHNY/2019 ( / ASSESSMENT YEAR: 2014-15) VEERAVEL TRUST 18, VEERARAGHAVAR STREET, TIRUCHENGODE-637 211. VS THE INCOME TAX OFFICER, EXEMPTION WARD. SALEM. PAN: AABTV 7506R ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR.T.BANUSEKAR, CA /RESPONDENTBY : MR. G.JOHNSON, ADDL.CIT /DATE OF HEARING : 24.06.2021 /DATE OF PRONOUNCEMENT : 22.07.2021 / O R D E R PER G.MANJUNATHA, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST ORDER OF THE LEARNED CIT(A), SALEM DATED 12.03.201 9 AND PERTAINS TO ASSESSMENT YEAR 2014-15. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF AP PEAL:- 1. FOR THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IS CONTRARY TO LAW FACTS AND CIRCUMSTANCES OF THE CASE TO THE EXTENT PREJUDICIAL TO THE INTEREST OF THE APPELLANT AND AT ANY RATE IS OPPOSED TO THE PRINCIPLES OF EQUITY, NATURAL JUSTIC E AND FAIR PLAY. 2 ITA NO.2064/CHNY/2019 2. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THE TOTAL RECEI PTS OF RS.55,82,6001- AS BUILDING FUND WAS RECEIVED FOR A SPECIFIC PURPOSE BEING CONSTRUCTION OF COMMUNITY BUILDING. 3. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT FUNDS RECEIVED FOR CONSTRUCTION OF COMMUNITY BUILDING IS A CAPITAL REC EIPT AND HENCE CANNOT BE TREATED AS INCOME OF THE APPELLANT. 4. FOR THAT THE APPELLANT OBJECTS TO THE LEVY OF IN TEREST U/S.234A, 234B AND 234C. 3. AT THE OUTSET, LEARNED AR FOR THE ASSESSEE SU BMITTED THAT APPEAL FILED BY THE ASSESSEE IS TIME BARRED B Y 37 DAYS FOR WHICH NECESSARY PETITION FOR CONDONATION OF DELA Y ALONG WITH AFFIDAVIT EXPLAINING THE REASONS FOR THE DELAY H AS BEEN FILED. THE AR FURTHER SUBMITTED THAT THE ASSESSEE COULD NOT FILE APPEAL WITHIN THE TIME ALLOWED UNDER THE ACT, DUE TO THE FACT THAT THERE WAS CHANGE IN COUNSEL FOR THE ASSESSEE. HENCE, THE DELAY IN FILING APPEAL IS NEITHER INTENTIONAL NOR WILLFUL, BUT FOR UNAVOIDABLE REASONS, THEREFORE, DELAY MAY BE CONDON ED IN THE INTEREST OF ADVANCEMENT OF SUBSTANTIAL JUSTICE. 4. THE LEARNED DR, ON THE OTHER HAND, STRONGLY OPPO SING CONDONATION OF DELAY PETITION FILED BY THE ASSESSE E SUBMITTED 3 ITA NO.2064/CHNY/2019 THAT THE REASONS GIVEN BY THE ASSESSEE DO NOT COME WITHIN THE AMBIT OF REASONABLE AND BONAFIDE REASONS, WHICH CA N BE CONSIDERED FOR CONDONATION OF DELAY AND HENCE, A PPEAL FILED BY THE ASSESSEE MAY BE DISMISSED AS NOT MAINTAIN ABLE. 5. HAVING HEARD BOTH SIDES AND CONSIDERED THE PETIT ION FILED BY THE ASSESSEE FOR CONDONATION OF DELAY, WE ARE O F THE CONSIDERED VIEW THAT REASONS GIVEN BY THE ASSESSEE FOR NOT FILING THE APPEAL WITHIN THE TIME ALLOWED UNDER THE ACT COMES UNDER REASONABLE CAUSE AS PROVIDED UNDER THE ACT F OR CONDONATION OF DELAY AND HENCE, DELAY IN FILING O F APPEAL IS CONDONED AND ADMITTED FOR ADJUDICATION . 6. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PUBLIC CHARITABLE AND RELIGIOUS TRUST REGISTERED UNDER TH E INDIAN TRUST ACT, 1882, HAS FILED ITS RETURN OF INCOME FOR ASSE SSMENT YEAR 2014-15 DECLARING TOTAL INCOME OF RS. NIL. THE RE TURN OF INCOME FILED BY THE ASSESSEE HAS BEEN PROCESSED U/S.143(1) OF THE INCOME TAX ACT, 1961, BY CPC, BENGALURU AND DETERMINED TOTAL INCOME OF RS.55,82,600/- BY MAKIN G ADDITIONS TOWARDS DISALLOWANCE OF DONATIONS RECEIVED AMOUNT ING TO 4 ITA NO.2064/CHNY/2019 RS.55,82,600/-. THE ASSESSEE HAS FILED APPEAL AGAI NST INTIMATION ISSUED U/S.143(1) OF THE ACT, BEFORE THE FIRST APPELLATE AUTHORITY AND CONTENDED THAT WHILE PROCESSING RETU RN U/S.143(1) OF THE ACT, ONLY PRIMA-FACIE ADJUSTMENTS CAN BE MAD E, HOWEVER, NO ADDITION CAN BE MADE FOR DISALLOWANCE OF CORPUS DONATIONS. THE ASSESSEE FURTHER CONTENDED THAT CORPUS DONATIO NS RECEIVED BY ANY TRUST OR INSTITUTION IS EXCLUDED FR OM THE INCOME DERIVED FROM PROPERTY HELD UNDER THE TRUST U/S. 11( 1)(D) OF THE ACT AND HENCE, EVEN THOUGH TRUST IS NOT REGISTERED U/S.12AA OF THE ACT, CORPUS DONATIONS CANNOT BE INCLUDED IN THE INCOME OF THE TRUST. THE LEARNED CIT(A), FOR THE REASONS STAT ED IN HIS APPELLATE ORDER DATED 12.03.2019 REJECTED CONTENTI ON OF THE ASSESSEE AND HELD THAT CONDITIONS PRECEDENT FOR CLA IMING EXEMPTION U/S.11 OF THE ACT IS REGISTRATION OF TRU ST U/S.12A OF THE ACT AND HENCE, IN THE ABSENCE OF REGISTRATION O F TRUST U/S.12A, EXEMPTION CLAIMED TOWARDS CORPUS DONATION S CANNOT BE ALLOWED . THEREFORE, HE OPINED THAT THERE IS NO ERROR IN ADJUSTMENTS MADE TOWARDS CORPUS DONATIONS WHILE PR OCESSING RETURN U/S.143(1) OF THE ACT. THE LEARNED CIT(A) HA S TAKEN SUPPORT FROM THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF M/S. U.P.FOREST CORPORATION & ANOTHER VS. DCIT IN CIVIL 5 ITA NO.2064/CHNY/2019 APPEAL NO.9432 OF 2003 DATED 27.11.2007. AGGRIEVED BY THE LEARNED CIT(A) ORDER, THE ASSESSEE IS IN APPEAL BEF ORE US. 7. THE LEARNED A.R FOR THE ASSESSEE SUBMITTED THAT THE LEARNED CIT(A) HAS ERRED IN CONFIRMING ADDITIONS MA DE TOWARDS DISALLOWANCE OF CORPUS DONATIONS, WITHOUT APPRECIAT ING FACT THAT DONATIONS HAVE BEEN RECEIVED FOR SPECIFIC PURPOSE AND SUCH DONATIONS HAVE BEEN UTILIZED FOR THE PURPOSE IT WA S RECEIVED . HE FURTHER REFERRING TO CERTAIN JUDICIAL PRECEDENT S, INCLUDING THE DECISION OF ITAT., MUMBAI IN THE CASE OF CHANDRAPRA BHU JAIN SWETAMBER MANDIR VS. ACIT (2016) 50 ITR (TRIB) 03 55(MUM), SUBMITTED THAT CORPUS DONATIONS RECEIVED BY THE TR UST WHICH WAS NOT REGISTERED U/S.12A ARE NOT TAXABLE, BECAUS E THEY ASSUME NATURE OF CAPITAL RECEIPT AND HENCE, IT IS O UTSIDE SCOPE OF INCOME. THE AR FOR THE ASSESSEE REFERRING TO FI NANCIAL STATEMENT OF THE ASSESSEE SUBMITTED THAT THE ASSESS EE HAS RECEIVED DONATIONS TO THE SPECIFIC PURPOSE OF CONST RUCTION OF BUILDING AND SAID DONATION HAS BEEN USED FOR CONSTR UCTION OF BUILDING, THEREFORE, SAME IS OUTSIDE THE SCOPE OF INCOME OF THE TRUST. THE AR FURTHER RELIED ON THE FOLLOWING DECI SIONS:- 1. SHREE JAIN SWETAMBER DEHARSHAR UPSHRAYA TRUST 6 ITA NO.2064/CHNY/2019 C/O. ANOOPCHANDJI KARNAVA VS. ACIT (2017) 4 TMI-765 (MUM) 2. ITO VS.SERUM INSTITUTE OF INDIA RESEARCH FOUNDA TION (2018) 169 ITD 271(PUNE) 3. BANK OF INDIA RETIRED EMPLOYEES MEDICAL ASSIS TANCE TRUST VS. ITO(EXEMPTION) 2018 172 ITD 78(MUM) 4. CHANDRAPRABHU JAIN SWEATAMBER MANDIRVS.ACIT (201 6) 50 ITR (TRIB) 0355 (MUM) 8. THE LEARNED DR, ON THE OTHER HAND, STRONGLY SU PPORTING ORDER OF THE LEARNED CIT(A), SUBMITTED THAT CONDITI ONS PRECEDENT FOR CLAIMING EXEMPTION U/S.11 IS REGISTRATION OF TR UST U/S.12AA OF THE ACT, AND HENCE, IN ABSENCE OF REGISTRATION OF TRUST U/S. 12AA OF THE ACT, NO EXEMPTION COULD BE GIVEN TO CO RPUS DONATIONS. 9. WE HAVE HEARD BOTH THE PARTIES, PERUSED MATERIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIES BELOW. THE DEFINITION OF INCOME AS DEFINED U/S.2 OF SUB-SECTION (24) INCLUDES VOLUNTARY CONTRIBUTION RECEIVED B Y ANY TRUST CREATED WHOLLY OR PARTLY FOR CHARITABLE OR RELIG IOUS PURPOSE. THIS MEANS, FOR ANY ASSESSEE, INCLUDING TRUST OR IN STITUTION VOLUNTARY CONTRIBUTION IS INCOME. THE PROVISIONS OF SECTION 11, 12A & 12AA, DEALS WITH TAXATION OF TRUST OR INST ITUTION. THE 7 ITA NO.2064/CHNY/2019 INCOME OF ANY TRUST OR INSTITUTION IS EXEMPT FRO M TAX WITH CERTAIN CONDITIONS. THE PROVISIONS OF SECTION 11(1 )(D) OF THE ACT EXCLUDES VOLUNTARY CONTRIBUTIONS RECEIVED BY TRUS T, WITH A SPECIFIC DIRECTION THAT THEY SHALL FORM PART OF CO RPUS OF TRUST OR INSTITUTION. SIMILARLY, PROVISIONS OF SECTION 12 ALSO STATES THAT ANY VOLUNTARY CONTRIBUTION RECEIVED BY A TRUST OR INSTITUTION, EXCLUDING CONTRIBUTIONS WITH A SPECIFIC DIRECTION SHALL FOR THE PURPOSE OF SECTION 11 BE DEEMED TO BE INCOME DERIVE D FROM PROPERTY HELD UNDER TRUST. FURTHER, PROVISIONS OF SECTION 12A STATES THAT PROVISIONS OF SECTION 11 & 12 SHALL NO T APPLY IN RELATION TO INCOME OF ANY TRUST OR INSTITUTION, UNL ESS SUCH TRUST OR INSTITUTION FULFILL CERTAIN CONDITIONS. AS PER SAI D SECTION ONE OF THE CONDITIONS FOR CLAIMING BENEFIT OF EXEMPTION U/S. 11 & 12 OF THE ACT IS REGISTRATION OF TRUST UNDER SUB-SECTION (AA) OF THE ACT . FROM CONJOINT READING OF THE ABOVE PROVISIONS, IT I S VERY CLEAR THAT INCOME OF ANY TRUST INCLUDING VOLUNTARY CONTRI BUTIONS RECEIVED WITH A SPECIFIC DIRECTION IS NOT INCLUDABL E IN THE TOTAL INCOME OF THE TRUST, IF SUCH TRUST IS REGISTERED U/ S.12A / 12AA OF THE INCOME TAX ACT, 1961. IN OTHER WORDS, CONDITIO NS PRECEDENT FOR CLAIMING EXEMPTION U/S.11 INCLUDIN G FOR VOLUNTARY CONTRIBUTIONS IS REGISTRATION OF TRUST U/S.12A OF THE 8 ITA NO.2064/CHNY/2019 INCOME TAX ACT, 1961. THIS PRINCIPLE IS SUPPORTED BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF M/S. U.P.FOREST CORPORATION & ANOTHER VS. DCIT (SUPRA), WHERE THE HON'BLE SUPREME COURT HAS VERY CLEARLY HELD THAT A CONJOINT READING OF SECTION 11, 12 & 12A MAKES IT CLEAR TH AT REGISTRATION U/S.12A IS A CONDITION PRECEDENT FOR AVAILING BENEF IT U/S.11 & 12 OF THE ACT. UNLESS AND UNTIL AN INSTITUTION IS REGI STERED U/S.12A OF THE ACT, IT CANNOT CLAIM BENEFIT OF SECTION 11 & 12 OF THE ACT. IN THIS CASE, TRUST IS NOT REGISTERED U/S.12A / 12A A OF THE INCOME TAX ACT, 1961. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT CORPUS DONATIONS RECEIVED BY THE TRUST WITH A SPECIFIC DIRECTION THAT THEY FORM PART OF CORPUS OF THE TRUS T FALLS WITHIN AMBIT OF INCOME OF A TRUST DERIVED FROM PROPERTY HE LD UNDER TRUST AND HENCE, INCLUDABLE IN TOTAL INCOME OF THE TRUST. 10. INSOFAR AS VARIOUS CASE LAWS RELIED UPON BY TH E ASSESSEE, WE FIND THAT ALTHOUGH THE ASSESSEE HAS RE LIED UPON FOUR CASE LAWS OF VARIOUS BENCHES OF THIS TRIBUNAL , WE FIND THAT NONE OF THE TRIBUNAL HAS CONSIDERED THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF M/S. U.P.FORE ST CORPORATION & ANOTHER VS. DCIT(SUPRA), WHILE DECID ING THE 9 ITA NO.2064/CHNY/2019 ISSUE AND HENCE, WE ARE OF THE CONSIDERED VIEW THAT THOSE CASE LAWS ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. 11. IN THIS VIEW OF THE MATTER AND CONSIDERING FACT S AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT VOLUNTARY CONTRIBUTION RECEIVED BY THE TRUST WITH A SPECIFIC DIRECTION THAT THEY FORM PART OF CORPUS OF THE TRUS T IS INCOME OF THE TRUST WITHIN THE MEANING OF SECTION 11 & 12 OF THE INCOME TAX ACT, 1961. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO ERROR IN THE FINDINGS RECORDED BY THE L EARNED CIT(A) TO CONFIRM ADDITIONS MADE BY THE ASSESSING OFFICER TOWARDS DISALLOWANCE OF CORPUS DONATIONS. HENCE, WE ARE INC LINED TO UPHOLD FINDINGS OF THE LEARNED CIT(A) AND DISMISS A PPEAL FILED BY THE ASSESSEE. 12. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND JULY, 2021 SD/- SD/- ( . ) ( . ) (DUVVURU RL REDDY) (G.MANJUNATHA) ' $ / JUDICIAL MEMBER $ / ACCOUNTANT MEMBER ' /CHENNAI, ' /DATED 22 ND JULY, 2021 DS )* +* /COPY TO: 1. APPELLANT 2. RESPONDENT 3. , () /CIT(A) 4. , /CIT 5. * 1 /DR 6. /GF .
