The ACIT, Ratlam V. M/s Swami Teuram Ashram Chritable Trust, Ratlam

ITA 210/IND/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0092 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 23-09-2009
• Assessment Year: misc
• Appeal Filed On: 01-05-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K KARAN
• Keywords: Charitable institution
• Section: 12A; 12AA; 148; 12; 11

Judgement Text

PAGE 1 OF 9 IN THE INCOME TAX APPELATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI BHAVNESH SAINI, JM & SHRI V.K. GUPTA, A M ITA NOS.208 TO 210/IND/2008 AYS 2001-02 TO 2003-04 ACIT, RATLAM APPELLANT V/S. SWAMI TEURAM ASHRAM CHARITABLE TRUST, KESAR VIHAR COLONY, SHASTRI NAGAR, RATLAM (PAN AADTS 8821 Q) RESPONDENT DEPARTMENT BY SHRI V.K. KARAN, ADDL. CIT, DR ASSESSEE BY SHRI MANJEET SACHDEVA, ADV. ORDER PER SHRI BHAVNESH SAINI, JM THE ABOVE APPEALS FILED BY THE REVENUE DEPARTMENT A RE AGAINST THE COMMON ORDER OF LD. CIT(A)-UJJAIN DATED 5.2.2008 FOR THE A BOVE AYS ON THE FOLLOWING COMMON GROUNDS OF APPEALS: (1) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DIRECTING THE AO TO XLUDE THE CORPUS DONATION RECEIVED BY THE ASSESSEE OF RS.8,10,000/-, RS.2,00,000/- & RS.5,00,000/- FOR THE ABOVE AYS RESPECTIVELY FROM THE INCOME OF THE TRUST VEN WHEN PROVISION OF SECTION 11 AND 12 DOES NOT APPLY AS THE REGISTRATION U/S 12A/12AA WAS REJECTED BY CIT. PAGE 2 OF 9 (2) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN ALLOWING CORPUS DONATION AS EXEMPT EVEN AFTER THE AMENDMENT IN SEC. 2(24)(II)(A) OF THE IT ACT W.E.F. 1.4.89 TREATING ALL VOLUNTARY DONATIONS RECEIVED BY THE TRUST AS INCOME. (3) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN APPLYING THE RATIO OF THE DECISION IN THE CASE OF MAHILA SIDH NIRMAN YOJNA VS. INSPECTING ASSISTANT COMMISSIONER REPORTED IN 50 ITD 472 DATED 6.7.1994 INSPITE OF AMENDMENT IN THE DEFINITION OF INCOME IN SEC. 2(24)(II)(A) OF THE IT ACT W.E.F. FROM 1.4.89. 2. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. 3. THE ASSESSEE HAS FILED RETURN OF INCOME SHOWING INCOME FROM INTEREST. THE AO ISSUED NOTICE U/S 148 OF THE IT ACT ON THE G ROUND THAT REGISTRATION U/S 12AA WAS REJECTED BY THE CIT, UJJA IN, THEREFORE, ADDITIONS OF THE ABOVE AMOUNTS MENTIONED IN THE GRO UNDS OF APPEALS WERE ADDED WHICH WERE RELATED TO THE RECEIPT FOR CO RPUS FUND. IT WAS SUBMITTED BEFORE LD. CIT(A) THAT AO WAS WRONG IN TA XING THE CONTRIBUTION FOR THE CORPUS OF ASHRAM & TEMPLE. THE DETAILS OF INVESTMENT IN PLOT AND OTHERS WERE EXPLAINED BEFORE LD. CIT(A). IT WAS ALSO EXPLAINED THAT FUNDS ARE RECEIVED FROM SHRI PR EMPRAKASH MANDAL TRUST, JAIPUR THROUGH BANKING CHANNEL WHICH IS REGI STERED TRUST U/S 12A OF THE IT ACT AND ITS RETURNS HAVE BEEN SCRUTINISED AND REGULAR ASSESSMENTS HAVE BEEN FRAMED. COPY OF THE ASSESSMEN T ORDER OF THE PAGE 3 OF 9 TRUST FROM WHOM CORPUS DONATION WAS RECEIVED BY THE ASSESSEE WAS FILED. IT WAS, THEREFORE, EXPLAINED THAT SINCE RECE IPTS ARE EXPLAINED, THEREFORE, ADDITIONS ARE ILLEGAL AND UNWARRANTED. I T WAS SUBMITTED THAT SINCE AMOUNT WAS RECEIVED ON CAPITAL A/C WHICH WAS INVESTED IN PROPERTY, THEREFORE, ADDITION SHOULD NOT BE MADE EV EN IF TRUST WAS NOT REGISTERED U/S 12A OF THE IT ACT. THE LD. CIT(A) FO UND THAT CERTIFICATE FURNISHED BY SHRI PREMPRAKASH MANDAL TRUST, JAIPUR SHOWS THAT THE CONTRIBUTIONS OF RS.8,10,000/-, RS.2,00,000/- AND R S.5,00,000/- WERE GIVEN TO THE ASSESSEE FOR THE PURPOSE OF CORPUS I.E . FOR PURCHASE OF LAND AND CONSTRUCTION WORK OF ASHRAM/TEMPLE. THE EVIDENC ES FILED ON RECORD SUPPORT THE CASE OF THE ASSESSEE. THE LD. CIT(A) BY FOLLOWING ORDER OF ITAT, DELHI BENCH IN THE CASE OF MAHILA SIDH NIRMAN YOJNA DELETED THE ENTIRE ADDITIONS. 4. LD. DR RELIED UPON ORDER OF THE AO AND SUBMITTED THAT ASSESSEE HAS NOT EXPLAINED THE SOURCE OF THE CORPUS AND THE ASSESSEE WAS NOT REGISTERED U/S 12A OF THE IT ACT, THEREFORE, CORPUS SHOULD BE TREATED AS INCOME OF THE ASSESSEE. HE HAS RELIED UPON CIRCULAR NO.551 DA TED 23.1.1990 OF THE CBDT IN WHICH IT WAS CLARIFIED AS REGARDS PROVISION S OF SEC. 2(24)(II)(A) R.W.S. 11 & 12 OF THE IT ACT THAT IN CASE OF TRUST OR INSTITUTION LOSES THE EXEMPTION U/S 11 BY NOT COMPLYING WITH THE CONDITIO NS LAID DOWN IN SEC. 12A OR 13, CORPUS DONATIONS WILL BE INCLUDED I N ITS INCOME AND SHALL BE TAXED. ON THE OTHER HAND, LD. COUNSEL FOR ASSESS EE REITERATED THE PAGE 4 OF 9 SUBMISSIONS MADE BEFORE AUTHORITIES BELOW AND RELIE D UPON ORDER OF ITAT, INDORE BENCH IN THE CASE OF ACIT VS. KALYAN A SHRAM TRUST, JHABUA IN ITA NO.837/IND/2005 FOR THE AY 2002-03 DA TED 27.6.2008 IN WHICH ON THE IDENTICAL FACTS, THE DEPARTMENTAL APPE AL HAS BEEN DISMISSED. COPY OF THE ORDER IS FILED ON RECORD. 5. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE AR E OF THE VIEW THAT DEPARTMENTAL APPEALS HAVE NO MERIT AND ARE LIABLE T O BE DISMISSED. ITAT, INDORE BENCH IN THE CASE OF ACIT VS. KALYAN A SHRAM TRUST (SUPRA) CONSIDERING THE IDENTICAL ISSUE HELD: 7. AFTER HEARING RIVAL CONTENTIONS, WE NOTED THAT B Y VIRTUE OF SECTION 2(24)(IIA), VOLUNTARY CONTRIBUTION RECEI VED BY A TRUST HAS BEEN TREATED AS INCOME, BUT SECTION 2(24) (IIA) HAS TO BE READ WITH SECTION 12 OF THE ACT, WHICH PROVID ES AS UNDER :- 12. ANY VOLUNTARY CONTRIBUTIONS RECEIVED BY A TRUST CREATED WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES OR BY AN INSTITUTION ESTABLISHED WHOLLY FOR SUCH PURPOSES (NOT BEING CONTRIBUTIONS MADE WITH A SPECIFIC DIRECTION THAT THEY SHALL FORM PART OF THE CORPUS OF THE TRUST OR INSTITUTION) SHALL FOR THE PURPOSES OF SECTION 11 BE DEEMED TO BE INCOME DERIVED FROM PROPERTY HELD UNDER TRUST PAGE 5 OF 9 WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSES AND THE PROVISIONS OF THAT SECTION AND SECTION 13 SHALL APPLY ACCORDINGLY. 8. FROM THE VARIOUS PROVISIONS OF THE ACT, IT IS FOUND THAT CONTRIBUTION RECEIVED WITH A SPECIFIC DIRECTION THA T THEY WILL FORM PART OF THE CORPUS OF THE TRUST WILL NOT BE TREATED AS INCOME. THE EFFECT OF SECTION 2(24)(IIA) AND SEC TION 12 IS THAT ALTHOUGH THE CORPUS DONATIONS WOULD BE INCO ME IN THE HANDS OF THE RECIPIENT, IN THE CASE OF THE TRUS T OR THE INSTITUTION, THE CORPUS WILL BE EXCLUDED FROM THE I NCOME OF THE TRUST. FURTHER, SECTION 11(1)(D) INSERTED WITH EFFECT FROM 1 ST APRIL, 1989, EXCLUDES VOLUNTARY CONTRIBUTION TOWARDS THE CORPUS FROM THE TOTAL INCOME OF THE TRU ST. THIS CLAUSE IS NECESSITATED AS SECTION 2(24)(IIA) D EEMS ALL VOLUNTARY CONTRIBUTIONS INCLUDING THOSE MADE TOWARD S THE CORPUS OF THE TRUST TO BE INCOME OF THE TRUST. IN E FFECT, VOLUNTARY CONTRIBUTION TOWARDS THE CORPUS, WILL BE EXCLUDED FROM THE TOTAL INCOME OF THE TRUST OR INST ITUTION. 9. IN VIEW OF THE ABOVE, THE DONATIONS RECEIVED WITH S PECIFIC DIRECTIONS THAT THE SAME SHALL BE PART OF CORPUS, Q UESTION OF TREATING SUCH DONATION AS TAXABLE INCOME DOES NO T ARISE. PAGE 6 OF 9 10. FURTHER, WE ALSO NOTED THAT THE A.O. HAS TREATED TH E STATUS OF THE ASSESSEE AS AN A.O.P. AND NOT TRUST. THE DEFINITION OF INCOME GIVEN IN SECTION 2(24)(IIA) R EADS AS UNDER :- (24) INCOME INCLUDES (I) PROFITS AND GAINS ; (II) DIVIDEND ; [(IIA) VOLUNTARY CONTRIBUTIONS RECEIVED BY A TRUST CREATED WHOLLY OR PARTLY FOR CHARITABLE OR RELIGIOUS PURPOSES OR BY AN INSTITUTION ESTABLISHED WHOLLY OR PARTLY FOR SUCH PURPOSES [OR BY AN ASSOCIATION OR INSTITUTION REFERRED TO IN CLAUSE (21) OR CLAUSE (23), OR BY A FUND OR TRUST O R INSTITUTION REFERRED TO IN SUB-CLAUSE (IV) OR SUB- CLAUSE (V) [OR BY ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION REFERRED TO IN SUB-CLAUSE (IIIAD) OR SUB-CLAUSE (VI) OR BY ANY HOSPITAL OR OTHER INSTITUTION REFERRED TO IN SUB-CLAUSE (IIIAE) OR SUB-CLAUSE (VIA)] OF CLAUSE (23C) OF SECTION 10]. 11. FROM THE ABOVE DEFINITION, IT IS CLEAR THAT INCOME IN CLAUSE (IIA) INCLUDES VOLUNTARY CONTRIBUTION RECEIV ED BY AN INSTITUTION ESTABLISHED WHOLLY OR PARTLY FOR CHARIT ABLE OR RELIGIOUS PURPOSES. HOWEVER, THE A.O. HAS NOT DISCU SSED PAGE 7 OF 9 THE OBJECT OF THE ASSESSEE AND HE HAD NOT CONSIDERE D THE STATUS OF THE ASSESSEE AS RELIGIOUS OR CHARITABLE T RUST, BECAUSE CIT HAS DENIED TO GRANT REGISTRATION TO THE ASSESSEE U/S 12A OF THE ACT. CONSEQUENTLY, THE A.O. HAS CONSIDERED THE STATUS OF THE ASSESSEE AS A.O.P. WIT HOUT DISCUSSING WHETHER THE OBJECT OF THE ASSESSEE ARE P ARTLY RELIGIOUS OR CHARITABLE IN NATURE. IN SUCH CIRCUMST ANCES, THE RECEIPT OF THE ASSESSEE DOES NOT FALL UNDER THE PROVISIONS OF SECTION 2(24)(IIA) OF THE ACT. IN SUC H CIRCUMSTANCES, WHEN COMMERCIAL PRINCIPLES ARE APPL IED FOR DETERMINATION OF INCOME OF THE ASSESSEE, THE AM OUNT RECEIVED TOWARDS CORPUS OF THE ASSESSEE FOUND TO BE IN CAPITAL NATURE, WHICH CANNOT BE TREATED AS TAXABLE INCOME. THE FINDING OF FACT RENDERED BY THE LD. CIT (A) ARE NOT DISPUTED BY THE LD. DEPARTMENTAL REPRESENTATIVE . THE I.T.A.T. DELHI BENCH A IN THE CASE OF MAHILA SIDH NIRMAN YOJNA VS. IAC, 50 ITD 472, HAS HELD THAT EVEN IF TH E TRUST WAS NOT REGISTERED U/S 12A, CONTRIBUTION TOWARDS CORPUS IS NOT LIABLE TO TAX, BECAUSE THE RECEIPT ITSELF IS NOT INCOME. THEREFORE, IN BOTH THE CIRCUMSTANCES I. E. THE ASSESSEE WAS NOT REGISTERED U/S 12-A AND THE STATUS OF THE ASSESSEE IS TREATED AS A.O.P., THE RECEIPT AS C ORPUS CANNOT BE TREATED AS INCOME OF THE ASSESSEE AND IS NOT PAGE 8 OF 9 LIABLE TO TAX. HENCE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). THEREFORE, THE APPEAL OF THE R EVENUE IS DISMISSED. 6. IN THE CASE OF THE ASSESSEE, THE AO HAS NOT DISC USSED THE OBJECT OF THE ASSESSEE AND HAS NOT CONSIDERED THE STATUS OF THE A SSESSEE AS RELIGIOUS OR CHARITABLE BECAUSE OF REJECTION OF REGISTRATION APPLICATION. THE AO TREATED THE STATUS OF THE ASSESSEE AS AOP. HE HAS M ADE THE ADDITIONS OF THE CORPUS CONTRIBUTIONS BECAUSE THE SOURCE IS N OT EXPLAINED. THE LD. CIT(A), HOWEVER, SPECIFICALLY NOTED THAT THE CORPUS AMOUNT HAS BEEN RECEIVED BY THE ASSESSEE FROM SHRI PREMPRAKASH MAND AL TRUST, JAIPUR THROUGH BANKING CHANNEL AND CERTIFICATE OF THE SAME ALONG WITH NECESSARY MATERIAL AND EVIDENCES ARE FILED. LD. CIT (A), THEREFORE, ACCEPTED THE EVIDENCES ON RECORD AND HELD THAT THE CORPUS AMOUNTS ARE RECEIVED BY THE ASSESSEE FROM THE ABOVE REGISTERED TRUST FOR PURCHASE OF LAND AND CONSTRUCTION WORK OF ASHRAM & TEMPLE. T HE RECEIPT OF THE AMOUNTS BY THE ASSESSEE IS, THEREFORE, EXPLAINED TH ROUGH MATERIAL ON RECORD. THE ISSUE IS, THEREFORE, SQUARELY COVERED B Y ORDER OF THE TRIBUNAL IN THE CASE OF KALYAN ASHRAM TRUST (SUPRA) . ALL THE GROUNDS OF APPEALS AND SUBMISSION OF THE LD. DR ARE CONSIDERED IN THIS CASE. BY FOLLOWING THE ABOVE ORDER IN THE LIGHT OF THE FACTS OF THE CASE NOTED ABOVE, WE DO NOT FIND ANY MERIT IN THE DEPARTMENTAL APPEALS. THE SAME ARE, ACCORDINGLY, DISMISSED. PAGE 9 OF 9 ORDER PRONOUNCED IN THE OPEN COURT ON 24.9.2009. SD/- SD/- (V.K. GUPTA) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 24.9.2009 {VYAS}