The ITO, (Exemptions), Ward-2, Ahmedabad V. The Church of North India ,Gujarat Diocese, Ahmedabad

ITA 2442/AHD/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2707 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2004-2005
• Appeal Filed On: 14-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Charitable institution; Corroborative evidences
• Section: 143(3); 14A; 12AA; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER THE ITO(EXEMPTION), WARD - 2, AHMEDABAD (APPELLANT) VS THE CHURCH OF NORTH INDIA, GUJARAT DIOCESE PAN: AAATT1698P (RESPONDENT) REVENUE BY : S H RI /MS. JAYA CHAUDHARY , SR. D . R. ASSESSEE BY: NONE DATE OF HEARING : 18 - 02 - 2 019 DATE OF PRONOUNCEMENT : 21 - 02 - 2 019 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS REVENUE S APPEAL FOR A.Y. 2004 - 05 , ARI SES FROM ORDER OF THE CIT(A) - 9, AHMEDABAD DATED 20 - 05 - 2 015 , IN PROCEEDINGS UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE SOLITARY GROUND OF APPEAL OF THE REVENUE IS AGAINST THE DECISION OF LD. CIT(A) IN DELETING THE ADDITION O F RS. 6982002/ - ON ACCOUNT OF ASSESSMENT DONATION AND RS. 11 LACS ON ACCOUNT OF FOREIGN CURRENCY DONATION MADE BY THE ASSESSING OFFICER. I T A NO . 2442 / A HD/20 15 A SSESSMENT YEAR 200 4 - 05 I.T.A NO. 2 44 2 /AHD/20 15 A.Y. 200 4 - 05 PAGE NO IT O VS. THE CHURCH OF NORTH INDIA 2 3. THE FACT IN BRIEF IS THAT THE ASSESSEE IS A CHARITABLE TRUST REGISTERED U/S. 12AA OF THE ACT. THE ASSESSEE TRUST HAS FILED ITS RETURN OF INCOME ON 27 TH OCTOBER, 200 4 DECLARING ITS INCOME AT RS. N IL. THEREAFTER, THE CASE OF THE ASSESSEE TRUST WAS REOPENED U/S. 14A OF THE ACT OF THE BY ISSUING OF NOTICE U/S. 148 OF THE A CT ON 29 TH M ARCH, 2011. THE CASE WAS REOPENED ON THE GROUND THAT ASSESSMENT DONATION AMOUNTING TO RS. 6982 002/ - AND FC DONATION WORTH RS. 11,82 ,000/ - APPEARED IN THE ANNUAL REPORT BUT WAS ABSENT FROM THE BOOKS SUBMITTED BEFORE THE CHARITY COMMISSIONER . ON QUERY , THE ASSESSEE HAS SUBMITTED THAT RE GARD ING ASSESSMENT DONATION OF R S. 698 2002/ - , THE HEAD OFFICE COLLECT AD MINISTRATION CHARGES FROM EACH M AND A LI BELONGING TO THE ASS ESSEE TRUST FOR ADMINISTRATION WORK CARRIED OUT BY THE HEAD OFFICE AND THE SAME AMOUNT CREDITED UNDER THE HEAD ASSESSMENT DONATI ON IN THE BOO KS OF HEAD OFFICE WHEREIN EACH M AND ALI DEBITS SUCH ADMINIS TRATION CHARGES PAID TO HEAD EXPENSES. THE ASSESSEE TRUST STATED THAT THE TOTAL ASSESSMENT DEBITED TO RESPECTIVE MA NDALI STATEMENT WAS OF RS. 7722134/ - . HOWEVER, ASSESSMEN T DONATION WAS CREDITED TO HEAD OFFICE STATEMENT OF RS. 6982002/ - THE DIFFERENCE OF RS. 740132 WAS DUE TO FC DONATION RECEIVED BY TH E HEAD OFFICE FROM RESPECTIVE MA NDALI ES. SO ACTU AL ASSESSMENT DONATION TO BE CHARGED FROM RESPECTIVE MANDALIE S . 6982 002/ - WAS SHOWN A S INCOME AND RS. 740132 WAS SHOWN AS FC DONATION IN HEAD OFFICE STATEMENT OF ACCOUNT . IT IS FURTHER STATED THAT TOTAL FC DONATION OF RS. 1100800 WAS SHOWN AS INCOME IN HEAD OFFICE STATEMENT OF ACCOUNT . THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATI ON OF THE ASSESSEE AND HELD THAT THE SAID AMOUNT HAS ESCAPED ASSESSMENT AND TREATED AS ANONYMOUS U/S. 115BBC OF THE ACT AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE OF RS. 80,82,800/ - I.T.A NO. 2 44 2 /AHD/20 15 A.Y. 200 4 - 05 PAGE NO IT O VS. THE CHURCH OF NORTH INDIA 3 ( ASSESSMENT DONATION AMOUNTING TO RS. 6982002/ - AND FC DONATION OF RS. 1100800/ - ) 4. THE ASSESEE HAS FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE. 5 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD CAREFULLY. THE ASSESSEE IS A CHARITABLE TRUST WHICH IS R EGISTERED U/S. 12AA OF THE ACT. IT WAS THE REGULAR PRACTICE OF THE TRUST TO PUBLISH ONLY AUDITED HEAD OFFICE ANNUAL REPORT AND TO SUBMIT CONSOLIDATED ACCOUNTS WITH THE CHARITY COMMISSIONER AND THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT. REGARD ING ASSESSMENT DONATION OF RS. 692002 / - AS PER DETAILED RECORD IT IS NOTICED THAT HEAD OFFICE COLLECT ADMIN ISTRA TION CHARGES FROM EACH M ANDALI FOR ASSESSMENT WORK CARRIED OUT BY THE HEAD OFFICE AND THE SAME AMOUNT IS CREDITED UNDER THE HEAD ASSESSMENT DON ATION IN THE BOOKS OF HEAD OFFICE WHEREAS EACH MANDALI DEBIT SUCH ADMINISTRATION EXPENSES. AT THE END OF THE YEAR AN CONSOLIDATION OF FINANCIAL STATEMENTS OF HEAD OFFICE AND 81 M ANDALIES THE INCOME SHOWN BY T H E HE AD OFFICE W AS SQUARED OFF AGAINST T H E EXPE NSES SHOWN BY M ANDALI . IN THE CONSOLIDATION FINANCIAL YEAR STATEMENT SEPARATE BREAK UP ASSESSMENT DONATION SHOWN AS INCOME AT HEAD OFFICE AND ASSESSMENT EXPENSES SHOWN BY MANDALAS AS EXPENSES WERE NOT SHOWN. IT IS DEMONSTRATED FROM THE MATERIAL ON RECOR D THAT ASSESSMENT DONATION DEBITED TO RESPECTIVE M ANDALIE S AT RS. 7722134/ - AS ASSESSMENT EXPENSES IN THEIR BOOKS WHEREAS HEAD OFFICE HAS CREDITED THE SAME INTO TWO PARTS (I) RS. 6982002/ - HAS BEEN CREDITED TO ASSESSMENT DONATION ACCOUNT (II) RS . 740432/ - HAS BEEN CREDITED TO FOREIGN CONTRIB UTION DONATION ACCOUNT I.T.A NO. 2 44 2 /AHD/20 15 A.Y. 200 4 - 05 PAGE NO IT O VS. THE CHURCH OF NORTH INDIA 4 BECAUSE THE SAME AMOUNT HAS BEEN RECEIVED FROM M AND A LI IN FOREIGN CURRENCY . IT IS ALSO NOTICED THAT FOREIGN CONTRIBUTION BANK ACCOUNT HAS BEEN MAINTAINED ONLY AT THE HEAD OFFICE, THEREFORE, CHE QUE OF DONATION RECEIVED BY M AND A LI IN FOREIGN CURRENCY WERE GIVEN TO THE HEAD OFFICE FOR DEPOSITING IN THE F.C. BANK ACCOUNT. IN VIEW OF THE AFORESAID FACTS, WE ARE OF THE VIEW THAT ASSESSING OFFICER HAS NOT CONSIDERED THESE FACTS AND ADDED THE AFORESAI D AMOUNT ON ASSUMPTION BASIS WHICH IS NOT CORRECT. REGARDING OTHER PART OF ADDITION OF RS. 11 ,00 ,800/ - IN RESPECT OF FOREIGN CONTRIBUTION DONAT ION, IT IS FOUND THAT THE BREAK - UP OF THIS AMOUNT IS AS UNDER : - (A) F.C. DONATION RECEIVED FOR RESPECTIVE MANDAL IES WAS ADJUSTED BY RESPECTIVE MANDNLIES AGAINST ASSESSMENT TO BE PAID TO HEAD OFFICE 740132/ - (B) BLOCK GRANT RECEIVED WINCH IS SHOWN AS INCOME UNDER 'DONATIONS' HEAD - AS PER ANNEXURE - 13 OF CONSOLIDATED STATEMENT 250000 (C) F.C. DON ATION RECEIVED FOR CHRISTMAS GIFT IS TO BE DISTRIBUTED TO PASTORS OF CHURCHES. THE SAME IS DEDUCTED FROM CHRISTMAS GIFT EXPENSES IN CONSOLIDATED STATEMENT OF ACCOUNT AND NET EXPENDITURE IS SHOWN UNDER HEAD EXPENDITURE TOWARDS THE OBJECT OF THE TRUST 11066 8/ - TOTAL F.C. DONATION SHOWN IN HEAD OFFICE ACCOUNT 1100800/ - IN THIS CONNECTION, ON THE MATERIAL ON RECORD, IT IS NOTICED THAT AS PER FORM FC - 3 THE ASSESSEE HAS FILED WITH MINISTRY OF HOME AFFAIRS, NEW DELHI CONTAINED DETAIL OF DONATION, DETAIL OF NAME AND ADDRESS OF DONER AND PURPOSE FOR WHICH THE DONATION WAS GIVEN IN FOREIGN CURRENCY. WE HAVE ALSO GONE THROUGH THE FINDING OF LD. CIT(A) WHICH IS REPRODUCED AS UNDER : - 5.3 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE BY THE A.R. OF THE APPELL ANT AND COMMENTS OF ID.A.O. IN THE MATTER AND REMAND REPORT DT 23/04/2015. APPELLANT FURNISHED AUDITED STATEMENT OF ACCOUNT OF H.O. AND COPY OF CONSOLIDATED STATEMENT OF ACCOUNT OF 81 MANDALIES (BRANCHES) EXCEPT H.O. ACCOUNT. APPELLANT SUBMITTED EACH MANDA LI HAS TO BE CONTRIBUTED CERTAIN AMOUNT TO H.O. FOR ADMINISTRATION WORK CARRIED OUT BY H.O. ASSESSMENT DONATION IS INCOME AND ASSESSMENT EXPENSES IS NOTHING BUT INTERNAL TRANSFER OF SOME AMOUNT FROM MANDALIES (BRANCHES) TO H.O. IT IS NOT AN ACTUAL INCOME O F THE APPELLANT TRUST AS A WHOLE. THE ASSESSMENT AMOUNT IS SOME PART OF INCOME/RECEIPTS OF MANDALIES OUT OF CONSOLIDATED TOTAL DONATION INCOME OF RS.2,95,68,847/ - AS PER CONSOLIDATED STATEMENT OF ACCOUNT WHICH HAS ALREADY BEEN DECLARED AS INCOME UNDER THE HEAD I.T.A NO. 2 44 2 /AHD/20 15 A.Y. 200 4 - 05 PAGE NO IT O VS. THE CHURCH OF NORTH INDIA 5 INCOME FROM OTHER SOURCES. APPELLANT CONTENDED THAT ASSESSMENT DONATION AMOUNT IS NOT CHARGEABLE TO TAX WHEN MAIN SOURCE OF INCOME IS ALREADY IN THE COMPUTATION OF INCOME. APPELLANT HAD SHOWN ASSESSMENT DONATION OF RS.77,22,134/ - SHOWN IN H.O. STATEME NT AS UNDER: 1) ASSESSMENT DONATION RS.69,82,002/ - 2) F.C. DONATION RECEIVED IN H.O. FROM RESPECTIVE MANDALIES WHICH IS ADJUSTED AGAINST ASSESSMENT TO BE GIVEN MANDALIES TO H.O. RS. 7,40,1327 - TOTAL: RS.77,22,134/ - APPELLANT SU BMITTED DETAILS O F F.C. DONATION OF RS.11,00,800/ - AS UNDER: 1) F.C. DONATION RECEIVED IN H.O. FOR RESPECTIVE MANDALIES WHICH WAS RECEIVED BY MANDALIES IN FOREIGN CURRENCY (SUPPORTED BY FORM FC - 3 FILED WITH MINISTRY OF HOME AFFAIRS, NEW DELHI RS.7,40,1 32/ - 2) BLOCK GRANT RECEIVED FROM CHURCH OF RS.2,50,000/ - NORTH INDIA, SYNOD, NEW DELHI 3) PASTOR'S CHRISTMAS GIFT DONATION RECEIVED RS. 1,10,668/ - CHURCH OF NORTH INDIA, SYNOD, NEW DELHI TOTAL RS. 11,00,800/ - THE APPELLANT SUBMITTED THAT IT FILED FORM FC - 3 WITH MINISTRY OF HOME AFFAIRS, NEW DELHI WHICH CONTAINS AMOUNT OF DONATION, DETAILS OF NAME AND ADDRESS OF DONOR AND PURPOSE FOR WHICH THE DONATION WAS GIVEN IN FOREIGN CURRENCY. THE APPELLANT ALSO SUBMITTED HEAD OFFICE STATEMENT OF ACCOUNT, LED GER ACCOUNT OF ASSESSMENT DONATION, 81 MANDALIES (BRANCHES) CONSOLIDATED STATEMENT OF ACCOUNT AND CONSOLIDATED STATEMENT OF INCOME AND EXPENDITURE ACCOUNT AS A WHOLE FOR F.Y. 2003 - 04 DULY AUDITED. AFTER CONSIDERING THE ENTIRETY OF FACTS AND PERUSAL OF VARI OUS DETAILS/SUPPORTING EVIDENCES FURNISHED BY THE APPELLANT, I AM INCLINED TO AGREE WITH THE APPELLANT. THE ADDITION MADE BY THE A.O. IN THE ASSESSMENT ORDER AGAINST ASSE SSMENT DONATION OF RS.69,82,002/ - AN D F.C. DONATION OF RS.11,00,800/ - AGGREGATING TO RS .80,82,802/ - IS DELETED. THIS GROUND OF APPEAL RAISED BY THE APPELLANT IS ALLOWED. IN THE LIGHT OF THE ABOVE FACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY INFIRMITY IN THE AFORESAID FINDING OF LD. CIT(A), THEREFORE, THIS APPEAL OF THE REVENUE IS DISMISSE D. ORDER PR ONOUNCED IN THE OPEN C OURT ON 21 - 02 - 201 9 SD/ - SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 21 /02 /2019 I.T.A NO. 2 44 2 /AHD/20 15 A.Y. 200 4 - 05 PAGE NO IT O VS. THE CHURCH OF NORTH INDIA 6 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,