ADIT (E), New Delhi V. Unitech South City Educational Charitable Trust, New Delhi

ITA 2873/DEL/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97416 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 29-06-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 02-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P CHANDRAKAR
• Keywords: Charitable institution; Additional evidence; Revenue expenditure
• Section: 143(3); 147; 68; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH H NEW DELHI) BEFORE SHRI I.C. SUDHIR AND SHRI INTURI RAMA RAO ITA NO. 2873/DEL/2011 ASSESSMENT YEAR: 2003-04 ADIT(E), VS. UNITECH SOUTH CITY EDUCATIONAL TRUST CIRCLE-IV, CHARITABLE TRUST, NEW DELHI. 6-CO,,UNITY CENTRE, SAKET, NEW DELHI. (PAN: AAATU1693H) (APPELLANT) (RESPONDENT) CROSS OBJ. NO. 308/DEL/2011 ( IN ITA NO. 2873/DEL/2011) ASSESSMENT YEAR: 2003-04 UNITECH SOUTH CITY EDUCATIONAL VS. ADIT(E), CHARITABLE TRUST, TRUST CIRCLE-IV, 6-CO,,UNITY CENTRE, SAKET, NEW DELHI. NEW DELHI. (PAN: AAATU1693H) (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI J.P. C HANDRAKAR, SR. DR ASSESSEE BY: SHRI GAUTAM JAIN, FCA DATE OF HEARING : 29 .06.2015 DATE OF PRONOUNCEMENT: 23 :09.2015 ORDER PER I.C. SUDHIR: JUDICIAL MEMBER ITA NO. 2873/DEL/2011 : THE REVENUE HAS IMPUGNED FIRST APPELLATE ORDER ON THE SOLE GROUND THAT: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION MAD E U/S. 68 OF THE ACT, AS THE ASSESSEE DID NOT OFFER ANY EXPLANATION WITH REGARD TO THE 2 GENUINENESS OF THE CORPUS DONATIONS DESPITE REPEATE D OPPORTUNITIES PROVIDED TO THE ASSESSEE. 2. WE HAVE HEARD AND CONSIDERED THE ARGUMENTS ADVAN CED BY THE PARTIES IN VIEW OF ORDERS OF THE AUTHORITIES BELOW, MATERIA L AVAILABLE ON RECORD AND THE DECISIONS RELIED UPON. 3. THE RELEVANT FACTS ARE THAT THE ASSESSING OFFICE R MADE ADDITION OF RS.1,31,000 REPRESENTING THE CORPUS DONATION RECEIV ED BY THE ASSESSEE TRUST DURING THE ASSESSMENT YEAR HOLDING THAT IT WAS INCO ME FROM OTHER SOURCES. THE ACTION OF THE ASSESSING OFFICER WAS QUESTIONED BEFORE THE LEARNED CIT(APPEALS) WHO HAS GRANTED RELIEF BY DELETING THE ADDITION. HENCE, THE REVENUE IS IN APPEAL BEFORE AGAINST THE DELETION MA DE BY THE LEARNED CIT(APPEALS). 4. IN SUPPORT OF THE GROUND, THE LEARNED SR. DR HAS BASICALLY PLACED RELIANCE ON THE ASSESSMENT ORDER. HE SUBMITTED THAT THERE WAS NO EVIDENCE AS TO WHAT WAS THE SPECIFIC DIRECTION FOR THE CORPUS D ONATION, HENCE, THE FINDING OF THE LEARNED CIT(APPEALS) IN PARA NO. 7.5 OF THE FIRST APPELLATE ORDER IS MISPLACED. 3 5. THE LEARNED AR ON THE OTHER HAND TRIED TO JUSTIF Y THE FIRST APPELLATE ORDER. HE SUBMITTED THAT CORPUS DONATION CANNOT BRO UGHT TO TAX UNDER SEC. 68 OF THE INCOME-TAX ACT, 1961, AS INCOME STOOD APP LIED FOR CHARITABLE PURPOSE UNDER SEC. 11(1)(A) OF THE ACT. HE SUBMITTE D THAT IN THE PRESENT CASE, INCOME HAS BEEN APPLIED FOR CHARITABLE PURPOSES. HE POINTED OUT THAT RS.1,29,07,277 WAS APPLIED ON THE FIXED ASSETS INCL UDING BUILDING AND IN SUPPORT HE REFERRED PAGE NO. 31 OF THE PAPER BOOK I .E. SCHEDULE-2 CONTAINING PARTICULARS OF THE FIXED ASSETS. HE SUBMITTED FURTH ER THAT RS.12,39,291 IS THE REVENUE EXPENDITURE AND REFERRED PAGE NO. 33 OF THE PAPER BOOK I.E. THE DETAILS OF DIFFERED REVENUE EXPENDITURE GIVEN UNDER SCHEDULE-V. THE LEARNED AR SUBMITTED FURTHER THAT THE INCOME APPLIE D WAS MORE THAN ALLEGED INCOME RECEIVED BY WAY OF CORPUS DONATION. HE PLACED RELIANCE ON THE FOLLOWING DECISIONS: I) DIT VS. KESHAV SOCIAL & CHARITABLE FOUNDATION 278 ITR 152 (DELHI); II) CIT VS. SADHANA FOUNDATION IN ITA NO. 827/2011 DATED 07.07.2011; III) CIT VS. O.P. SURI MEMORIAL EDUCATION SOCIETY I N ITA NOS. 1754 & 1755/2010 AND 206/2011 UPHOLDING DECISION OF ITAT IN THE CASE OF DCIT VS. SADHANA FOUNDATION IN ITA NO.2704/DEL/2010 DATED 08.10.2010; IV) DIT VS. MOTI BAGH MUTUAL AID EDUCATION 298 IT R 190 (DEL.); 4 V ) DIT VS. AKHIL BHARTIYA MAHAJAN SIROMANI SABHA I N ITA NO. 214/2009 DT. 13.5.2009; VI) ORDER OF ITAT IN THE CASE OF HANS RAJ SAMARA SO CIETY VS. DIT(E) IN ITA NO. 2957/DEL/2010 DATED 14.1.2011; VII) 230 ITR 636 (S.C) S.RM.CT.M.TIRUPPANI TRUST VS . CIT; VIII) CIT VS. UTTARANCHAL WELFARE SOCIETY 364 ITR 398; & IX) ITA NO. 776/LUK/2014 DATED 17.6.2015 ITO VS. M/S. SARASWATI EDUCATIONAL CHARITABLE TRUST. 6. THE LEARNED AR SUBMITTED FURTHER THAT CORPUS DON ATION IS NOT INCOME AND EXEMPT UNDER SEC. 11(1)(D) OF THE ACT. IN THIS REGARD, HE PLACED RELIANCE ON THE FOLLOWING DECISIONS: I) DIT VS. JAIPUR GOLDEN CHARITABLE CLINICAL LAB. T RUST 311 ITR 365 (DELHI); II) DIT VS. AJAY G. PIRAMAL FOUNDATION- 228 TAXMAN 332 (DELHI); III) ITA NO. 927/2009 (DEL) DATED 23.9.2009 DIT VS. BASANTI DEVI & SHRI CHAKHAN LAL GARG EDU. TRUST BASANTI. IV ) CIT VS. ETERNAL SCIENCE OF MANS SOCIETY 12 8 ITR 456; V ) CIT VS. PUARARPAN CHARITABLE TRUST 166 ITR 2 14 (CAL.); VI) APOLLO HOSPITALS RESEARCH FOUNDATIONS VS. ASST . DIT(E)- 241 ITR 26; VII) CIT VS. STHANAKVASI VARDHMAN VANIK JAIN SANGH 260 ITR 366 (GUJ.); & VIII) 61 ITD 196 (CAL.) SHRI SHANKAR BHAGWAN ESTAT E VS. ITO. 5 7. THE LEARNED AR ALSO REFERRED LIST OF DONORS ALON G WITH ADDRESS AND LETTERS FROM DONORS, RESOLUTION PASSED BY DONORS AN D RECEIPTS ISSUED BY ASSESSEE, COPIES WHEREOF HAVE BEEN MADE AVAILABLE A T PAGE NO. 100 TO 172 OF THE PAPER BOOK. HE SUBMITTED THAT EVEN DURING TH E ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD PLACED ON RECORD THE LEDGER ACCOUNT OF DONATION GIVING DETAILS OF PERSONS FROM WHOM DONATI ON WAS RECEIVED WHICH ITSELF ESTABLISHED THAT SUM WERE RECEIVED BY ACCOUN T PAYEE CHEQUE. IN THIS REGARD, HE REFERRED PAGE NOS. 72 AND 73 OF THE PAPE R BOOK. HE SUBMITTED THAT THE BANK STATEMENT HAD ALSO BEEN PLACED ON RECORD AND REFERRED PAGE NOS. 39 TO 47 OF THE PAPER BOOK. THE LEARNED AR SUBMITTE D FURTHER THAT APART FROM THE ABOVE, FOR CORPUS DONATION OF RS.12 LACS E VIDENCED IN THE SHAPE OF RECEIPTS RETURN OF INCOME, LETTERS, RESOLUTION WERE ALSO MADE AVAILABLE ON RECORD, COPIES WHEREOF HAVE BEEN PLACED AT PAGE NOS . 48 TO 62 OF THE PAPER BOOK. THE LEARNED AR POINTED OUT FURTHER THAT IN TH E REMAND REPORT (PAGE NO. 6 OF THE FIRST APPELLATE ORDER), THE ASSESSING OFFICER DID NOT DISPUTE THE ABOVE FACTS AND AS SUCH, THE LEARNED CIT(APPEALS) H AD ADMITTED THE ADDITIONAL EVIDENCE VIDE WHICH FINDINGS RECORDED IN PARA NO. 2.2 AT PAGE NO.14 OF THE FIRST APPELLATE ORDER, WHICH HAS AGAIN NOT BEEN CHALLENGED BY THE REVENUE. THUS, THE GROUND RAISED TO DISPUTE THE DELETION OF ADDITION ON 6 ACCOUNT OF NON-FURNISHING OF EXPLANATION TO THE GEN UINENESS OF CORPUS DONATION IS NOT TENABLE. THE LEARNED AR POINTED OUT THAT IMPUGNED ASSESSMENT IS FOR THE ASSESSMENT YEAR 2003-04 AND F OR SUBSEQUENT ASSESSMENT YEAR RETURNED INCOME DECLARED HAS BEEN A CCEPTED AFTER ALLOWING EXEMPTION UNDER SEC. 11 AND 12 OF THE ACT IN THE AS SESSMENT FRAMED UNDER SEC. 143(3) OF THE ACT. HE SUBMITTED THAT BURDEN OF THE ASSESSEE STOOD DISCHARGED AS ENTIRE EVIDENCE STOOD FURNISHED. 8. AFTER CONSIDERING THE ABOVE SUBMISSION, WE FIND THAT THE LEARNED CIT(APPEALS) HAS DEALT WITH THE ISSUE IN DETAIL. HE HAS ALLOWED ADDITIONAL EVIDENCE AFTER GIVING OPPORTUNITY TO THE ASSESSING OFFICER AND DISCUSSING THE SAME HAS COME TO THE CONCLUSION THAT THE INCOME HAS UTILIZED FOR CHARITABLE PURPOSE, HENCE, THERE IS NEITHER ANY LOGIC NOR LEGA L AND VALID JUSTIFICATION TO DENY THE CLAIM UNDER SEC. 11 OF THE ACT. ALL WHAT I S REQUIRED IS IRRESPECTIVE OF SOURCE THAT 75% OF INCOME SHOULD HAVE BEEN UTILI ZED FOR CHARITABLE PURPOSES AS HAS BEEN DONE IN THE PRESENT CASE. THE LEARNED CIT(APPEALS) HAS OBSERVED FURTHER THAT EVEN ASSUMING THOUGH IT I S SERIOUSLY DISPUTED THAT RS.1,31,00,000 IS INCOME OF THE ASSESSEE FROM OTHER SOURCES THEN TOO SINCE MORE THAN 25% OF RS.1,31,00,000 I.E. RS.98,25,000 H AS BEEN UTILIZED FOR CHARITABLE PURPOSE BY ACQUIRING FIXED ASSETS OF RS. 1,29,00,000, THERE WAS NO 7 BASIS FOR THE ASSESSING OFFICER TO BRING THE INCOME OF RS.1,31,00,000 TO TAX AS INCOME OF THE ASSESSEE TRUST. IN ABSENCE OF REBU TTAL OF THIS MATERIAL FINDING OF THE LEARNED CIT(APPEALS) THAT SINCE MORE THAN 75 % OF RS.1,31,00,000 HAS BEEN UTILIZED FOR CHARITABLE PURPOSE BY ACQUIRI NG FIXED ASSETS OF RS.1,29,00,000, WE DO NOT FIND REASON TO INTERFERE WITH THE FIRST APPELLATE ORDER DELETING THE ADDITION OF RS.1,31,00,000. THE LEARNED CIT(APPEALS) HAS FIRSTLY HELD THAT RS.1,31,00,000 REPRESENTS COR PUS DONATION AND IS THUS EXEMPT UNDER SEC. 11(1)(D) OF THE ACT. WE FIND THAT THIS FINDING OF THE LEARNED CIT(APPEALS) REGARDING CORPUS DONATION IS W ELL SUPPORTED BY THE EVIDENCE FILED BY THE ASSESSEE, DISCUSSED ABOVE IN THE SUBMISSIONS OF THE LEARNED AR. THE FIRST APPELLATE ORDER IS THUS UPHEL D. THE GROUND IS ACCORDINGLY REJECTED. 9. IN RESULT, THE APPEAL IS DISMISSED. CROSS-OBJECTION 308/DEL/2011 : 10. IN THIS CROSS-OBJECTION, THE ASSESSEE HAS OBJEC TED THE FIRST APPELLATE ORDER; (I) UPHOLDING THE VALIDITY OF INITIATION OF PROCEEDINGS UNDER SEC. 147 AND ASSESSMENT FRAMED IN FURTHERANCE THERETO UNDER SEC. 144/147 OF THE ACT; AND (II) NON-APPRECIATION THAT THE ASSESSMENT WAS B ASED ON CERTAIN PURPORTED INFORMATION RECEIVED FROM INVESTIGATION WING OF THE DEPARTMENT AND THAT CORPUS DONATION IS NOT TAXABLE AS INCOME. 8 11. IN VIEW OF THE ABOVE FINDING IN THE APPEAL OF T HE REVENUE ON THE ISSUE OF VALIDITY OF ADDITION OF RS.1,31,00,000 MADE BY T HE ASSESSING OFFICER UNDER SEC. 68 OF THE ACT ON ACCOUNT OF NON-GENUINEN ESS OF THE CORPUS DONATIONS, THE PRESENT CROSS OBJECTION HAS BECOME I NFRUCTUOUS AND IT IS DISPOSED OFF ACCORDINGLY. 12. IN RESULT, THE APPEAL AND CROSS OBJECTION ARE D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 .09.2015 SD/- SD/- ( INTURI RAMA RAO ) ( I.C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 23 /09/2015 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR 9 DATE DRAFT DICTATED ON COMPUTER 23.09.2015 DRAFT PLACED BEFORE AUTHOR 23.09.2015 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 23.09.20 15 APPROVED DRAFT COMES TO THE SR.PS/PS 24.09.2015 KEPT FOR PRONOUNCEMENT ON 23.09.2015 FILE SENT TO THE BENCH CLERK 24.09.2015 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.