I.T.O.-3(2), Mathura V. M/s Gaudiya Granth Anuved Trust, Mathura

ITA 386/AGR/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67394 (ITAT-AGRA)
• Duration Of Justice: 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 12-07-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 06-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L MAURYA
• Keywords: Capital asset; Gift; Charitable institution; Capital receipt
• Section: 12AA; 12

Judgement Text

.IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.386/AGRA/2012 ASSESSMENT YEAR: 2007-08 INCOME TAX OFFICER 3(2), VS. M/S. GAUDIYA GRANTH ANUVED TRUST, MATHURA. A/7-101, ISKON MVT, BHAKTI VEDANT SWAMI MARG, RAMAN RETI, VRINDABAN, MATHURA. (PAN: AABTG 0692 D). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.L. MAURYA, SR. D.R. RESPONDENT BY : SHRI DEEPENDRA MOHAN, C.A. DATE OF HEARING : 12.07.2013 DATE OF PRONOUNCEMENT : 02.08.2013 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 24.02.2012 PASSED BY THE LD. CIT(A)-I, AGRA FOR THE ASSESSMENT YEAR 2007-08. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN FAILING TO APPRECIATE THAT VOLUNTARY CONTRIBUTIONS (WHETHER CO RPUS DONATIONS OR GENERAL DONATIONS) RECEIVED BY A CHARITABLE TRUST A RE INCOME AS DEFINED VIE SECTION 2(24)(IIA) OF THE ACT AND CORPU S DONATIONS ARE EXEMPT FROM TAX U/S 11(1)(D) ONLY IF ASSESSEE IS RE GISTERED U/S 12A/12AA OF THE ACT. ITA NO.386/AGRA/2012 A.Y. 2007-08 2 2. THE LD. CIT(A) HAS ERRED IN PLACING RELIANCE UPO N THE APPELLATE DECISION OF HONBLE DELHI HIGH COURT IN ITA NO.5082 /DEL/2010 IN THE CASE OF ITO (EXEMPION0 VS. SMT. BASANTI DEVI AND SH RI CHAKHAN LAL GARG EDUCATION TRUS FOR A.Y. 2003-04, WHICH IN TURN IS NOW UNDER CHALLENGE IN THE HONBLE /SUPREME COURT. 3. THE ORDER OF CIT(A)-1, AGRA BEING ERRONEOUS IN L AW AND ON FACTS BE SET ASIDE AND THE ORDER OF THE AO BE RESTO RED.. 4. THE APPELLANT CRAVES TO AMEND THE GROUNDS OF THE APPEAL STATED ABOVE S AND WHEN NEED FOR DOING SO MAY ARISE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E, TRUST HAS SHOWN DONATION OF RS.68,50,000/- FROM BBT, MUMBAI. THE A.O. COMPUTED THE ASSESSMENT ON TOTAL INCOME OF RS.68,70,000/- REJECTING THE ASSESSEES C ONTENTION THAT THE DONATIONS WERE RECEIVED TOWARDS THE CORPUS OF THE TRUST. THE CIT(A) DELETED THE ADDITION OF RS.68,50,000/- OUT OF THE ADDITION OF RS.68,70,000/ - MADE BY THE A.O. AS UNDER :- I HAVE ALSO EXAMINED THE TERM CORPUS FOUND AND COR PUS FUND AND CORPUS DONATION AS IT IS BEING GENERALLY USED WITH RESPECT TO A TRUST. A CORPUS FUND DENOTES A PERMANENT FUND KEPT FOR THE B ASIC EXPENDITURES NEEDED FOR THE ADMINISTRATION AND SURVIVAL OF THE O RGANIZATION. THE CORPUS FUND IS GENERALLY NOT ALLOWED TO BE UTILIZED FOR THE ATTAINMENT OF THE PURPOSES, BUT THE INTEREST/DIVIDEND ACCUSED ON SUCH FUND CAN BE UTILIZED AS WELL AS ACCUMULATED. SUCH FUND CAN ALSO BE USED FOR CREATION OF CAPITAL ASSET OR PROPERTY OF THE TRUST FROM WHIC H INCOME CAN BE GENERATED. CORPUS FUND ARE GENERALLY CRATED OUT OF CORPUS DONATION. A DONATION WILL BE TREATED AS CORPUS DONATION ONLY IF IT IS ACCOMPANIED BY A SPECIFIC WRITTEN DIRECTION OF THE DONOR. IN THE A BSENCE OF ANY WRITTEN DIRECTION OF THE DONOR, A CONTRIBUTION OF GRANT CAN NOT BE TRANSFERRED TO CORPUS FUND. IN THE PRESENT CASE, THE DONOR, THE BH AKTIVEDANTA BOOK TRUST HAS VERY CATEGORICALLY IN HIS LETTER, WHILE P ROVIDING MONEY TO THE APPELLANT TRUST, HAS MENTIONED THE AMOUNT OF RS.68, 50,000/- AS CORPUS DONATION AND SUCH AMOUNT HAS BEEN USED BY THE TRUST FOR PURCHASING THE ITA NO.386/AGRA/2012 A.Y. 2007-08 3 LAND AND GIVING MONEY ON INTEREST AS LOAN. THEREFOR E, THE AMOUNT OF RS.68,50,000/- SHOWN BY THE APPELLANT TRUST HAS BEE N FOUND TO BE IN THE NATURE OF CORPUS DONATION. NOW, THE QUESTION ARISES WHETHER SUCH CORPUS DONAT ION IS TAXABLE AS INCOME OR NOT EVEN IN THE CASES IN WHICH THE TRU ST IS NOT REGISTERED U/S 12AA BECAUSE FOR THOSE TRUSTS WHICH ARE REGISTE RED U/S 12AA, EXEMPTION TO CORPUS DONATION HAS BEEN PROVIDED AS P ER PROVISION OF SECTION 11(1)(D). FOR SUCH TRUST TO WHICH REGISTRAT ION U/S 12AA HAS NOT BEEN PROVIDED, ITS TAX ABILITYIS REQUIRED TO BE DEC IDED WITH REFERENCE TO THE SCHEME OF THE ACT AS HELD IN THE DECISION OF PE NTAFOUR SOFTWARE EMPLOYEES WELFARE FOUNDATION VS. ACIT (SUPRA). IN B OTH THE DECISIONS REFERRED BY THE LD. AR, IN CASE OF M/S PENTAFOUR SO FTWARE EMPLOYEES WELFARE FOUNDATION VS. ACIT (SUPRA), IT HAS BEEN HE LD THAT CORPUS DONATION BEING IN THE NATURE OF CAPITAL RECEIPT ARE NOT CHARGEABLE TO INCOME TAX. THE DECISION OF ITAT DELHI IN CASE OF B ASANTI DEVI AND SRI CHAKHAN LAL GARG EDUCATION TRUST FOR BOTH AY 2002-0 3 AND AY 2003- 04 ARE ANNEXED WITH THIS ORDER AS ANNEXURE A-1 IN W HICH REFERENCE TO THE DECISION IN CASE OF PENTAFOUR SOFTWARE EMPLOYEE S WELFARE FOUNDATION IS ALSO GIVEN. I HAVE ALSO COME ACROSS ANOTHER DECISION OF HONBL E ITAT, KOLKATTA IN CASE OF SHRI SHANKAR BHAGWAN ESTATE VS. ITO DATED 13.01.1997 REPORTED IN (1997) 61 ITD 196 (CAL) IN WHICH, THE TAXABILITY OF CORPUS DONATION HAS BEEN EXAMINED IN THE LIGHT OF SECTION 12 READ SECTION 2(24(IIA) OF THE INCOME TAX ACT AND IN THIS DECISION, IT HAS BEEN HELD AS UNDER :- SO FAR AS SECTION 2(24)(IIA) IS CONCERNED, THIS SE CTION HAS TO BE READ IN THE CONTEXT OF THE INTRODUCTION OF THE PRESENT S ECTION 12 IT IS SIGNIFICANT THAT SECTION 2(24)(IIA) WAS INSERTED WI TH EFFECT FROM 01.04.1973 SIMULTANEOUSLY WITH THE PRESENT SECTION 12, BOTH OF WHICH WERE INTRODUCED FROM THE SAID DATE BY THE FINANCE A CT, 1972. SECTION 12 MAKES IT CLEAR BY THE WORDS APPEARING IN PARENTH ESIS THAT CONTRIBUTIONS MADE WITH A SPECIFIC DIRECTION THAT T HEY SHALL FROM PART OF THE CORPUS OF THE TRUST OR INSTITUTION SHALL NOT BE CONSIDERED AS INCOME OF THE TRUST. THE BOARDS CIRCULAR NO.108 DATED 20 .03.1973 IS EXTRACTED AT PAGE 1277 OF VOL. I OF SAMPAT IYENGARS LAW OF I NCOME TAX, 9 TH EDN. IN WHICH THE INTER-RELATION BETWEEN SECTION 12 AND SECTION 2(24) HAS BEEN BROUGHT OUT. GIFTS MADE WITH CLEAR DIRECTIONS THAT THEY SHALL FORMPART OF THE CORPUS OF THE RELIGIOUS ENDOWMENT C AN NEVER BE ITA NO.386/AGRA/2012 A.Y. 2007-08 4 CONSIDERED AS INCOME. IN THE CASE OF R.B. SHREERAM RELIGIOUS AND CHARITABLE TRUST V CIT (1988) 172 ITR 373/39 TAXMAN 28 IT WAS HELD BY THE BOMBAY HIGH COURT THT EVEN IGNORING THE AMEN DMENT TO SECTION 12, WHICH MEANS THAT EVEN BEFORE THE WORDS APPEARIN G TO PARENTHESIS IN THE PRESENT SECTION 12, IT CANNOT BE HELD THAT VOLU NTARY CONTRIBUTORS SPECIFICALLY RECEIVED TOWARDS THE CORPUS OF THE TRU ST MAY BE BROUGHT TO TAX. THE AFORESAID DECISION WAS FOLLOWED BY THE BOM BAY HIGH COURT IN THE CASE OF CIT VS. TRUSTEES OF KASTURBAI SCINDIA C OMMISSIONTRUST (1991) 189 ITR 5/57 TAXMAN 38. THE POSITION AFTER T HE AMENDMENT IS A FORORI. IN THE PRESENT CASES THE ASSESSING OFFICER ON EVIDENCE HAS ACCEPTED THE FACTS THAT ALL THE DONATIONS HAVE BEEN RECEIVED TOWARDS THE CORPUS OF THE ENDOWMENTS. IN VIEW OF THIS CLEAR FI NDING, IT IS NOT POSSIBLE TO HOLD THAT THEY ARE TO BE ASSESSED AS IN COME OF THE ASSESSEES. WE, THEREFORE, HOLD THAT THE ASSESSMENT OF THE CORP US DONATIONS CANNOT BE SUPPORTED. 12.FOR THE ABOVE REASONS, WE HOLD AS UNDER: THE RELIGIOUS ENDOWMENTS ARE NOT INVALID ON THE GRO UND THAT NEITHER THE TEMPLE NOR THE IMAGE HAD BEEN CONSECRATED AT TH E TIME OF CREATING THE ENDOWMENTS. THE ASSESSEES HAVE TO BE ASSESSED IN THE STATUS OF INDIVIDUAL SINCE THEY ARE ARTIFICIAL JURIDICAL ENTITIES AND THE VOLUNTARY CONTRIBUTORS RECEIVED BY THE ASSESSEE S TOWARDS THE CORPUS CANNOT BE BROUGHT TO TAX. 6.5 EVEN AFTER CONSIDERING THE DEFINITION OF SECTIO N 2(24)(IIA) READ WITH SECTION 12, THE HONBLE ITAT, KOLKATTA AR RIVED TO THE CONCLUSION THAT THE VOLUNTARY CONTRIBUTION IN THE N ATURE OF CORPUS DONATION RAISED BY THE APPELLANT CANNOT BE BROUGHT TO TAX. IN THIS CASE ALSO, THE TRUST UNDER APPEAL WAS A PVT. RELIGIOUS T RUST NOT REGISTERED U/S 12AA AND HENCE, CORPUS DONATION RECEIVED BY IT SHOU LD NOT BE TAXABLE AS ITS INCOME. 6.6 AFTER CONSIDERING THE POSITION OF LAW AS IT IS PREVAILING AT PRESENT ON THE BASIS OF DECISION OF THREE TRIBUNALS I.E. ITAT, CHENNAI, ITAT, DELHI AND ITAT, KOLKATTA AND FURTHER CONFIRME D BY THE DELHI HIGH COURT, THE CORPUS DONATION IS IN THE NATURE OF CAPITAL RECEIPT AND ARE NOT TAXABLE, IRRESPECTIVE OF THE FACT WHETHER T RUST IS REGISTERED U/S 12AA OR NOT. THEREFORE, I AGREE WITH THE LD. AR THA T THE AMOUNT OF ITA NO.386/AGRA/2012 A.Y. 2007-08 5 RS.68,50,000/- BEING IN THE NATURE OF CORPUS DONATI ON IS NOT TAXABLE UNDER THE INCOME TAX ACT BEING IN THE NATURE OF CAP ITAL RECEIPT AND THEREFORE, THE ADDITION OF RS.68,50,000/- MADE BY T HE AO TOWARDS THE TAXABLE INCOME OF THE ASSESSEE IS HEREBY DELETED AN D ACCORDINGLY, GROUND NO.2 IS ALLOWED. 4. LD. D.R. RELIED UPON THE ORDER OF THE AO, WHEREA S THE LD. AUTHORIZED REPRESENTATIVE RELIED UPON THE ORDER OF THE CIT(A) AND SUBMITTED THAT THE CIT(A) HAS FOLLOWED THE ORDER OF THE ITAT DELHI BENCH, WHI CH HAS BEEN CONFIRMED BY THE HONBLE DELHI HIGH COURT, THUS, THE ISSUE IS COVERE D IN FAVOUR OF THE ASSESSEE. 5. THE LD. AUTHORIZED REPRESENTATIVE HAS SUBMITTED THAT THE ISSUE IS COVERED BY VARIOUS ORDERS OF THE ITAT IN THE CASES OF SHRI SHA NKAR BHAGWAN ESTATE VS. ITO 61 ITD 196 (CAL.), SOCIETY FOR INTEGRATED DEVELOPME NT IN URBAN & RURAL AREAS VS. DEPUTY COMMISSIONER OF INCOME TAX (2004) 90 ITD 493 (HYD.), SRI DWARKADHEES CHARITABLE TRUST VS. ITO (1975) 98 ITR 557 (ALL.) AND DEPUTY COMMISSIONER OF INCOME TAX VS. NASIK GYMKHAN 77 ITD 500 (PUNE). 6. WE HAVE HEARD LD. REPRESENTATIVES OF THE PARTIES AND RECORDS PERUSED. THE GRIEVANCE OF THE REVENUE IS THAT THE CIT(A) HAS WRO NGLY FOLLOWED THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN ITA NO. 5082/DEL./2 010, WHEREAS THAT ORDER HAS BEEN CHALLENGED BEFORE THE HONBLE SUPREME COURT. T HE REVENUE DID NOT DISPUTE THE FACTS. WE NOTICED THAT THE CIT (A) AFTER CONSID ERING THE DECISION OF THREE TRIBUNALS I.E. ITAT, ITAT, DELHI IN THE CASE OF SMT . BASANTI DEVI AND SHRI ITA NO.386/AGRA/2012 A.Y. 2007-08 6 CHAKHAN LAL GARG EDUCATION TRUST, THE REVENUE FILED APPEAL BEFORE HONBLE DELHI HIGH COURT. HONBLE DELHI HIGH COURT CONFIRMED THE ORDER OF THE ITAT, THE REVENUE FILE APPEAL BEFORE HONBLE SUPREME COURT, W HICH HAS BEEN DISMISSED FOR NON-PROSECUTION VIDE JUDGMENT CIVIL APPEAL NOS. 703 6 OF 2011, JUDGMENT DATED 28.1.2013, ITAT CHENNAI BENCH IN THE CASE OF M/S PENTAFOUR SOFTWARE EMPLOYEES WELFARE FOUNDATION VS. ACIT ITA NOS 751 A ND 752 /MADS/2007 AND OTHERS AND ITAT, KOLKATTA BENCH IN THE CASE OF SHRI SHANKAR BHAGWAN ESTATE VS. ITO DATED 13.01.1997 REPORTED IN (1997) 61 ITD 196 (CAL) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. WE FIND THAT THE FACTS OF T HE CASE UNDER CONSIDERATION ARE IDENTICAL TO THE FACTS OF THE CASE DECIDED BY ITAT DELHI BENCH IN THE CASE OF SMT. BASANTI DEVI & SHRI CHAKHAN LAL GARG EDUCATION TRUS T (SUPRA) AND OTHER ORDERS OF THE ITAT. SINCE FACTS ARE IDENTICAL, THEREFORE, TO MAINTAIN CONSISTENCY, WE FOLLOW THE ABOVE ORDERS OF ITAT AND THE LIGHT OF FA CTS WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). THE ORDER OF CIT(A) IS CONFIRMED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTA NT MEMBER AMIT/- ITA NO.386/AGRA/2012 A.Y. 2007-08 7 COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, AGRA TRUE COPY