Rasipuram Kannada Saineegar Samuga Pradama Sangam Educational Trust, Rasipuram V. ITO, Salem

ITA 43/CHNY/2015

• Counselvise Citation: 4321714 RSA 2015
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2015
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 04-09-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 08-01-2015
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHAL
• Assessee Lawyers: S SRIDHAR
• Section: 12; 12AA

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL S M C BENCH : CHENNAI . . . , [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER ] ./ I.T.A.NOS.43 & 44/MDS/2015 / ASSESSMENT YEARS : 2008-09 AND 2009-10 RASIPURAM KANNADA SAINEEGAR SAMUGA PRADAMA SANGAM EDUCATIONAL TRUST 4/41, DASA STREET RASIPURAM TK VS. THE INCOME TAX OFFICER WARD II(2) SALEM [PAN AABTR 2734 F ] ( ! / APPELLANT) ( '# ! /RESPONDENT) / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE /RESPONDENT BY : DR. B. NISCHAL, JCIT / DATE OF HEARING : 04 - 0 9 - 2015 / DATE OF PRONOUNCEMENT : 13 - 11 - 2015 / O R D E R THESE APPEALS OF THE ASSESSEE ARE AGAINST SEPARA TE ORDERS OF THE COMMISSIONER OF INCOME-TAX (APPEALS), SALEM, DATED 28.10.2014 PERTAINING TO ASSESSMENT YEARS 2008-09 A ND 2009-10. SINCE COMMON ISSUE IS INVOLVED IN BOTH THE APPEALS, FOR THE SAKE OF CONVENIENCE, WE DISPOSE OF THE SAME BY THIS COMPOSI TE ORDER. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A TRUST AND FILED ITS RETURN OF INCOME DECLARING NIL INCOME FOR BOTH THE ASSESSMENT YEARS UNDER CONSIDERATION AND WAS NOT RE GISTERED U/S ITA NO.43 & 44/15 :- 2 -: 12AA OF THE INCOME-TAX ACT, 1961. DURING THE FINA NCIAL YEAR 2007-08, A SUM OF ` 5,49,049/- RECEIVED AS CORPUS DONATIONS AND INTERE ST OF ` 10,590/-. SIMILARLY, DURING FINANCIAL YEAR 2008-09, A SUM OF ` 2,73,479/- RECEIVED AS CORPUS DONATIONS AND ` 41,060/- AS DONATION FOR TUITION FEES. ACCORDINGLY, THE CORPUS DONATIONS ARE CREDITED TO CAPITAL ACCOUNT AND DONATIONS ARE ADMITTED FOR TAX UNDER INCOME AND EXPENDITURE ACCOUNT. SINCE THERE IS NO REGISTRATIO N U/S 12AA, THE PROVISIONS OF SECTIONS 11 AND 12 ARE NOT APPLICABLE TO THE INCOME OF THE TRUST. UNDER THE INCOME-TAX ACT, INCOME AS D EFINED U/S 2(24) ALSO INCLUDES VOLUNTARY CONTRIBUTIONS. WHERE THE V OLUNTARY CONTRIBUTIONS ARE MADE WITH SPECIFIC DIRECTION, IT TAKES THE CHARACTERISTICS OF CORPUS AND SHALL FORM PART OF TH E CORPUS FUND OF THE TRUST OR INSTITUTION WHICH IS EXEMPTED U/S 11(1)(D ) OF THE ACT. IN RE- ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLE D FOR LIST OF DONATIONS ALONGWITH CONFIRMATION LETTERS OF DONORS WHO HAVE CONTRIBUTED TO CORPUS FUND. FURTHER THE ASSESSEE PRODUCED BOOKS OF ACCOUNT AND MADE SUBMISSIONS. THE ASSESSING OFFICE R VERIFIED AND EXAMINED THE CORRECTNESS OF BOOKS OF ACCOUNT AND AL SO THE EXPENDITURE INCURRED. THOUGH THE ASSESSING OFFICER VERIFIED AND SATISFIED WITH THE CLARIFICATIONS, HE BROUGHT TO TA X CORPUS DONATIONS OF ` 5,49,049/- AND ` 2,73,479/- FOR ASSESSMENT YEARS 2008-09 AND 2009- 10, RESPECTIVELY, AS THE TRUST WAS NOT REGISTERED U/S 12AA OF THE ACT. ITA NO.43 & 44/15 :- 3 -: 3. AGGRIEVED BY THE ORDERS OF THE ASSESSING OFFICER, T HE ASSESSEE FILED APPEALS BEFORE THE CIT(A) RAISING VA RIOUS GROUNDS. IN SUPPORT OF VOLUNTARY CONTRIBUTIONS WITH SPECIFIC DI RECTION, THE ASSESSEE RELIED ON CASE LAWS AND PROVISIONS OF THE ACT. IN THE HEARING PROCEEDINGS BEFORE THE CIT(A), THE LD. COUNSEL HAS BROUGHT ON RECORD THE CASE LAWS, WHERE THE CONTRIBUTIONS MADE WITH SP ECIFIC DIRECTION SHALL FORM PART OF THE CORPUS OF THE TRUST OR INSTI TUTION AND SHALL NOT BE DEEMED TO BE INCOME DERIVED FROM PROPERTY HELD UNDE R THE TRUST WHOLLY FOR CHARITABLE OR RELIGIOUS PURPOSE THOUGH T HE TRUST WAS NOT REGISTERED U/S 12AA OF THE ACT. IT WAS ARGUED T HAT IN THE ABSENCE OF 12AA REGISTRATION, THE PROVISIONS OF SECTIONS 11 AN D 12 SHALL NOT APPLY IN RELATION TO INCOME OF ANY TRUST OR INSTITUTION. THE FACTS WERE REITERATED WITH COPY OF TRUST DEEDS AND SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER. THE CIT(A) HAS COME TO A CONCLU SION THAT THE ASSESSEE AND THE ASSESSING OFFICER ARE SILENT ON TH E NATURE OF DONATIONS EXCEPT STATING THAT THEY ARE CORPUS DONAT IONS. SINCE THE TRUST IS NOT REGISTERED U/S 12AA OF THE ACT, EXEMP TION U/S 11(1)(D) IS NOT AVAILABLE TO THE TRUST AND DISMISSED THE APPEA LS OF THE ASSESSEE. 4. FURTHER, AGGRIEVED BY CIT(A)S ORDERS, APPEALS WERE FILED BEFORE THE TRIBUNAL FOR BOTH THE ASSESSMENT YEARS 2 008-09 AND 2009- 10. THE LD. COUNSEL APPEARING HAS MENTIONED ABOUT THE FACTS OF ITA NO.43 & 44/15 :- 4 -: SPECIFIC DIRECTIONS OF CORPUS DONATIONS AND ALSO AS SESSING OFFICERS VERIFICATION AND EXAMINATION OF DONATIONS AND CONFI RMATION LETTERS IN ASSESSMENT PROCEEDINGS. THE LD. COUNSEL SUBMITTE D THAT WHERE THE DONATIONS ARE ACCEPTED WITH SPECIFIC DIRECTION, IT SHALL TAKE THE CHARACTERISTICS OF THE CORPUS FUND, HENCE, A DIRECT ION MAY BE ISSUED TO CONSIDER THE CORPUS DONATIONS FOR CONSTRUCTION OF B UILDING AS CAPITAL IN NATURE. THE LD. COUNSEL RELIED ON THE DECISION OF THIS TRIBUNAL IN THE CASE OF M/S PENTAFOUR SOFTWARE EMPLOYEES WELFARE FO UNDATION VS ACIT IN I.T.A.NO.1007/MDS/2007, DATED 08.07.2008. 5. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDERS OF THE LOWER AUTHORITIES FOR BOTH THE ASSESSMENT YEARS UND ER CONSIDERATION. HE SUBMITTED THAT THE ASSESSEE-TRUST IS NOT REGISTE RED U/S 12AA OF THE ACT AND ITS ACTIVITIES ARE ALSO NOT EXAMINED BY THE LOWER AUTHORITIES. 2. THE TRIBUNAL CONSIDERED THE SUBMISSION OF BOTH THE COUNSELS WHERE THE CORPUS DONATIONS ARE GIVEN WITH SPECIFIC DIRECTION EXEMPTED FROM INCOME-TAX. SINCE THE BENEFIT OF SE C. 11 WILL NOT BE AVAILABLE TO THE TRUST AS IT IS NOT REGISTERED U/S 12AA OF THE ACT. THE LD. COUNSEL RELIED UPON THE ORDER OF THIS TRIBUNAL IN I.T.A.NO. 1007/MDS/2007 IN CASE OF PENTAFOUR SOFTWARE EMPLOYE ES WELFARE FOUNDATION, DATED 8.7.2008, WHICH IS RENDERED ON DI FFERENT FACTS WHEREIN THE BENCH CONCLUDED THAT MATTER NEEDS TO BE EXAMINED ITA NO.43 & 44/15 :- 5 -: WITH REFERENCE TO THE SCHEME OF THE ACT AS REGARDS CORPUS DONATION, BUT DOES NOT ALLOW CORPUS DONATION EXEMPTED TO UNRE GISTERED TRUST. SINCE THE ASSESSEE-TRUST IS NOT REGISTERED U/S 12 AA, CORPUS DONATIONS ARE TAXED AT NORMAL RATES. 3. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ST AND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH NOVEMBER, 2015, AT CHENNAI. SD/- ( . . . ! ) (N.R.S. GANESAN) / JUDICIAL MEMBER '# / CHENNAI $% / DATED: 13 TH NOVEMBER, 2015 RD %&'' ()'*) / COPY TO: ' 1 . / APPELLANT 4. ' + / CIT 2. / RESPONDENT 5. ),-' . / DR 3. ' +'/! / CIT(A) 6. -0'1 / GF