Rasipuram Rotary Club Trust, Rasipuram V. ITO, Salem

ITA 45/CHNY/2015

• Counselvise Citation: 4521714 RSA 2015
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2015
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 04-09-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 08-01-2015
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHAL
• Assessee Lawyers: S SRIDHAR
• Section: 12A; 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.NO.45/MDS/2015 / ASSESSMENT YEAR : 2007-08 RASIPURAM ROTARY CLUB TRUST ROTARY NAGAR NAMAKKAL ROAD RASIPURAM TK. VS. THE INCOME TAX OFFICER WARD II(2) SALEM [PAN AABTR 4516 K ] ( ! / APPELLANT) ( '# ! /RESPONDENT) / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE /RESPONDENT BY : DR. B. NISCHAL, JCIT / DATE OF HEARING : 04 - 0 9 - 2015 / DATE OF PRONOUNCEMENT : 20 - 11 - 2015 / O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), SALEM, DA TED 28.10.2014, FOR ASSESSMENT YEAR 2007-08. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A TRUST AND FILED ITS RETURN OF INCOME DECLARING NIL INCOME AND WAS NOT REGISTERED U/S 12AA OF THE INCOME-TAX ACT, 1961. DURING THE FINANCIAL YEAR 2006-07, A SUM OF ` 8,85,148/- RECEIVED AS CORPUS DONATIONS AND ` 26,004/- AS DONATIONS. ACCORDINGLY, THE CORPUS DONATIONS ARE CREDITED TO CAPITAL ACCOUNT AND DONAT IONS ARE ADMITTED FOR TAX UNDER INCOME AND EXPENDITURE ACCOUNT. SINC E THERE IS NO ITA NO.45/15 :- 2 -: REGISTRATION U/S 12AA, THE PROVISIONS OF SECTIONS 1 1 AND 12 ARE NOT APPLICABLE TO THE INCOME OF THE TRUST. UNDER THE I NCOME-TAX ACT, INCOME AS DEFINED U/S 2(24) ALSO INCLUDES VOLUNT ARY CONTRIBUTIONS. WHERE THE VOLUNTARY CONTRIBUTIONS ARE MADE WITH SPE CIFIC DIRECTION, IT TAKES THE CHARACTERISTICS OF CORPUS AND SHALL FORM PART OF THE CORPUS FUND OF THE TRUST OR INSTITUTION WHICH IS EXEMPTED U/S 11(1)(D) OF THE ACT. IN RE-ASSESSMENT PROCEEDINGS, THE ASSESSING O FFICER CALLED FOR LIST OF DONATIONS ALONGWITH CONFIRMATION LETTERS OF DONO RS 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 ` 8,85,148/- AS THE TRUST WAS NOT REGISTERED U/S 12A A OF THE ACT. 3. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, TH E ASSESSEE FILED APPEAL BEFORE THE CIT(A) RAISING VAR IOUS 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 ITA NO.45/15 :- 3 -: REGISTERED U/S 12AA OF THE ACT. IT WAS ARGUED TH AT EVEN THOUGH REGISTRATION U/S 12A WAS NOT GRANTED, THE PROVISION S OF SECTIONS 11(1)(D) SHALL APPLY IN RELATION TO CORPUS DONATIO N OF ANY TRUST OR INSTITUTION. THE FACTS WERE REITERATED WITH COPY O F TRUST DEED AND SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER. THE CIT(A) CONCLUDED THAT THE ASSESSEE AND THE ASSESSING OFFICER ARE SI LENT ON THE 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 APPE AL. 4. FURTHER, AGGRIEVED BY CIT(A)S ORDER, APPEAL WAS FI LED BEFORE THE TRIBUNAL. THE LD. COUNSEL FOR THE ASSESSEE H AS MENTIONED ABOUT THE FACTS OF SPECIFIC DIRECTIONS OF CORPUS DONATION S AND ALSO ASSESSING OFFICERS VERIFICATION AND EXAMINATION OF DONATIONS AND CONFIRMATION LETTERS IN ASSESSMENT PROCEEDINGS. THE LD. COUNS EL SUBMITTED THAT WHERE THE DONATIONS ARE ACCEPTED WITH SPECIFIC DIRE CTION, IT SHALL TAKE THE CHARACTERISTICS OF THE CORPUS FUND, HENCE, A DI RECTION MAY BE ISSUED TO CONSIDER THE CORPUS DONATIONS FOR CONSTRU CTION OF BUILDING AS CAPITAL IN NATURE. THE LD. COUNSEL PLACED HIS RELI ANCE ON THE DECISION OF THIS TRIBUNAL IN M/S PENTAFOUR SOFTWARE EMPLOYEES WELFARE FOUNDATION VS ACIT [I.T.A.NO.1007/MDS/2007], COPY OF WHICH WAS FILED BY THE LD. COUNSEL FOR THE ASSESSEE. ITA NO.45/15 :- 4 -: 5. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. HE SUBMITTED THAT THE ASSESSEE- TRUST IS NOT REGISTERED U/S 12AA OF THE ACT AND ITS ACTIVITIES ARE ALSO NOT EXAMINED BY THE LOWER AUTHORITIES. 6. THE TRIBUNAL CONSIDERED THE SUBMISSIONS OF BOTH PAR TIES. THE QUESTION ARISES FOR CONSIDERATION IS WHETHER TH E CORPUS DONATION RECEIVED BY THE ASSESSEE IS EXEMPTED U/S 11(1)(D) OF THE ACT OR NOT ? ADMITTEDLY, THE TRUST WAS NOT REGISTERED U/S 12AA OF THE ACT. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT REGISTRA TION U/S 12AA IS A MANDATORY PRE-CONDITION FOR GRANT OF EXEMPTION U/S 11 AND 12 OF THE ACT. I HAVE CAREFULLY GONE THROUGH THE ORDER OF THIS TRIBUNAL IN CASE OF PENTAFOUR SOFTWARE EMPLOYEES WELFARE FOUND ATION VS ACIT(SUPRA). THIS TRIBUNAL HAS NOT CONSIDERED THE MANDATORY REQUIREMENT OF REGISTRATION U/S 12AA OF THE ACT F OR CLAIMING EXEMPTION U/S 11 OF THE ACT. UNDER THE SCHEME OF THE INCOME-TAX ACT, 1961, DONATIONS ARE CONSIDERED AS INCOME UNLES S THE SAME WERE RECEIVED FROM BLOOD RELATIVES. IN THE CASE BEFORE US, ADMITTEDLY THE ASSESSEE IS NOT REGISTERED U/S 12AA OF THE ACT. T HEREFORE, SEC. 11 OF THE ACT IS NOT APPLICABLE. THERE IS NO PROVISION IN THE INCOME-TAX ACT, 1961 FOR EXEMPTING THE DONATION RECEIVED BY THE AS SESSEE IN CASE IT IS NOT REGISTERED U/S 12AA OF THE ACT. THEREFORE, TH E ORDER OF THIS TRIBUNAL IN M/S PENTAFOUR SOFTWARE EMPLOYEES WELFAR E FOUNDATION (SUPRA) IS NOT APPLICABLE. HENCE, THIS TRIBUNAL DO NOT FIND ANY REASON ITA NO.45/15 :- 5 -: TO INTERFERE WITH THE ORDER OF THE CIT(A). ACCORDI NGLY, THE SAME IS CONFIRMED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH NOVEMBER, 2015, AT CHENNAI. SD/- ( . . . ! ) (N.R.S. GANESAN) / JUDICIAL MEMBER '# / CHENNAI $% / DATED: 20 TH NOVEMBER, 2015 RD %&'' ()'*) / COPY TO: ' 1 . / APPELLANT 3. ' +',! / CIT(A) 5. )-.' / / DR 2. / RESPONDENT 4. ' + / CIT 6. .0'1 / GF