ITO (E) Trust Ward-111, V. Discipleship Centre,

ITA 4733/DEL/2007

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9853 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 21-07-2009
• Assessment Year: 2004-2005
• Appeal Filed On: 07-12-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: STEPHAN GEORGE
• Keywords: Charitable institution; Deemed to accrue or arise in india; Competent authority
• Section: 143(3); 10AA; 12AA; 6; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B: NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI DEEPAK R. SHAH, ACCOUNTANT MEMBER I.T.A.NO.4733/DEL/2007 ASSESSMENT YEAR : 2004-05 INCOME-TAX OFFICER, DISCIPLESHIP CENTRE, TRUST WARD-III, DELHI. VS. A-42-43, COMMERCIAL COMPLEX, DR. MUKHERJEE NAGAR, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI STEPH AN GEORGE, CIT-DR. RESPONDENT BY : SHRI K. SAMPATH, ADVOCATE. O R D E R PER DEEPAK R. SHAH, ACCOUNTANT MEMBER. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-XXI, NEW DELHI , DATED 14.09.2007 FOR THE ASSESSMENT YEAR 2004-05, IN AN APPEAL AGAIN ST THE ASSESSMENT FRAMED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (THE ACT). 2 2. THE GRIEVANCE OF THE REVENUE IS THAT THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF DONATION R ECEIVED BY THE ASSESSEE ASSESSED AS DEEMED INCOME UNDER SECTION 12(3) OF TH E ACT. 3. THE ASSESSEE IS A REGISTERED TRUST WITH INCOME-T AX UNDER SECTION 12AA OF THE ACT AND A SOCIETY REGISTERED UNDER THE SOCIE TIES REGISTRATION ACT, 1860. THE ASSESSEE CARRIED OUT VARIOUS RELIEF WORK S ACCORDING TO ITS MEMORANDUM AND ALSO PARTICULARLY GUJARAT EARTHQUAKE REHABILITATION PROJECT IN KUTCH. THE ASSESSING OFFICER NOTED THAT IN RESPECT OF ACTI VITIES OF GUJARAT EARTHQUAKE REHABILITATION PROJECT THE ASSESSEE HAS NOT RENDERED ITS ACCOUNTS IN FORM NO.10AA ON OR BEFORE 30 TH JUNE, 2004, TO THE AUTHORITY PRESCRIBED UNDER RULE 18AAA OF THE INCOME-TAX RULES. THE ASSE SSEE SUBMITTED THAT THE ASSESSEE HAS NOT RECEIVED DONATIONS FROM ASSESS EES CHARGEABLE TO TAX IN INDIA BUT ARE FROM FOREIGN DONORS AND HENCE NOT THE DONATION REFERRED IN SECTION 80G(2)(D) OF THE ACT. THE ASSESSING OFFI CER HELD THAT SINCE DURING THE PERIOD 26 TH JANUARY 2001 TO 30 TH SEPTEMBER, 2001 THE ASSESSEE HAS RECEIVED DONATION OF RS.3,53,14,185/- FROM FOREIGN DONORS FOR RELIEF OF VICTIMS OF GUJARAT EARTHQUAKE BUT FORM 10AA WERE NO T FILED BEFORE THE PRESCRIBED AUTHORITY ON OR BEFORE 30 TH JUNE, 2004 AND HENCE IN TERMS OF 3 SECTION 12(3) OF THE ACT, THE SAME IS TO BE CONSIDE RED AS INCOME OF THE ASSESSEE. THE LEARNED CIT(A) HELD THAT THE ASSESSEE HAS RECEI VED GRANT/RELIEF FROM FOREIGN INSTITUTION. RESPECTIVE INSTITUTIONS HAVE SUBMITTED CERTIFICATES THAT THEY ARE NOT CHARGEABLE TO TAX IN INDIA. THES E HAVE BEEN IGNORED BY THE ASSESSING OFFICER. THEREFORE, THE SAID AMOUNT IS NO T COVERED UNDER THE PROVISION OF SECTION 12(3) OF THE ACT. ACCORDINGLY , ADDITION WAS DELETED. THE REVENUE IS IN FURTHER APPEAL BEFORE US. 4. THE LEARNED DR SHRI STEPHAN GEORGE SUBMITTED THA T THE ASSESSEE IS A RESIDENT PERSON AND HENCE DONATION RECEIVED BY IT W HETHER WITHIN OR OUTSIDE INDIA ARE TAXABLE IN INDIA. PROVISION OF SECTIONS 4, 5 & 6 ARE CATEGORICAL IN THIS REGARD ACCORDING TO WHICH THE ASSESSEE BEING A RESIDENT IN INDIA EVEN FOREIGN DONATION WILL BE CHARGEABLE TO TAX IN INDIA . THE SAME IS NOT DEPENDENT UPON THE CHARGEABILITY TO TAX IN RESPECT OF FOREIGN DONORS. THE LEARNED COUNSEL FOR THE ASSESSEE SHRI K. SAMPAT H ON THE OTHER HAND, SUBMITTED THAT INSTEAD OF GOING INTO THE LEGA LITY OF ISSUE, THE ASSESSEE IS WILLING TO FILE RELEVANT DECLARATION IN FORM 10A A FOR WHICH THE ASSESSEE MAY BE PERMITTED TO FILE AND THE MATTER MAY BE SENT TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSEE HAS NOT RECEIVED DONATION REFERRED TO IN SECTION 80G(2)(D) OF THE ACT. THEREFORE, THE SAME CANNOT BE CONSIDERED AS 4 INCOME UNDER SECTION 12(3) OF THE ACT. EVEN IF IT IS TO BE HELD AS TAXABLE UNDER SECTION 12(3) OF THE ACT, IN WHICH YEAR IT HA S TO BE TAXED IS ALSO NOT CERTAIN. THEREFORE, TO RE-DECIDE THIS ISSUE, THE M ATTER MAY BE RESTORED BACK T THE ASSESSING OFFICER SO THAT THE RELEVANT DECLARAT ION CAN BE BROUGHT ON RECORD AND THE ISSUE BE DECIDED ON MERITS RATHER TH AN LEGALITY OR TECHNICALITIES. HE ALSO RELIED UPON THE DECISION O F HONBLE DELHI HIGH COURT IN THE CASE OF CARE TODAY FUND & ANOTHER VS. DIRECT OR GENERAL OF INCOME- TAX, 294 ITR 383. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN TH E CASE OF CARE TODAY FUND & ANOTHER (SUPRA) THE FACTS ARE AS UNDER:- THE ASSESSEE, A CHARITABLE INSTITUTION, RECEIVED D ONATIONS FROM INDIAN AND FOREIGN SOURCES TOWARDS RELIEF WORK TO BE CARRIED OUT CONSEQUENT TO THE EARTHQUAKE IN GUJARAT IN JANUARY, 2001. THE DONATIONS WERE RECEIVED BETWEEN JANUARY 2 6, 2001, AND SEPTEMBER 30, 2001, AND THE AMOUNTS RECEIVED WE RE REQUIRED TO BE UTILISED FOR EARTHQUAKE RELIEF ON OR BEFORE MARCH 31, 2004. ACCORDING TO THE ASSESSEE, IT RECEIVED OV ER RS. 3 CRORES FROM INDIAN AND FOREIGN DONORS OUT OF WHICH AN AMOUNT OF RS. 40,74,666 WAS NOT UTILISED FOR EARTHQUAKE RE LIEF, THE UNUTILISED AMOUNT BEING ATTRIBUTABLE TO FOREIGN DON ATIONS AND FROM PERSONS WHO WERE NOT ASSESSEE IN INDIA. THE AS SESSEE FILED THE REQUISITE DETAILS IN FORM NO. 10AA BEFORE THE C OMPETENT AUTHORITY AND THE FORM WAS SIGNED BY THE CHARTERED ACCOUNTANT OF THE ASSESSEE. A NOTE WAS APPENDED TO THE FORM IN WHICH IT WAS MENTIONED THAT THE MANAGEMENT WAS OF THE VIEW T HAT THE AMOUNT OF RS. 40,74,666 RECEIVED FROM FOREIGN DONAT IONS DID NOT QUALIFY FOR THE PURPOSE OF SECTION 12 OR SECTIO N 10(23C) OF THE INCOME-TAX ACT, 1961. IT WAS ALSO STATED THAT T HE AMOUNT WAS BEING SHOWN AS TAXABLE AS A MEASURE OF ABUNDANT CAUTION. ON THE BASIS OF THE INFORMATION CONTAINED IN FORM N O. 10AA, 5 THE DIRECTOR-GENERAL OF INCOME-TAX (EXEMPTIONS) PAS SED AN ORDER UNDER RULE 18AAAA OF THE INCOME-TAX RULES, 19 62, READ WITH SECTION 12(3) OF THE INCOME-TAX ACT, 1961. THE ASSESSEE FILED THE WRIT PETITION CHALLENGING TH E ORDER OF THE ASSESSING OFFICER. THE HONBLE DELHI HIGH COURT HELD THAT SINCE FRESH MATERIAL WHICH WAS QUITE RELEVANT HAD BEEN PLACED BEFORE THE COURT, THE ISSUES INVOLVED OUGHT TO BE RECONSIDERED BY THE DIRECTOR-GENERAL OF INCOME-TAX (EXEMPTIONS). IT WOULD BE APPROPRIATE FOR THE DIREC TOR-GENERAL OF INCOME-TAX (EXEMPTIONS) TO ADJUDICATE THE MATTER DE NOVO ONLY BECAUSE THE ASSESSEE WAS ADMITTEDLY A CHARITAB LE INSTITUTION AND HAD RECEIVED DONATIONS FOR A LAUDAB LE PURPOSE AND A MAJOR PART OF THESE DONATIONS HAD BEEN UTILIS ED FOR THE PURPOSE OF REHABILITATION OF THE VICTIMS OF THE GUJ ARAT EARTHQUAKE AND THE ASSESSEE SHOULD NOT UNNECESSARIL Y BE TAXED ON ACCOUNT OF FULL FACTS NOT BEING PLACED BEFORE TH E COMPETENT AUTHORITY. WE FIND THAT THE FACTS BEFORE US ARE ALSO IDENTICAL . WHETHER THE DONATIONS CAN BE CLASSIFIED UNDER SECTION 80G(2)(D) WHICH COM PELS THE ASSESSEE TO FILE FORM 10AA AND WHETHER SUCH DONATIONS ARE UTILIZED O R NOT IS REQUIRED TO BE LOOKED INTO BEFORE INVOKING THE PROVISIONS OF SECTI ON 12(3) OF THE ACT. IT IS ALSO NOT CERTAIN AS TO IN WHICH YEAR THE AMOUNT CAN BE BROUGHT TO TAX. THEREFORE, CONSIDERING ALL THIS WE REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER WHO SHALL DECIDE THE ISSUE DE NOV O WITHOUT BEING GUIDED BY OUR OBSERVATIONS. THE ASSESSEE SHALL PLACE FORM 10AA BEFORE THE PRESCRIBED AUTHORITY AND WHICH SHALL BE CONSIDERED AS WITHIN TIME AS TO HOLD OTHERWISE TO TAKE A HARSH VIEW IN RESPECT OF NOBLE CAUSE. THE MATTER SHALL BE 6 DECIDED AFRESH AFTER AFFORDING REASONABLE OPPORTUNI TY OF BEING HEARD TO THE ASSESSEE. 6. FOR STATISTICAL PURPOSES, THE APPEAL IS TREATED AS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 28 TH AUGUST, 2009. SD/- SD/- (I.P. BANSAL) (DEEPAK R. SHAH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 28 TH AUGUST, 2009. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR, ITAT.