M/s.Social Actiopn for Empowerment & Dev Minorities, Calicut V. CIT, Calicut

ITA 50/COCH/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4713 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2013
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 18-07-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 21-02-2012
• Court: TRIBUNAL
• Section: 12A; 68; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A. NOS. 49 & 50/COCH/2012 ASSESSMENT YEARS : 2006-07 & 2007-08 M/S. SOCIAL ACTION FOR EMPOWERMENT & DEVELOPMENT OF MINORITIES, PB NO. 830, ROSY APARTMENT, NEAR SPAN HOTEL, JAIL ROAD, PUTHIYARA P.O. KOZHIKODE-673 004. [PAN:AAFAS: 5426A] VS. THE INCOME TAX OFFICER, WARD- 1(2), CALICUT. (ASSESSEE -APPELLANT) (REVENUE-R ESPONDENT) ASSESSEE BY SHRI C.B.M. WARRIER, CA REVENUE BY SMT. S. VIJAYAPRABHA, JR. DR DATE OF HEARING 18/07/2013 DATE OF PRONOUNCEMENT 27/09/2013 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THESE TWO APPEALS CHALLENGI NG THE COMMON ORDER DATED 18-11-2011 PASSED BY LD CIT(A)-I, KOZHIKODE AND THE Y RELATE TO THE ASSESSMENT YEARS 2006-07 AND 2007-08. THE ASSESSEE IS ASSAILING THE DECISION OF LD CIT(A) IN CONFIRMING THE ASSESSMENT OF DONATION RECEIPTS AND LOAN RECEIP TS AS THE INCOME OF THE ASSESSEE IN BOTH THE YEARS. 2. THE FACTS RELATING TO THE CASE ARE STATED IN BRI EF. THE ASSESSEE IS REGISTERED AS A SOCIETY UNDER SOCIETIES REGISTRATION ACT WITH THE O BJECTIVE OF ESTABLISHING AND MAINTAINING ISLAMIC EDUCATIONAL AND CULTURAL CENTRE S FOR PROVIDING LEARNING AND RESEARCH FACILITIES IN ISLAMIC RELIGION, HISTORY AND PRACTIC E FOR THE UPLIFTMENT OF MORAL, SOCIAL AND ECONOMIC STATUS OF THE MINORITY COMMUNITIES AND THE REBY EMPOWERING THE MUSLIM I.T.A. NOS. 49 & 50/COCH/2012 2 MINORITY COMMUNITY TO IMPROVE THEIR STANDARD OF LIF E. IT FILED AN APPLICATION SEEKING REGISTRATION U/S 12A OF THE ACT BEFORE THE COMMISSI ONER OF INCOME TAX, KOZHIKODE ON 13.02.2009. HOWEVER, THE LD CIT REJECTED THE APPLI CATION, VIDE HIS ORDER DATED 05-08- 2009. SUBSEQUENTLY THE AO REOPENED THE ASSESSMENTS OF BOTH THE YEARS UNDER CONSIDERATION. THE AO NOTICED THAT THE ASSESSEE HA S RECEIVED DONATIONS AND LOANS IN BOTH THE YEARS AS DETAILED BELOW:- ITEM 2006-07 2007-08 DONATION 13,10,200 4,96,500 LOAN 1,00,000 ---- WITH REGARD TO THE LOAN RECEIPT OF RS.1.00 LAKH, RE FERRED ABOVE, THE ASSESSEE FILED CONFIRMATION LETTERS FOR SIX PERSONS, EACH CLAIMING TO HAVE LENT MONEY AT AN AMOUNT OF LESS THAN RS.20,000/-. THE AO FELT THAT ALL THE CON FIRMATION LETTERS HAVE BEEN PREPARED ONLY RECENTLY AND THEY HAVE BEEN BACK DATED. SINCE NO OTHER DETAIL WAS GIVEN, HE HELD THAT THE ASSESSEE HAS FAILED TO PROVE THE LOAN CRED ITS. WITH REGARD TO THE DONATION RECEIPTS, THE ASSESSEE FILED A CONFIRMATION LETTER FROM A PERSON NAMED SHRI K. MOHAMMED, WHEREIN IT WAS STATED THAT HE HAD CONTRIB UTED A SUM OF RS.11,70,000/- DURING THE YEAR RELEVANT TO THE ASSESSMENT YEAR 200 6-07 AND RS.1,85,000/- DURING THE YEAR RELEVANT TO THE ASSESSMENT YEAR 2007-08. HOWE VER, THE ASSESSEE COULD NOT PRODUCE ANY RECEIPT ISSUED TO THE DONORS, BANK ACCO UNT OR BOOKS OF ACCOUNT TO SHOW THAT THE ASSESSEE HAS REALLY RECEIVED FUNDS FROM SH RI K MOHAMMED. HENCE, THE AO TREATED THE DONATIONS AS ANONYMOUS DONATIONS, WHICH REMAIN UNEXPLAINED. ACCORDINGLY, HE ASSESSED THE DONATION AND LOAN RECE IPTS AS THE INCOME OF THE ASSESSEE U/S 68 OF THE ACT IN BOTH THE YEARS. THE LD CIT(A) ALSO CONFIRMED THE ASSESSMENT ORDER OF THE ASSESSING OFFICER IN BOTH THE YEARS AND HENC E THE ASSESSEE HAS FILED THESE APPEALS BEFORE US. 3. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE WAS REGISTERED AS A CHARITABLE SOCIETY UNDER SOCIETIES REGISTRATION A CT. THEREAFTER, IT APPLIED FOR REGISTRATION U/S. 12A OF THE ACT ON 07.01.2009. HO WEVER, IT DID NOT RECEIVE ANY ORDER FROM THE COMMISSIONER OF INCOME TAX. ONLY DURING T HE COURSE OF ASSESSMENT I.T.A. NOS. 49 & 50/COCH/2012 3 PROCEEDINGS, THE ASSESSEE CAME TO KNOW THAT THE APP LICATION OF THE ASSESSEE HAS BEEN REJECTED BY THE COMMISSIONER OF INCOME-TAX, KOZHIKO DE. HENCE, THE ASSESSEE FILED A LETTER DATED 17-11-2012 WITH THE INCOME TAX OFFICER , WARD I(2), KOZHIKODE SEEKING A COPY OF THE ORDER PASSED BY THE COMMISSIONER OF INC OME-TAX. HOWEVER, SO FAR, THE ASSESSEE HAS NOT RECEIVED THE SAME. THE LD. COUNSE L FOR THE ASSESSEE SUBMITTED THAT THE AO WAS WRONG IN TREATING THE DONATION RECEIPTS AS ANONYMOUS DONATIONS, AS THE ASSESSEE HAS GOT FULL LIST OF DONORS IN BOTH THE YE ARS AND THE SAME HAS BEEN PLACED IN PAGES 21 TO 25 OF THE PAPER BOOK FILED BY THE ASSES SEE. HE SUBMITTED THAT THE DONATIONS RECEIVED FROM SHRI K. MOHAMMED ARE TOWARD S CORPUS FUND FOR PURCHASE OF LAND AND HENCE, THEY ARE TO BE CAPITALISED IN BOTH THE YEARS. THE LD. COUNSEL FURTHER SUBMITTED THAT THE ASSESSEE HAS OBTAINED FRESH CONF IRMATION LETTERS FROM SHRI K. MOHAMMED AND THE SAME HAS BEEN FILED BEFORE THE TRI BUNAL. THE LD COUNSEL SUBMITTED THAT THE DONATION RECEIPTS, BEING CAPITAL IN NATURE, IS NOT LIABLE FOR TAX. ACCORDINGLY, HE SUBMITTED THAT THE LD. CIT(A) WAS N OT JUSTIFIED IN CONFIRMING THE ASSESSMENT OF DONATIONS AS THE INCOME OF THE ASSESS EE IN BOTH THE YEARS. 4. ON THE CONTRARY, THE LD. DR SUBMITTED THAT THE A SSESSEE DID NOT HAVE REGISTRATION U/S. 12A OF THE ACT AND HENCE, THE ENT IRE INCOME OF THE ASSESSEE-SOCIETY IS TAXABLE UNDER THE INCOME TAX ACT. THE LD. DR FURTH ER SUBMITTED THAT THE ASSESSEE IS MAKING A CLAIM OF CORPUS DONATIONS FOR THE FIRST TI ME BEFORE THE TRIBUNAL, WHILE IT CLAIMED BEFORE LD CIT(A) THAT THE AMOUNT RECEIVED F ROM SHRI K. MOHAMMED WAS REFUNDABLE TO HIM. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE RECORD. WE NOTICE THAT THE ASSESSEE HAS STATED IN THE GROUNDS OF APPE AL THAT THE AMOUNT OF RS.11,70,000/- AND RS.1,85,000/- RECEIVED FROM SHRI K. MOHAMMED RESPECTIVELY DURING THE YEARS UNDER CONSIDERATION AS THE AMOUNTS LIABLE TO BE REFUNDED. HOWEVER, THE ASSESSEE NOW CLAIMS THAT THE SAID DONATIONS REQUIRE TO BE CAPITALISED, APPARENTLY AS CORPUS DONATIONS. THE CONFIRMATION LETTERS OBTAINE D FROM SHRI K. MOHAMMED, WHICH HAVE BEEN FILED BEFORE US, ALSO STATES THAT THE ABO VE SAID AMOUNTS REPRESENT DONATIONS ONLY AND NOT AS CORPUS DONATIONS. TH US, AS POINTED OUT BY LD D.R, THERE IS I.T.A. NOS. 49 & 50/COCH/2012 4 AN APPARENT CONTRADICTION BETWEEN THE CLAIM MADE IN THE GROUNDS OF APPEALS AND SUBMISSIONS NOW MADE BEFORE US. 6. THE MAIN CONTENTION OF THE ASSESSEE APPEARS TO BE THAT THE DONATIONS CANNOT BE ASSESSED AS THE INCOME OF THE ASSESSEE. THE AO HAS GIVEN A FINDING THAT THE ASSESSEE DID NOT HAVE REGISTRATION U/S. 12A OF THE ACT. EVEN THOUGH, THE LD A.R DISPUTES THE SAIF FINDING, YET HE DID NOT FILE ANY MATERIAL TO CONTRA DICT THE SAID FINDINGS GIVEN BY THE ASSESSING OFFICER. HENCE, WE HAVE NO OTHER OPTION, BUT TO ACCEPT THE FINDING GIVEN BY THE ASSESSING OFFICER. 7. THE QUESTION THAT ARISES IS WHETHER THE DONAT IONS RECEIVED BY THE ASSESSEE IS TAXABLE UNDER THE ACT OR NOT, SINCE THE ASSESSEE SO CIETY DO NOT HAVE REGISTRATION U/S 12A OF THE ACT. AT THIS JUNCTURE, WE FEEL IT PERTI NENT TO EXTRACT THE PROVISIONS OF SECTION 2(24)(IIA) OF THE ACT: (24) INCOME INCLUDES (I) PROFITS AND GAINS; (II) DIVIDEND; (IIA) VOLUNTARY CONTRIBUTIONS RECEIVED BY A TRUST CREATED WHOLLY OR PARTLY FOR CHARITABLE OR RELIGIOUS PURPOSES OR BY AN INSTI TUTION ESTABLISHED WHOLLY OR PARTLY FOR SUCH PURPOSES OR BY AN ASSOCIATION OR INSTITUTION REFERRED TO IN CLAUSE (21) OR CLAUSE (23), OR BY A FUND OR TRUS T OR INSTITUTION REFERRED TO IN SUB-CLAUSE (IV) OR SUB-CLAUSE (V) OR BY ANY UNIV ERSITY OR OTHER EDUCATIONAL INSTITUTION REFERRED TO IN SUB-CLAUSE(I IIAD) OR SUB-CLAUSE (VI) OR BY ANY HOSPITAL OR OTHER INSTITUTION REFERRED TO IN SUB-CLAUSE (IIIAE) OR SUB- CLAUSE (VIA) OF CLAUSE (23C) OF SECTION 10 OR BY AN ELECTORAL TRUST. 8. A PLAIN READING OF THE ABOVE SAID PROVISION SHOW S THAT THE VOLUNTARY CONTRIBUTIONS RECEIVED BY A TRUST/INSTITUTION CREAT ED WHOLLY OR PARTLY FOR CHARITABLE OR RELIGIOUS PURPOSE IS TREATED AS INCOME U/S. 2(24) O F THE ACT. IN THE INSTANT CASE, THE ASSESSEE IS AN INSTITUTION CREATED WHOLLY OR PARTLY FOR CHARITABLE OR RELIGIOUS PURPOSES. THERE SHOULD NOT BE ANY DOUBT THAT THE DONATIONS RE CEIVED BY THE ASSESSEE CONSTITUTE VOLUNTARY CONTRIBUTIONS. HENCE, IN OUR VIEW, THE DONATIONS RECEIVED BY THE ASSESSEE CONSTITUTE INCOME IN THE HANDS OF THE ASSESSEE IN T ERMS OF THE PROVISION REFERRED ABOVE. I.T.A. NOS. 49 & 50/COCH/2012 5 THE CLAIM OF THE LD. AR THAT THE DONATIONS RECEIVED FROM SHRI K. MOHAMMED ARE CORPUS DONATIONS, EVEN IF ACCEPTED AS CORRECT FOR A MOMENT EVEN THOUGH THE SAID CLAIM WAS NOT SUBSTANTIATED, DOES NOT MAKE ANY DIFFERENCE AS THE PROVISION OF SECTION 2(24) DOES NOT PROVIDE FOR EXCLUSION OF CORPUS DONATIONS. 9. THE ASSESSEE HAS FURTHER SUBMITTED THAT IT HAS F URNISHED LIST OF DONORS IN THE PAPER BOOK. THE ASSESSEE IS MAKING THIS SUBMISSION , SINCE THE ASSESSING OFFICER HAD TREATED THE DONATIONS AS ANONYMOUS DONATIONS, AS TH E ASSESSEE DID NOT FURNISH THE DETAILS OF THE DONORS BEFORE HIM. HOWEVER, IN VIEW OF THE SPECIFIC PROVISIONS OF SECTION 2(24) OF THE ACT, EVEN IF THE DONORS ARE IDENTIFIED , THE SAME CONSTITUTE THE INCOME IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, IN OUR VIEW , THE LD. CIT(A) WAS JUSTIFIED IN CONFIRMING THE ASSESSMENT OF DONATION RECEIPTS AS I NCOME OF THE ASSESSEE. ACCORDINGLY, WE UPHOLD HIS ORDER. 10. THE ASSESSEE HAS RAISED ONE MORE GROUND THA T THE AO HAS NOT GRANTED DEDUCTION FOR EXPENSES INCURRED IN RUNNING THE SOCIETY. THE LD CIT(A) HAS NOTICED THAT THE ASSESSING OFFICER HAS ACTUALLY GRANTED DEDUCTION OF EXPENSES. HOWEVER, BEFORE US, THE ASSESSEE HAS FAILED TO SHOW THAT THE DECISION RENDE RED BY LD CIT(A) ON THIS CLAIM AS WRONG. ACCORDINGLY, WE DO NOT FIND ANY REASON TO I NTERFERE WITH THE ORDER OF LD CIT(A) ON THIS ISSUE. 11. IN THE RESULT, BOTH THE APPEALS FILED BY THE AS SESSEE ARE DISMISSED. PRONOUNCED ACCORDINGLY ON 27-09 -2013. SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 27TH SEPTEMBER, 2013 GJ I.T.A. NOS. 49 & 50/COCH/2012 6 COPY TO: 1. M/S. SOCIAL ACTION FOR EMPOWERMENT & DEVELOPMENT OF MINORITIES, PB NO. 830, ROSY APARTMENT, NEAR SPAN HOTEL, JAIL ROAD, PUTHIYARA P. O. KOZHIKODE-673 004. 2. THE INCOME TAX OFFICER, WARD-1(2), CALICUT. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS)-I, KOZHI KODE 4.THE COMMISSIONER OF INCOME-TAX, KOZHIKODE. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN