DCIT (Exemption), New Delhi V. Om Prakash Jindal Gramin Jan Kalyan Sansthan, New Delhi

ITA 6012/DEL/2015

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 2890 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-09-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 05-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMAR BHADRA
• Assessee Lawyers: V K TUSIAN
• Keywords: Capital asset
• Section: 80G; 12; 2; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI C BEN CH, NEW DELHI BEFORE SHRI SUCHITRA KAMBLE, JUDICIAL MEMBER, AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER, ITA NO.6012/DEL/2015 [ASSESSMENT YEAR: 2011-12] DCIT(E), CIRCLE-2(1), ROOM NO.2408, 24 TH FLOOR, E-2 BLOCK, PRATYAKSH KAR BHAVAN, DR. S.P. MUKHERJEE CIVIC CENTRE, NEW DELHI-11002 OM PRAKASH JINDAL GRAMIN JAN KALYAN SANSTHAN, 06, PRITHVI RAJ ROAD, NEW DELHI-110001 PAN-AAATO1058J APPELLANT RESPONDENT APPELLANT BY SHRI SAMAR BHADRA CIT-DR RESPONDENT BY SHRI V. K. TUSIAN, CA DATE OF HEARING 08/08/2019 DATE OF PRONOUNCEMENT 03/09/2019 ORDER PER SUCHITRA KAMBLE, JUDICIAL MEMBER THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF THE LD. CIT(A)- 40(EXEMPTION), NEW DELHI, DATED 27/08/2015 FOR ASSE SSMENT YEAR 2011-12. 2. GROUNDS OF APPEAL ARE AS UNDER:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN IGNORING THE FACT THAT IN THE ABSENCE OF WRITTEN DIRECTION FROM THE DONOR, THE DO NATION WILL NOT BE TREATED AS CORPUS DONATION AND CONSEQUE NTLY, FROM PART OF THE INCOME OF THE ORGANISATION. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN IGNORING THE FACT THAT ASSESSEE BEING A SEPARATE ENTITY CAN BE EARMARKED T O PAY FOR EDUCATION AND FOR THE SPECIFIC EXPENSES. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING THE CLAIM OF CARRY FORWARD OF LOSSES DISREGARDING THE FACT THAT THE PR OVISIONS 2 OF SECTION 72 TO 74 ARE APPLICABLE TO CASES WHOSE I NCOME ARE TAXABLE AS PER PROVISIONS OF THE ACT AND NOT AP PLICABLE IN THE CASES WHO ARE CLAIMING EXEMPTION U/S. 11 & 1 2 OF THE INCOME TAX ACT, 1961. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING THE AO T O ALLOW BENEFIT OF CARRY FORWARD OF DEFICIT LOSS OF RS. 25,66,47,941/- IN VIEW OF THE DECISION OF DELHI TRI BUNAL IN THE CASE OF PUSHPAWATI SINGHANIA RESEARCH INSTITUTE FOR LIVER, RENAL & DIGESTIVE DISEASE VS DDIT(E) (2009) 29 SOT 316 (DEL.). 3. THE ASSESSEE IS REGISTERED UNDER THE SOCIETIES R EGISTRATION ACT, 1860 ON 18.08.2004 AND IS ALSO REGISTERED UNDER SECTION 12AA(1) OF THE INCOME TAX ACT, 1961 ON 28.04.2005 AND ALSO ENJOYS THE BEN EFIT OF SECTION 80G VIDE ORDER DATED 01.07.2010. THE MAIN OBJECT OF THE ASSE SSEE TRUST IS TO CONDUCT VARIOUS ACTIVITIES, PROGRAMS INCLUDING SOCIAL WELFA RE, SANITATION AND HEALTHCARE, HEALTH COMMUNITY PROGRAMS, PRIMARY EDUC ATION AND VOCATIONAL TRAINING, INFRASTRUCTURE SUPPORT TO SCHOOLS AND NON -FORMAL EDUCATION, LIFE SKILL AND EMPLOYMENT GENERAL PROGRAM, YOUTH AND SPO RTS DEVELOPMENT AND GOVERNANCE REFORMS ETC. DURING THE ASSESSMENT PROCE EDINGS THE ASSESSING OFFICER HAD TREATED THE SOCIETY AS AN AOP NOT A CHA RITABLE SOCIETY AND COMPUTED ALL THE TAXES AS NORMAL AOP VIDE THE ORDER OF THE ASSESSING OFFICER. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE. 5. THE LD. DR SUBMITTED THAT THE CIT(A) IGNORED THE FACT THAT IN THE ABSENCE OF WRITTEN DIRECTION FROM THE DONOR, THE DO NATION WILL NOT BE TREATED AS CORPUS DONATION AND CONSEQUENTLY, FROM PART OF T HE INCOME OF THE ORGANIZATION. THE CIT(A) IGNORED THE FACT THAT ASSE SSEE BEING A SEPARATE ENTITY CAN BE EARMARKED TO PAY FOR EDUCATION AND FO R THE SPECIFIC EXPENSES. THE LD. DR FURTHER SUBMITTED THAT THE CIT(A) ERRED IN ALLOWING THE CLAIM OF CARRY FORWARD LOSSES DISREGARDING THE FACT THAT THE PROVISIONS OF SECTION 72 TO 74 ARE APPLICABLE TO CASES WHOSE INCOME ARE TAXABLE AS PER PROVISIONS OF THE ACT AND NOT APPLICABLE IN THE CASES WHO ARE CLAIMIN G EXEMPTION U/S 11 & 12 3 OF THE INCOME TAX ACT, 1961. THE LD. DR FURTHER SUB MITTED THAT THE CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW B ENEFIT OF CARRY FORWARD OF DEFICIT LOSS OF RS.25,66,47,941/- IN VIEW OF THE DE CISION OF DELHI TRIBUNAL IN THE CASE OF PUSHPAWATI SINGHANIA RESEARCH INSTITUTE FOR LIVER, RENAL & DIGESTIVE DISEASES VS. DDIT (E) (2009) 29 SOT 316 ( DEL.). 6. THE LD. AR RELIED UPON THE ORDER OF THE CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE CIT(A) HELD AS UNDER : 4.5 THE AO HAS ADDED THE SUM OF RS. 19 CRORE IN TH E INCOME OF THE APPELLANT ON THE PREMISES THAT THE TRANSFER FROM TH E CORPUS FUND TO GENERAL RESERVE TANTAMOUNT INCOME OF THE ASSESSEE A ND THE SAME WAS NOT OFFERED FOR TAXATION. I HAVE GONE THROUGH AND FOUND NO SUBSTANCE ON THE ACTION OF THE AO BECAUSE THE CORPUS FUND WAS UTILIZ ED FOR PURCHASE OF LAND I.E. CAPITAL ASSETS. THE INCOME TAX ACT PERMIT S THAT THE CORPUS FUND MAY BE UTILIZED FOR ACQUIRING CAPITAL ASSETS PURSUI NG ACTIVITIES IN ACCORDANCE WITH THE OBJECTIVE OF THE CHARITABLE INS TITUTION. THE TRANSFER TO GENERAL FUND IS ONLY AN ACCOUNTING ENTRY. THERE IS NO TRANSFER OF FUND BY THIS ENTRY, IT IS WELL SETTLED THAT SUBSTANCE PREVA IL OVER FORM. MERELY MAKING AN ACCOUNTING ENTRY DOES NOT CHANGE THE SUBSTANCE O F THE TRANSACTION THAT THE CORPUS FUND HAS BEEN UTILIZED FOR PURCHASE OF C APITAL ASSET. 4.6 THE APPELLANT RELIES UPON THE CASE LAWS WHICH H AVE BEEN PERUSED AND FOUND THAT IF AN AMOUNT RECEIVED AS VOLUNTARY C ONTRIBUTION TOWARDS THE ADVANCEMENT OF CHARITABLE ACTIVITIES WITH THE SPECI FIC DIRECTION IT WILL FORM PART OF THE CORPUS FUND AND IT WILL NOT LOSE EXEMPT ION EVEN IF IT IS SPENT BY THE TRUST FOR MEETING ITS EXPENSES. THE ADDITION MA DE BY THE AO WITHOUT JUDICIOUS APPRECIATION OF THE FACTS AND THE POSITIO N OF LAW AND THEREFORE IT IS DELETED. THUS, THE CIT(A) HAS RIGHTLY OBSERVED THAT MERELY M AKING AN ACCOUNTING ENTRY DOES NOT CHANGE THE SUBSTANCE OF THE TRANSACT ION THAT THE CORPUS FUND HAS BEEN UTILIZED FOR THE PURCHASE OF CAPITAL ASSETS. THUS, THERE IS NO 4 NEED TO INTERFERE WITH THE FINDINGS OF THE CIT(A). THE APPEAL OF THE REVENUE IS DISMISSED. 8. IN RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 03/09/2019. SD/- SD- [PRASHANT MAHARISHI] [SUCHITRA K AMBLE] ACCOUNTANT MEMBER JUDICIAL MEMBER DELHI; DATED: 03/09/2019. SHEKHAR, SR. P.S COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI