Jeypore Evangelical Lutheran Church, Jeypore V. ITO, Exemption Ward, Berhampur

ITA 66/CTK/2021

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3404 (ITAT-CUTTACK)
• Duration Of Justice: 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 07-10-2021
• Assessment Year: 2014-2015
• Appeal Filed On: 08-09-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Principle of natural justice; Capital receipt
• Section: 12AA; 43; 13; 119; 22; 154; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BEFORE JEYPORE EVANGELICAL LUTHERAN CHURCH, GROUND FLOOR, POHL BOTHMANN BHAVAN, MISSION COMPOUND, JEYPORE PAN/GIR NO. (APPELLANT REVENUE BY THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE OR CIT(A), NATIONAL FACELESS APPEAL CENTRE, DELHI DATED 20.4.2021 ASSESSMENT YEAR INCOME TAX ACT, 1961. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN PASSING ORDER EXPARTE ON 20 ASSESSEE AND COUNSEL OF THE ASSESSEE WERE LOCK DOWN DUE TO THE SPREAD OF COVID 19. THE ORDER PASSED BY THE LD CIT(A) IS WITHOUT PROVIDING PROPER OPPORTUNITY OF BEING HEARD WHICH IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE UNJUSTIFIED, UNWARRANTED AND UNCALLED FOR. IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK SMC BENCH, CUTTACK BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL ITA NO.66/CTK/2021 ASSESSMENT YEAR : 2014-15 EVANGELICAL LUTHERAN CHURCH, GROUND FLOOR, POHL BOTHMANN BHAVAN, MISSION COMPOUND, JEYPORE VS. ITO, EXEMPTION WARD, BERHAMPUR NO. AAAAJ 2644 Q (APPELLANT ) .. ( RESPONDENT ASSESSEE BY : SHRI P.K.MISHRA REVENUE BY : SHRI SOVESH CHANDRA MOHANTY DATE OF HEARING : 07 /10 / 20 DATE OF PRONOUNCEMENT : 20 / O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE OR CIT(A), NATIONAL FACELESS APPEAL CENTRE, DELHI DATED 20.4.2021 ASSESSMENT YEAR 2014- 15, IN THE MATTER OF ORDER UNDER SECTION 154 OF THE INCOME TAX ACT, 1961. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN PASSING ORDER EXPARTE ON 20 .4.2021 I.E. WHEN THE AREA OF THE ASSESSEE AND COUNSEL OF THE ASSESSEE WERE LOCK DOWN DUE TO THE SPREAD OF COVID 19. THE ORDER PASSED BY THE LD CIT(A) IS WITHOUT PROVIDING PROPER OPPORTUNITY OF BEING HEARD WHICH IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE , HENCE, THE ORDER PASSED BY THE AO IS UNJUSTIFIED, UNWARRANTED AND UNCALLED FOR. P A G E 1 | 8 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH, CUTTACK JUDICIAL MEMBER ITO, EXEMPTION WARD, RESPONDENT ) P.K.MISHRA , AR MOHANTY , ADDL. CIT (DR) / 20 21 / 10/2021 THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE OR DER OF THE CIT(A), NATIONAL FACELESS APPEAL CENTRE, DELHI DATED 20.4.2021 FOR THE 15, IN THE MATTER OF ORDER UNDER SECTION 154 OF THE 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS .4.2021 I.E. WHEN THE AREA OF THE ASSESSEE AND COUNSEL OF THE ASSESSEE WERE LOCK DOWN DUE TO THE SPREAD OF COVID 19. THE ORDER PASSED BY THE LD CIT(A) IS WITHOUT PROVIDING PROPER OPPORTUNITY OF BEING HEARD WHICH IS AGAINST THE , HENCE, THE ORDER PASSED BY THE AO IS ITA NO.66/CTK/2021 ASSESSMENT YEAR : 2014-15 P A G E 2 | 8 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN PASSING ORDER WITHOUT CALLING FOR THE DOCUMENTS SUBMITTED WITH THE AO IN THE ORIGINAL PROCEEDING. THEREFORE, ORDER PASSED WITHOUT VERIFYING THE DOCUMENTS AVAILABLE WITH THE DEPARTMENT IS UNJUSTIFIED, UNWARRANTED AND UNCALLED FOR. 3. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN PASSING ORDER WITHOUT ADJUDICATING THE LEGAL GROUND RAISED BY ASSESSEE JUDICIOUSLY. THEREFORE, ORDER PASSED IN UNJUSTIFIED, UNWARRANTED AND UNCALLED FOR. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN SUSTAINING THE ORDER OF THE AO WHERE IN THE AO HAS ERRED IN CONSIDERING THE SPECIFIC FUND AS GENERAL FUND AND TREATING IT AS REVENUE RECEIPT WHILE PASSING THE ORDER. THE ADDITION MADE BY THE AO AND CONFIRMED BY LD CIT(A) IS UNJUSTIFIED, UNWARRANTED AND UNCALLED FOR. 3. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE IS A TRUST, FILED ITS RETURN OF INCOME ON 28.9.2014, CLAIMING EXEMPTION UNDER SECTION 11 OF THE ACT. THE RETURN WAS PROCESSED U/S.143(1) OF THE ACT BY THE CPC ON 14.3.2016 ON TOTAL INCOME OF RS.1,54,10,132/- RAISING DEMAND OF RS.66,50,150/-. THEREAFTER, A RECTIFICATION PETITION WAS FILED BY THE ASSESSEE U/S.154 OF THE ACT ALONGWITH AUDITED INCOME AND EXPENDITURE ACCOUNT, RECEIPT AND PAYMENT ACCOUNT, BALANCE SHEET, ON THE GROUND THAT THE CPC HAS NOT CONSIDERED THE EXPENSES INCURRED DURING THE YEAR FOR RUNNING OF THE TRUST. THE ASSESSING OFFICER, ON VERIFICATION OF BALANCE SHEET, NOTICED THAT THE ASSESSEE HAS SHOWN SPECIAL FUND OF RS.2,09,36,028/- FROM VARIOUS DONORS (THE DETAILS ARE REPRODUCED BY THE LD CIT(A) AT PAGE 4 6 OF THE IMPUGNED ORDER) WITHOUT ROUTING THROUGH THE INCOME AND EXPENDITURE ACCOUNT. THE AO ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE SPECIAL FUND RECEIVED THROUGH DONATION WOULD NOT TREATED AS REVENUE RECEIPT. THE SECRETARY OF THE ITA NO.66/CTK/2021 ASSESSMENT YEAR : 2014-15 P A G E 3 | 8 TRUST PRODUCED THE LIST OF DONORS AND AMOUNT OF DONATION. THE AO FOUND THAT AN AMOUNT OF RS.44,91,791/- HAS BEEN DONATED FOR THE SPECIFIC PURPOSE, THEREFORE, SAME WERE CONSIDERED TO BE GENUINE AND BALANCE AMOUNT OF RS.1,64,44,237/- WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE AND DETERMINED THE TOTAL INCOME AT RS.19,83,850/-. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE TRUST WENT IN APPEAL BEFORE THE LD CIT(A), WHO PASSED THE ORDER EXPARTE CONFIRMING THE ADDITION SO MADE BY THE AO. HENCE, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT FIRST OF ALL THE DISALLOWANCES OF SPECIAL FUND BY THE LD AO WHILE CONSIDERING THE APPLICATION UNDER SECTION 154 WAS BEYOND HIS SCOPE. IT WAS HIS SUBMISSION THAT THE APPELLANT HAD SUBMITTED THE RECTIFICATION PETITION CLAIMING FOR ALLOWING OF EXPENDITURE INCURRED BY IT WHILE CONSIDERING THE RECEIPTS. LD AO EXCEEDED HIS JURISDICTION IN PROCEEDING WITH EXAMINATION OF SPECIAL FUND. IN ADDITION TO THIS SUBMISSION, LD A.R. SUBMITTED THAT THE RECEIPTS OF SPECIAL FUND BEING CAPITAL IN NATURE, NEED REQUIRED TO BE ROUTED THROUGH INCOME AND EXPENDITURE ACCOUNT. FURTHER, HE ALSO SUBMITTED THAT THE SAID RECEIPTS ARE NOT COMING UNDER THE DEFINITION OF INCOME AS DEFINED UNDER THE ACT. HE SUBMITTED THAT SINCE TRUST IS REGISTERED UNDER SECTION 12AA OF THE ACT, SPECIAL FUND RECEIVED FOR SPECIFIC PURPOSE HAVE TO BE EXEMPTED. THEREFORE, BOTH THE AUTHORITIES BELOW ARE NOT JUSTIFIED IN TAXING THE SPECIAL FUND AS REVENUE RECEIPTS. HE SUBMITTED THAT THE ASSESSING OFFICER HAS CONSIDERED ITA NO.66/CTK/2021 ASSESSMENT YEAR : 2014-15 P A G E 4 | 8 THE DONATIONS PARTLY AS SPECIFIC DIRECTION AND PARTLY NOT RECEIVED FOR SPECIFIC PURPOSE, WHIMSICALLY WITHOUT GIVING ANY REASON THEREOF. LD A.R. PRODUCED THE FOLLOWING DECISIONS IN SUPPORT OF HIS CASE THAT THE DONATIONS RECEIVED BY THE TRUST ARE ALLOWED BEING CAPITAL RECEIPTS. I) DECISION OF HONBLE KARNATAKA HIGH COURT IN CIT VS BHARATIYA SAMSKRITI VIDYAPITH TRUST(2014) 43 TAXMANN.COM 295 (KARNATAKA). II) MUMBAI TRIBUNAL IN THE CASE OF CHANDRAPRABHU JAIN SWETAMBER MANDIR VS ACIT (2017) 82 TAXMANN.COM 245 (MUM) III) SURAT TRIBUNAL IN DCIT VS SHREE SURAT JILLA LEUVA PATIDAR SAMAJ TRUST (2019) 103 TAXMANN.COM 295 (SURAT) IV) VISAKHAPATNAM TRIBUNAL IN ITO (EXEMPTION) VS HOSANNA MINISTRIES (2020) 119 TAXMANN.COM 379 (VIS) 5. REPLYING TO ABOVE, LD SR DR DUTIFULLY SUPPORTED THE ORDER OF THE LD CIT(A) BUT COULD NOT POINT OUT ANY DISTINGUISHING FEATURE REGARDING THE SPECIFIC PURPOSE OF DONATION BY THE DONORS. 6. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORD OF THE CASE. FIRST OF ALL, I MAY POINT OUT THAT ALTHOUGH THE ASSESSEE IN ITS PETITION U/S.154 OF THE ACT, HAS AGITATED TO CONSIDER EXPENDITURE FOR RUNNING OF THE TRUST BUT THE ASSESSING OFFICER HAS LEFT OUT THE SAME AND PROCEEDED TO CONSIDER THE DONATIONS PARTLY FOR SPECIFIC PURPOSE AND OTHERS NOT FOR THE SPECIFIC PURPOSE. I FIND THAT BOTH THE AO AND LD CIT(A) HAS REPRODUCED THE DETAILS OF DONATIONS RECEIVED BY THE ASSESSEE TRUST, WHICH ARE AS UNDER: ITA NO.66/CTK/2021 ASSESSMENT YEAR : 2014-15 P A G E 5 | 8 SI NO NAME OF DONOR AMOUNT OF GRANT/ DONATION PURPOSE OF DONATION 01 ZMOE, GERMANY 16,88,787/ - RENOVATION/ CONSTRUCTION OF SCS BAODING SCHOOL AND WIDOW ASHARAM, KOTAPADA 02 COMPASSION EAST INDIA 7,56,617/ - PROJECT SUPPORT FOR MONTH OF MARCH,2014 03 04 05 ZMOE, GERMANY 22,50,000/ - CAMPUS RENOVATION/ CONSTRUCTION OF ACS HOSTEL ZMOE, GERMANY 10,00,000/ - REGULAR MAINTENANCE, ELECTRICITY, WATER AND SANITATION CHURCH'S AUXILIARY FOR SOCIAL ACTION 55,380/ - PROJECT SOCIAL ACTION FOR LIFE TRANSFORMATION 06 COMPASSION EAST INDIA 7,66,016/ - PROJECT SUPPORT FOR MONTH OF JANUARY, 2014 07 COMPASSION EAST INDIA 4,54,270/ - PROJECT SUPPORT FOR MONTH OF SEPTEMBER,2013 08 CHURCH'S AUXILIARY FOR SOCIAL ACTION 40,106/ - PROJECT SOCIAL ACTION FOR LIFE TRANSFORMATION 09 ZMOE, GERMANY 41,698/ - JELC GOLDEN GATE, P. SUKU 10 CHURCH'S AUXILIARY FOR SOCIAL ACTION 53,858/ - PROJECT SOCIAL ACTION FOR LIFE ' TRANSFORMATION 11 12 COMPASSION EAST INDIA 3,38,924/ - PROJECT SUPPORT FOR MONTH OF JULY,2013 COMPASSION EAST INDIA 7,05,820/ - PROJECT SUPPORT FOR MONTH OF JUNE,2013 13 ZMOE, GERMANY 15,25,332/ - ACS DONATION RETREAT CENTRE 14 CHURCH'S AUXILIARY FOR SOCIAL ACTION 40,350/ - PROJECT SOCIAL ACTION FOR LIFE TRANSFORMATION ITA NO.66/CTK/2021 ASSESSMENT YEAR : 2014-15 P A G E 6 | 8 15 ZMOE, GERMANY 5,53,004/ - ACS SCHOOL/ BOARDING WATER HEATER, RENOVATION/ CONSTRUCTION ETC. 16 ZMOE, GERMANY 5,98,541/ - MATCHING GRANT PENSION 17 ZMOE, GERMANY 8,25,000/ - EDUCATION PROGRAM 18 COMPASSION EAST INDIA 3,13,654/ - PROJECT SUPPORT FOR THE MONTH OF DECEMBER, 2013 19 COMPASSION EAST INDIA 12,69,843/ - PROJECT SUPPORT FOR THE MONTH OF DECEMBER, 2013 20 ZMOE GERMANY 2,32,129/ - AFFORESTATION PROGRAM 21 ZMOE GERMANY 2,53,773/ - AFFORESTATION PROGRAM 22 ZMOE GERMANY 58,208/ WIDOW ASHRAM 23 COMPASSION EAST INDIA 6,37,707/ - PROJECT SUPPORT FOR MONTH OF APRIL,2013 24 COMPASSION EAST INDIA 6,67,589/ - PROJECT SUPPORT FOR MONTH OF AUGUST,2013 25 COMPASSION EAST INDIA 6,82,477/ - PROJECT SUPPORT FOR MONTH OF OCTOBER,2013 26 COMPASSION EAST INDIA 3,57,130/ - PROJECT SUPPORT FOR SEPTEMBER,2013 27 COMPASSION EAST INDIA 7,59,292/ - PROJECT SUPPORT FOR MONTH OF NOVEMBER,2013 28 COMPASSION EAST INDIA 8,19,094/ - PROJECT SUPPORT FOR MONTH OF FEBRUARY,2014 29 L.W.F GENEVA 5,06,060/ - NEW LIFE PROJECT 30 L.W.F GENEVA 3,35,064/ - AGRICULTURE DEVELOPMENT PROJECT 31 L.W.F GENEVA 1,63,190/ - NEW LIFE PROJECT AND AGRICULTURE DEVELOPMENT PROJECT 32 L.W.F GENEVA 6,66,465/ - NEW LIFE PROJECT ITA NO.66/CTK/2021 ASSESSMENT YEAR : 2014-15 P A G E 7 | 8 33 L.W.F. GENEVA 2,78,407/ - AGRICULTURE DEVELOPMENT 34. COMPASSION EAST INDIA 3,54,183/ - PROJECT SUPPORT FOR MONTH OF MAY, 2013 35. COMPASSION EAST INDIA 3,65,661/ PROJECT SUPPORT FOR MONTH OF MAY, 2013 36. INTEREST FROM BANK 3,34,093/ - MEDICAL AID 37 INTEREST FROM BANK 1,56,484/ - BD COLLEGE HOSTEL CONSTRUCTION 38. INTEREST FROM BANK 21,822/ - CDC 7. FROM THE NARRATION GIVEN IN THE LIST OF DONATIONS, IT IS OBSERVED THAT THE AMOUNT OF DONATION HAS BEEN GIVEN FOR THE SPECIFIC PURPOSE. THE ASSESSING OFFICER HAS BIFURCATED THREE DONATIONS AS SPECIFIC PURPOSE AND LEFT OUT OTHER DONATIONS NOT BEING SPECIFIC PURPOSE WITHOUT GIVING ANY REASON. THE DONATIONS ARE BEING SPECIFIC PURPOSE AND BEING CAPITAL RECEIPTS ARE NOT COMING WITHIN THE AMBIT OF DEFINITION OF INCOME AS DEFINED UNDER SECTION 2(24)(II) OF THE ACT. IT BEING A CAPITAL RECEIPTS, THERE IS NO NECESSITY OF ROUTING THROUGH INCOME AND EXPENDITURE ACCOUNT, AS CLAIMED BY THE ASSESSING OFFICER. I ALSO FIND THAT THE SOME DONATIONS HAVE BEEN RECEIVED FOR THE SPECIAL PROJECT UNDERTAKEN BY THE TRUST AND, THEREFORE, SAME CANNOT BE TREATED AS REVENUE RECEIPT. IT IS NOT THE CASE THAT THE ASSESSEE TRUST HAS NOT DISCLOSED THE DONATION AND HAVE NOT ACCOUNTED FOR. THE AMOUNT RECEIVED CLEARLY DEMONSTRATES FOR THE PURPOSE OF VARIOUS PROJECT DEVELOPMENT AND BUILDING CONSTRUCTION. IN VIEW OF ABOVE, I AM OF THE CONSIDERED VIEW THAT THE AMOUNT RECEIVED BY THE ASSESSEE TRUST FOR SPECIFIC DIRECTION TO USE THE SAME FOR DIFFERENT PROJECT UNDERTAKEN BY THE ITA NO.66/CTK/2021 ASSESSMENT YEAR : 2014-15 P A G E 8 | 8 ASSESSEE AND IS ENTITLED FOR DEDUCTION U/S.11 OF THE ACT. I ALSO FIND THAT THE DECISIONS RELIED BY LD A.R. OF THE ASSESSEE, AS REPRODUCED ABOVE, SUPPORT THE CASE OF THE ASSESSEE, WHEREIN, THE CORPUS FUNDS RECEIVED BY THE TRUST ARE CONSIDERED AS CAPITAL RECEIPTS, NOT INCLUDIBLE IN INCOME OF THE TRUST. THEREFORE, I AM OF THE CONSIDERED OPINION THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE VARIOUS DECISIONS (SUPRA). HENCE, I ALLOW THE APPEAL OF THE ASSESSEE AND DIRECT THE AO TO DELETE THE DISALLOWANCE OF RS.1,64,44,237/-. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 20 /10/2021. SD/- (CHANDRA MOHAN GARG) JUDICIAL MEMBER CUTTACK; DATED 20 /10/2021 B.K.PARIDA, SPS (OS) COPY OF THE ORDER FORWARDED TO : BY ORDER SR.PVT.SECRETARY ITAT, CUTTACK 1. THE APPELLANT : JEYPORE EVANGELICAL LUTHERAN CHURCH, GROUND FLOOR, POHL BOTHMANN BHAVAN, MISSION COMPOUND, JEYPORE 2. THE RESPONDENT. ITO, EXEMPTION WARD, BERHAMPUR 3. THE CIT(A), NATIONAL FACELESS APPEAL CENTRE (NFAC), DELHI 4. PR.CIT - , BHUBANESWAR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//