DDIT(Exemp)-II, Hyderabad V. Society for Integrated Development, Hyderabad

ITA 674/HYD/2011

• Counselvise Citation: 67422514 RSA 2011
• Duration Of Justice: 2 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-07-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 18-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S J T KOTTARAM
• Assessee Lawyers: CH G KRISHNAMUR THY
• Keywords: Charitable institution
• Section: 12A; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND S HRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.674/HYD/2011 ASSESSMENT YEAR 2007-08. DDIT(EXEMP.)-II, -V- SOCIETY FO R INTEGRATED DEVELOPMENT HYDERABAD. IN URBAN & RURAL ARE AS (SIDDUR) HYDERABAD. PAN:AAATS7428Q (APPELLANT) (RESPONDENT) APPELLANT BY SHRI S.J.T.KOTTARA M RESPONDENT BY SHRI CH.G.KRISHNAMUR THY DATE OF HEARING 25-11-2013 DATE OF PRONOUNCEMENT 03 -O1-2014 ORDER PER SAKTIJIT DEY, J.M: THIS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST T HE ORDER DATED 31-1-2011 PASSED IN APPEAL NO.569/DDIT(E)-II/ CIT(A)- IV/2009-10 PERTAINING TO THE ASSESSMENT YEAR 2007-0 8. 2. THE DEPARTMENT HAS RAISED FOLLOWING GROUNDS BEF ORE US:- 1. THE CIT (A) OUGHT TO HAVE SUSTAINED THE DISALLOW ANCE OF RS.2,90,154/- TOWARDS INTERNATIONAL CONFERENCE AND TRAINING. 2. THE CIT (A) OUGHT TO HAVE SUSTAINED THE DISALLOW ANCE OF RS.10,33,000/-TOWARDS GRANTS FROM HLF PPT. 2 ITA NO.674 OF 2011 SOCIETY FOR INTEGRATED DEVELOPMENT, HYD. 3. THE CIT (A) OUGHT TO HAVE CONSIDERED THAT THE SO CIETY IS NOT REGISTERED U/S 43(1) OF THE AP CHARITABLE AND HINDU RELIGIOUS INSTITUTIONS AND ENDOWMENTS ACT, 1987. 4. THE CIT (A) OUGHT TO HAVE SUSTAINED AMOUNT SPENT FOR REPAIRS TO THE HOUSES (TSUNAMI ) RS.50,65,125. 5. THE CIT (A) OUGHT TO HAVE SUSTAINED AMOUNT SPENT FOR SUPPORT TO WOMEN OF RS.12,69,629/-. 3. BRIEFLY THE FACTS ARE, THE ASSESSEE IS A CHARITA BLE TRUST REGISTERED U/S 12A OF THE ACT. IT IS ENGAGED IN AC TIVITIES OF HELPING THE DALITS, WOMEN EMPOWERMENT, UPLIFTING THE STREET CHILDREN ETC. IN THE IMPUGNED ASSESSMENT YEAR, THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING NIL INCOME AFTER CLAIMING EXE MPTION U/S 11 OF THE ACT. IN COURSE OF SCRUTINY ASSESSMENT PROCEEDI NGS, THE ASSESSING OFFICER AFTER EXAMINING THE INFORMATION S UBMITTED BY THE ASSESSEE FOUND THAT THE ASSESSEE HAS INCURRED EXP ENDITURE OF AN AMOUNT OF RS.2,90,154/- FOR INTERNATIONAL CONFEREN CE OR TRAINING. HE CONSIDERED THIS AMOUNT SPENT WAS NOT FOR THE PUR POSE OF CHARITABLE ACTIVITIES U/S 11(1)(A) OF THE ACT AS IT IS NOT SUPPORTED BY SPECIAL OR GENERAL ORDER OF CBDT. HE THEREFORE HELD THAT THE SAID AMOUNT CANNOT BE TREATED AS EXEMPT U/S 11 OF THE AC T. 4. THE ASSESSING OFFICER NOTICED THAT THERE IS RE FUND OF LOAN TO THE ASSESSEE NAMELY SIDDUR OF RS.10,49,458/-. WHEN ASKED TO EXPLAIN BY THE ASSESSING OFFICER, THE ASSESSEE SUBM ITTED THAT THE ASSESSEE IS ENGAGED IN IMPLEMENTING PROJECT RELATIN G TO PREVENTION AND CONTROL OF HIV/AIDS AMONGST TRUCKERS THROUGH TH E GOVT. OF ANDHRA PRADESH. IT WAS SUBMITTED THAT SOMETIMES OW ING TO DELAY IN RECEIPT OF AMOUNT FROM THE GOVERNMENT THE ASSESSEE SOCIETY 3 ITA NO.674 OF 2011 SOCIETY FOR INTEGRATED DEVELOPMENT, HYD. INCURRED EXPENDITURE OUT OF THE AMOUNTS RECEIVED FR OM OTHER AGENCIES AND THE SAME WAS REFUNDED TO SIDDUR, THE M OMENT MONIES WERE RECEIVED FROM THE GOVERNMENT. IN SUPPO RT OF SUCH CONTENTION, THE ASSESSEE ALSO SUBMITTED TWO LETTERS AND COPIES OF DD AND CHEQUES BETWEEN SIDDUR AND PSU (PROJECT SUPP ORT UNIT) WHOSE HEAD OFFICE IS HINDUSTAN LATEX FAMILY PLANNIN G PROMOTION TRUST (HLFPPT), 301-302, HEMKUNT CHAMBER, 89, NEHRU PLACE, NEW DELHI. THE ASSESSING OFFICER HOWEVER DID NOT ACCEP T THE CONTENTION OF THE ASSESSEE AND TREATED IT AS INCOME OF THE ASS ESSEE. FURTHER, ON GOING THROUGH THE MOU WITH MISEREOR (TSUNAMI PR OJECTS) FELT THAT THE MAIN AIM OF THE PROJECT WAS RECONSTRUCTIO N AND REHABILITATION IN THREE DISTRICTS OF ANDHRA PRADESH I.E., NELLORE, KRISHNA AND EAST GODAVARI TOWARDS TSUNAMI AFFECTED PEOPLE. HE FURTHER NOTED THAT UNDER THE MOU, THE MEASURES TO B E SUPPORTED ARE MENTIONED AS UNDER:- I) REPAIRING OF 800 HOUSES OF DALIT AND FISHER FAMILI ES BY ACTIVE INVOLVEMENT OF THE TARGET GROUP. II) SUPPORT OF LIVELIHOOD (ACCOMMODATION, FOOD AND MED ICAL CARE) AND OF SCHOOL ATTENDANCE (MATERIALS, SCHOOL UNIFORMS, TRANSPORT TO SCHOOL ETC.,) FOR 200 CHILDR EN UNDER THE AGE OF 14, WHO BECAME HALF ORPHAN AND FOR THEIR FAMILIES LOST BY THEIR LIVELIHOOD CAUSED BY THE TAS UNAMI. III) FINANCIAL SUPPORT FOR LIVELIHOOD, BASIC TRAINING N INCOME GENERATING MEASURES AND PSYCHOSOCIAL GUIDANCE OF 30 0 WOMEN (80% ARE DALITS) WHO MOSTLY ARE SINGLE AND/OR OLDER PERSONS. IV) PURCHASE OF AN AMBULANCE (FOR EAST-GODAVARI DISTRIC T) AND OF MOTORBOAT (FOR THE INSULAR REGION OF KRISHNA 4 ITA NO.674 OF 2011 SOCIETY FOR INTEGRATED DEVELOPMENT, HYD. DISTRICT) FOR HEALTH CARE WHICH WAS VERY INSUFFICIE NT IN THE ISOLATED TSUNAMI AFFECTED REGIONS EVEN BEFORE THE CATASTROPHE. 5. THE ASSESSING OFFICER FURTHER NOTED THAT ANOTHER IMPORTANT CONDITION LAID DOWN IN THE MOU IS AS UNDER:- FOR THE NON-RECURRENT EXPENDITURES AND THE MATERIAL S FOR THE HOUSE REPAIRS WE WOULD LIKE TO ASK YOU FOR A SOLICI TATION OF AT LEAST 3 QUOTATIONS AND TO INFORM AS ABOUT IT BEFORE CONCLUDING A PURCHASE CONTRACT WITH A SUPPLIER THE ASSESSING OFFICER ON FURTHER VERIFICATION OF FA CTS AND DETAILS SUBMITTED BY THE ASSESSEE NOTICED THAT AS PER THE I NFORMATION SUBMITTED BY THE ASSESSEE CONTAINED IN THE PROJECT REPORT DATED 31-12-2006, THE ASSESSEE HAD MENTIONED THAT REPAIR OF 109 HOUSES WAS COMPLETED AND 352 WOMEN WERE GIVEN LIVELIHOOD S UPPORT IN NELLORE DISTRICT, 113 WOMEN WERE GIVEN LIVELIHOOD S UPPORT IN KRISHNA DISTRICT, REPAIR OF 102 HOUSES WAS COMPLETED AND 50 WOMEN WERE GIVEN LIVELIHOOD SUPPORT IN EAST GODAVARI DISTRICT. THE ASSESSING OFFICER FURTHER NOTED THAT THE EXPENDITURE INCURRED BY THE ASSESSEE COULD BE BROADLY CATEGORISED IN THE FOLLOWING THREE TYPES:- I) UNIFORM DISTRIBUTION OF CASH II) COST OF MATERIALS III) INDIVIDUAL HOUSING BENEFICIARIES FOR CARRYING AMOUN TS. 6. THE ASSESSING OFFICER ON GOING THROUGH THE FACTS AVAILABLE BEFORE HIM OPINED THAT THE ASSESSEE INSTEAD OF IMP LEMENTING THE SCHEME OF HOUSING FOR VICTIMS OF TSUNAMI 2004 HAD I MPLEMENTED THE SCHEME OF INDIRAMMA. HE THEREFORE WAS OF THE V IEW THE EXPENDITURE INCURRED BY THE ASSESSEE CANNOT COME UN DER THE TERMS 5 ITA NO.674 OF 2011 SOCIETY FOR INTEGRATED DEVELOPMENT, HYD. AND CONDITIONS LAID DOWN IN MOU BETWEEN THE ASSESSE E AND MISEREOR. THE ASSESSING OFFICER FURTHER OBSERVED THAT THOUGH THE ASSESSEE FURNISHED E-MAIL/CORRESPONDENCE IN SUPPORT OF ITS CLAIM THAT THE DEVIATIONS IF ANY, FOR CARRYING OUT THE P ROGRAMME WAS APPROVED BY THE DONOR BUT THE PERUSAL OF THE CORRES PONDENCE INDICATES THAT THE ASSESSEE FAILED TO FOLLOW TWO IM PORTANT GUIDELINES LAID DOWN BY ITSELF WHICH THE WEALTH RANKING WOULD BE THE INDICATOR IN SELECTING THE POOREST OF THE POOR AND THE DISTRI BUTION OF MATERIALS TO THE BENEFICIARIES IS THE COMMITMENT OF THE ASSES SEE AND NOT MERE DISTRIBUTION OF CASH. THE ASSESSING OFFICER THEREF ORE FELT THAT THE ASSESSEE HAVING NOT UTILISED THE TIED UP OF GRANT FOR THE PURPOSE FOR WHICH IT WAS GIVEN, IS NOT ENTITLED FOR EXEMPTION . THE ASSESSING OFFICER REFERRED TO AN ORDER PASSED BY THE ITAT DA TED 27-12-2008 FOR ASSESSMENT YEAR 1997-98 WHEREIN THE TRIBUNAL HE LD THAT THE CONTRIBUTIONS RECEIVED FOR SPECIFIC PURPOSES DO N OT FORM CORPUS OF THE ASSESSEE AND ITS INCOME AND THE SAME IS IN THE NATURE OF TIED UP GRANTS. SINCE ACCORDING TO THE ASSESSING OFFICER THE ASSESSEE HAS UTILISED THE TIED UP GRANT ACCORDING TO ITS OWN DIS CRETION, THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION ON THE AMOUN T OF RS.50,65,125/- TOWARDS REPAIRS TO HOUSES DESTROYED BY TSUNAMI AND RS.12,69,821 TOWARDS SUPPORT TO WOMEN. THE ASS ESSING OFFICER FURTHER OPINED THAT THE ASSESSEE HAVING NOT BEEN R EGISTERED U/S 43(1) OF AP CHARITABLE AND HINDU ENDOWMENT ACT, 198 7 IT IS NOT ENTITLED FOR EXEMPTION U/S 11(1) OF THE ACT. ACCOR DINGLY THE ASSESSING OFFICER COMPLETED THE ASSESSMENT BY DETER MINING THE TOTAL INCOME AT RS.76,58,100/-BEING AGGRIEVED OF SU CH ADDITION MADE, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE C IT (A). 6 ITA NO.674 OF 2011 SOCIETY FOR INTEGRATED DEVELOPMENT, HYD. 7. THE CIT (A) AFTER CONSIDERING THE SUBMISSIONS O F THE ASSESSEE IN THE CONTEXT OF THE MATERIALS PLACED BEFORE HIM WAS OF THE VIEW THAT NONE OF THE GROUNDS ON WHICH THE ASSESSING OFF ICER DENIED EXEMPTION U/S 11 OF THE ACT ARE GOOD GROUNDS. SO F AR AS THE ADDITION OF RS.50,65,125/- ON ACCOUNT OF AMOUNTS SP ENT FOR REPAIRS TO TSUNAMI AFFECTED HOUSE AND SUPPORT TO WOMEN AT R S.12,69,820/- ARE CONCERNED, THE CIT (A) AFTER GOING THROUGH THE TERMS OF THE MOU BETWEEN THE ASSESSEE AND MISEREOR (TSUNAMI PROJ ECTS), HELD THAT AS PER THE TERMS OF THE SAID MOU, THE FUNDS AR E TO BE UTILISED FOR SPECIFIC PURPOSES AND A CONTROL MECHANISM FOR ACTUAL UTILISATION OF FUND WAS ALSO PROVIDE UNDER MOU. THE CIT (A) NO TED THAT THE ASSESSING OFFICER IS NOT DISPUTING THE FACT THAT TH E SAID FUNDS ARE RECEIVED IN TERMS OF SPECIFIC MOU OF THE APPELLANT WITH DONOR AGENCIES. THE CIT (A) THEREFORE RELIED UPON A DECI SION OF INCOME- TAX APPELLATE TRIBUNAL IN THE CASE OF NIRMAL AGRICU LTURAL SOCIETY (71 ITD 152) WHEREIN IT WAS HELD THAT THE GRANTS WHICH ARE FOR SPECIFIC PURPOSE DO NOT BELONG TO THE SOCIETY AND HENCE DO N OT FORM CORPUS OF THE ASSESSEE OR ITS INCOME AND THAT THOSE ARE NO T EVEN DONATIONS TO THE ASSESSEE, SO AS TO BRING THEM UNDER THE PURV IEW OF SEC. 12 OF THE ACT. THE TRIBUNAL MAKING A DISTINCTION BETW EEN THE VOLUNTARY CONTRIBUTIONS COVERED U/S 12 OF THE ACT HELD THAT VOLUNTARY CONTRIBUTIONS ARE THOSE WHICH ARE FREELY AVAILABLE TO THE ASSESSEE, WITHOUT ANY STIPULATION, AND WHICH THE ASSESSEE CAN UTILISE TOWARDS U ITS OBJECTIVES ACCORDING TO ITS DISCRETION AND JU DGMENT. 8. THE CIT (A) THEREFORE TAKING A NOTE OF THE AFORE SAID FINDING OF THE INCOME-TAX APPELLATE TRIBUNAL HELD THAT SINCE T HE DONORS HAD PROVIDE THE FUNDS TO THE ASSESSEE WITH SPECIFIC PUR POSES ONLY AND THE ASSESSEE WAS NOT SUPPOSED TO UTILISE THOSE AT I TS OWN DISCRETION 7 ITA NO.674 OF 2011 SOCIETY FOR INTEGRATED DEVELOPMENT, HYD. AND JUDGMENT, IT CANNOT BE DISPUTED THAT THE FUNDS RECEIVED BY THE ASSESSEE DURING THE YEAR WERE INDEED IN THE NATURE OF TIED UP GRANTS. THE CIT (A) AFTER CONSIDERING THE DETAILS O F SUPPLY OF MATERIALS AND CASH DISTRIBUTION FOR HOUSES AND PRO VIDING LIVELIHOOD SUPPORT IN FOUR DISTRICTS OF ANDHRA PRADESH, WAS OF THE VIEW THAT ALL THE DEVIATIONS AND DIGRESSIONS IN THE PROGRAMME HAD BEEN DULY APPROVED BY THE DONORS. THE CIT (A) FURTHER NEGATE D THE FINDING OF THE ASSESSING OFFICER TO THE EFFECT THAT THE ASSESS EE HAS NOT UTILISED THE FUND FOR THE PUBLIC I.E., HOUSING FOR VICTIMS O F TSUNAMI 2004 AND HENCE CANNOT BE HELD TO HAVE DONE CHARITABLE ACTIVI TY, BY OBSERVING THAT THE INDIRAMMA HOUSING PROGRAMME HAS INDEED BEE N INTRODUCED BY THE GOVERNMENT TO ASSIST THE POOREST OF THE POOR AND CAN EVEN ENCOMPASS THE VICTIMS OF THE TSUNAMI. THAT BESIDES SUCH COLLABORATIVE EFFORTS HAD INDEED BEEN APPROVED BY T HE DONOR AGENCIES. THE CIT (A) FURTHER OBSERVED THAT THE A SSESSING OFFICERS OBJECTION WITH REGARD TO THE FACT THAT THE ASSESSEE DID NOT SOLICIT THE REQUISITE THREE QUOTATIONS FOR PURCHASES, IS ALSO NOT A VERY VITAL POINT TO DENY EXEMPTION TO THE ASSESSEE SINCE ALL THE PURCHASES WERE MADE WITH DUE APPROVAL OF DONORS. T HE CIT (A) FINALLY HELD THAT THE ASSESSING OFFICER WAS NOT COR RECT IN MAKING ADDITION OF THE AMOUNTS SPENT BY THE ASSESSEE TOWAR DS REPAIR OF HOUSE AND SUPPORT TO WOMEN. SO FAR AS THE EXPENDIT URE INCURRED TOWARDS INTERNATIONAL SEMINARS/CONFERENCES AMOUNTIN G TO RS.2,90,154/- IS CONCERNED, THE CIT (A) ALSO DID NO T AGREE WITH THE ASSESSING OFFICER BY OBSERVING THAT THE ASSESSEE RE CEIVES GRANTS FROM VARIOUS DONORS FOR VARIOUS CHARITABLE PURPOSES AND IT IS ONLY LOGICAL THAT IT HAS TO STAY ABREAST WITH THE DEVEL OPMENTS IN THE FIELD GLOBALLY. HE FURTHER OBSERVED THAT IN EVERY PROJECT CERTAIN AMOUNT IS PROVIDED TOWARDS ATTENDING CONFERENCES. THE CIT (A ) FELT THAT THE 8 ITA NO.674 OF 2011 SOCIETY FOR INTEGRATED DEVELOPMENT, HYD. ASSESSING OFFICER HAS NOT BEEN ABLE TO PROVE THAT A NY PERSONAL BENEFIT ACCRUED TO THE SECRETARY BY ATTENDING SUCH SEMINAR OR THAT THE EXPENDITURE INCURRED FOR THIS PURPOSE WAS NOT F OR ACHIEVEMENT OF THE OBJECTIVES OF THE ASSESSEE SOCIETY. 9. THE CIT (A) THEREFORE HELD THAT THERE IS NO JUS TIFICATION TO DISALLOW THE EXPENDITURE INCURRED TOWARDS INTERNATI ONAL SEMINARS AND CONFERENCES AND TREATED IT AS INCOME OF THE ASS ESSEE. AS REGARDS THE REFUND OF LOAN OF RS.10.33.000/- IS CON CERNED, THE CIT (A) ALSO ACCEPTED THE ASSESSEES CONTENTION BY HOLD ING THAT THE AMOUNT RECEIVED SUBSEQUENT TO THE INCURRING OF EXPE NDITURE FOR THE PROJECT RELATING TO PREVENTION AND CONTROL OF HIV/A IDS UNDERTAKEN BY THE ASSESSEE IN COLLABORATION WITH THE APSACS IS I N THE NATURE OF REFUND OF THE FUNDS TEMPORARILY PROVIDED BY THE ASS ESSEE ON BEHALF OF APSACS FOR THE SAID ACTIVITIES. HENCE, THE AMOUN T OF RS.10,33,000/- RECEIVED FROM HLFPPT COULD NOT HAVE BEEN CONSIDERED AS ADDITIONAL GRANTS RECEIVED BY THE ASS ESSEE. 10. SO FAR AS THE OBSERVATION MADE BY THE ASSESSING OFFICER TO THE EFFECT THAT SINCE THE ASSESSEE IS NOT REGISTERED UN DER AP CHARITABLE AND HINDU RELIGIOUS INSTITUTIONS AND ENDOWMENTS ACT , 1987 AND THEREFORE IS NOT ELIGIBLE FOR EXEMPTION U/S 11 OF T HE ACT IS CONCERNED, THE CIT (A) RELYING UPON THE DECISION OF INCOME-TAX APPELLATE TRIBUNAL, HYDERABAD BENCH IN CASE OF M/S KAMALAKAR MEMORIAL CHARITABLE TRUST VS. DIT (EXEMPTIONS) HYDE RABAD IN ITA NO.1145/HYD/09 HELD THAT MERELY BECAUSE THE ASSESS EE-TRUST IS NOT REGISTERED UNDER THE PROVISIONS OF THE SAID ACT, WO ULD NOT RENDER THE ASSESSEE A NON CHARITABLE ONE. ON THE AFORESAID B ASIS, THE CIT (A) ALLOWED THE APPEAL OF THE ASSESSEE. 9 ITA NO.674 OF 2011 SOCIETY FOR INTEGRATED DEVELOPMENT, HYD. 11. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE MATERIAL ON RECORD AS WELL AS THE ORDER OF THE AUTHORITIES BELOW. IN GROUND NO.1, THE DEPARTMENT HAS CHALLENGED THE DELETION OF RS.2,90,154/- BY THE CIT (A). AS ALREADY STATED, THE AFORESAID AMOUNT IS EXPENDITURE INCURRED TOWARD S ATTENDANCE OF INTERNATIONAL CONFERENCES AND TRAINING. AS CAN BE SEEN FROM PARA- 17 OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER H AS DISALLOWED IT SIMPLY OBSERVING THAT IT IS NOT A CHARITABLE ACTIVI TY U/S 11(1)(C) OF THE ACT AS IT IS NOT SUPPORTED BY SPECIAL OR GENERA L ORDER OF CBDT. IN OUR VIEW, THE DISALLOWANCE OF EXPENDITURE ON SUC H PLEA IS TOTALLY CONTRARY TO THE STATUTORY PROVISIONS. IT IS NEITHE R NECESSARY NOR REQUIRED AS PER THE STATUTE THAT FOR AVAILING EXEMP TION U/S 11 OF THE ACT A PARTICULAR CHARITABLE ACTIVITY HAS TO BE NO TIFIED IN A CIRCULAR ISSUED BY THE CBDT. AS HAS BEEN RIGHTLY HELD BY TH E CIT (A), THE EXPENDITURE WAS INCURRED ON BEHALF OF THE SOCIETY FOR ATTENDING INTERNATIONAL CONFERENCES AND SEMINARS AND FOR THE PURPOSE OF ADVANCING THE OBJECTS OF THE SOCIETY. IT IS NOT FOR THE PERSONAL BENEFIT OF THE SECRETARY, THEREFORE IT CANNOT BE SA ID THAT THE EXPENDITURE INCURRED IN THAT BEHALF IS NOT FOR CHAR ITABLE PURPOSE. ON THE AFORESAID VIEW OF THE MATTER, WE DO NOT FIND AN Y INFIRMITY IN THE ORDER OF THE CIT (A) ON THIS ISSUE. ACCORDINGLY, T HE GROUND RAISED BY THE DEPARTMENT IS DISMISSED. 12. THE NEXT ISSUE AS RAISED IN GROUND NO.2 IS WITH REGARD TO THE CIT (A) DELETING THE ADDITION OF RS.10,33,000/- BEI NG REFUND OF LOAN. IT IS THE CONTENTION OF THE LEARNED DEPARTMENTAL RE PRESENTATIVE BEFORE US THAT IN THE CERTIFICATE ISSUED BY HINDUST AN LATEX FAMILY PLANNING PROMOTION TRUST (HLFPPT) THE AMOUNT HAS BE EN CLEARLY 10 ITA NO.674 OF 2011 SOCIETY FOR INTEGRATED DEVELOPMENT, HYD. MENTIONED TO BE A GRANT AND HENCE THE ASSESSING OFF ICER HAS CORRECTLY TREATED IT AS DONATION RECEIVED AND NOT A REFUND OF LOAN. 13. THE LEARNED AR, ON THE OTHER HAND, CONTENDED B EFORE US THAT ONE OF THE OBJECTS OF THE ASSESSEE TRUST IS TO EDU CATE THE ILL EFFECT OF HAVING RELATIONSHIPS WITH SEX WORKERS BY THE RIV ERS AND CLEANERS OF THE TRUCKS TRAVELLING THROUGH THE STATE. IT IS FURTHER CONTENDED THAT IN THE CITY OF HYDERABAD, THERE IS HEAVY CONCE NTRATION OF SUCH GROUPS IN AUTONAGAR AND NEAR SANATNAGAR RAILWAYS GO ODS SHED AREA AND THESE ARE TECHNICALLY CALLED INTERVENTION ARE AS IN THIS CONTEXT ALSO, ASSISTANCE IS TAKEN FROM THE LOCAL TRADESMEN, TRANSPORT OFFICIALS, POLICE AND PEERS AND PEER EDUCATORS TO I DENTIFY THE POTENTIAL ABUSE OF THE FACILITY. THE ORDINARY ROLE OF THE PEERS AND PEER EDUCATORS IS TO HIGHLIGHT AND ENLIGHTEN THE GU LLIBLE TRUCKERS ABOUT THE ILL EFFECTS AND ALSO TO PROVIDE EDUCATION FOR PREVENTION OF AIDS/HIV. IT WAS SUBMITTED THAT THE NORMAL EXPENDI TURE INCURRED INVOLVES PRINTING OF PAMPHLETS, BROUCHERS, SUPPLY O F GOOD QUALITY CONDOMS, ETC AND IT ALSO INCLUDES THE PAYMENT OF RE MUNERATION TO THE PEERS AND THE PEER EDUCATORS. IT WAS SUBMITTED THAT IN THE ORDINARY COURSE GENERALLY SUMS ARE EXPENDED OUT OF THE MONIES RECEIVED FROM APSACS. HOWEVER, WHEN THERE IS DELAY IN RECEIPT OF MONIES, THEN THE FUNDS FROM OTHER AGENCIES ARE UTIL ISED FOR THE SAID PURPOSE AND ON RECEIPT OF THE SAME FROM THE GOVERNM ENT, THE AMOUNT IS REFUNDED TO THE AGENCY FROM WHICH THE MON EY HAS BEEN BORROWED. IT WAS SUBMITTED THAT IT IS PURELY AN IN TERNAL MATTER OF THE ASSESSEE AND AT THE END OF THE YEAR, THE ACCOUN T IS SQUARED UP AND NO AMOUNT IS CARRIED FORWARD TO THE SUBSEQUENT FINANCIAL YEAR. IT WAS SUBMITTED THAT NATIONAL AIDS CONTROL SOCIETY (NACO) IS A NATIONAL FUNDER FOR HIV/AIDS PROGRAMME AND IT WAS SUBMITTED THAT 11 ITA NO.674 OF 2011 SOCIETY FOR INTEGRATED DEVELOPMENT, HYD. FOR A BETTER AND EFFECTIVE IMPLEMENTATION OF THE PR OJECT, NACO UTILISES THE SERVICES OF ALL STATE UNITS (APSACS) F OR THE REQUIRED ACTIVITIES. IT WAS SUBMITTED THAT THE ASSESSEE DUR ING THE YEAR HAD INCURRED CERTAIN EXPENDITURE ON PEER EDUCATORS BY B ORROWING SOME AMOUNTS FROM OUTSIDE AGENCIES. ON RECEIPT OF AMOU NT FROM HLFPPT, IT WAS ADJUSTED BY REFUNDING THE SAID AMOUN TS BORROWED TO THE AGENCIES. THE LEARNED AR SUBMITTED THAT THE C IT (A) AFTER CONSIDERING ALL ASPECTS OF THE MATTER THOROUGHLY, D ELETED THE SAID ADDITION AND THERE IS NO CAUSE TO INTERFERE WITH TH E FINDINGS OF THE CIT (A) ON THIS ISSUE. 14. THE LEARNED DR, ON THE OTHER HAND, STRONGLY SUP PORTING THE VIEW OF THE ASSESSING OFFICER SUBMITTED THAT SINCE IN THE CERTIFICATES OF HLFPPT, THE AMOUNT HAS BEEN MENTIONED AS GRANT AND THE ASSESSING OFFICER WAS JUSTIFIED IN MAKING THE SAID ADDITION. 15. HAVING HEARD THE SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIALS ON RECORD, WE DO NOT FIND ANY INFIRMITY I N THE ORDER OF THE CIT (A). AS CAN BE SEEN FROM THE OBSERVATIONS MADE BY THE ASSESSING OFFICER, HE HAS NOT DISPUTED THE FACT THA T THE ASSESSEE HAS INCURRED THE EXPENDITURE TOWARDS IMPLEMENTATIO N OF THE PROJECT RELATING TO PREVENTION AND CONTROL OF HIV/AIDS. IT IS ALSO NOT DISPUTED THAT THE PROJECT IS A GOVERNMENT PROMOTED PROJECT AND THE GRANT HAS BEEN SPECIFICALLY FOR IMPLEMENTING THE SA ID PROJECT. IN THE AFORESAID CIRCUMSTANCES, THE CONCLUSION ARRIVED AT BY THE ASSESSING OFFICER CANNOT BE ACCEPTED, EVEN OTHERWISE ALSO IF AT ALL THE AMOUNT RECEIVED IS TO BE CONSIDERED AS A GRANT, THEN CORRE SPONDING EXPENDITURE INCURRED BY THE ASSESSEE IS ALSO TO BE ALLOWED. IN AFORESAID VIEW OF THE MATTER, WE DO NOT FIND ANY RE ASON TO INTERFERE 12 ITA NO.674 OF 2011 SOCIETY FOR INTEGRATED DEVELOPMENT, HYD. WITH THE ORDER PASSED BY THE CIT (A) WHICH IS ACCOR DINGLY CONFIRMED. THE GROUND RAISED BY THE DEPARTMENT IS DISMISSED. 16. IN GROUND NO.3, THE DEPARTMENT HAS RAISED THE I SSUE OF NON REGISTRATION OF THE ASSESSEE SOCIETY UNDER A.P. CH ARITABLE AND HINDU RELIGIOUS INSTITUTIONS AND ENDOWMENTS ACT, 1987. HA VING CONSIDERED THE SUBMISSIONS OF THE PARTIES AND AFTER PERUSING THE MATERIALS ON RECORD AS WELL AS THE DECISIONS RELIED UPON BY THE CIT (A), WE ARE OF THE VIEW THAT THE EXEMPTION U/S 11 OF THE ACT CA NNOT BE DENIED TO THE ASSESSEE MERELY BECAUSE THE ASSESSEE IS NOT REG ISTERED UNDER THE A.P. CHARITABLE AND HINDU RELIGIOUS INSTITUTION S AND ENDOWMENTS ACT, 1987. WHEN THERE IS NO SUCH RESTRIC TION PUT U/S 11,12, AND 13 OF THE ACT OR ANY OTHER PROVISION UND ER THE ACT THE ASSESSING OFFICER CANNOT DENY EXEMPTION TO THE ASSE SSEE ON THE GROUND THAT THE ASSESSEE IS NOT REGISTERED UNDER TH E A.P. CHARITABLE AND HINDU RELIGIOUS INSTITUTIONS AND ENDOWMENTS ACT , 1987.WE THEREFORE UPHOLD THE ORDER OF THE CIT (A) ON THIS I SSUE BY DISMISSING THE GROUND RAISED BY THE REVENUE. 17. THE LAST ISSUE RAISED IN GROUND NOS. 4 AND 5 IS WITH REGARD TO GRANTS RECEIVED FROM DONOR AGENCIES SPENT FOR REPAI RS TO THE HOUSES (TSUNAMI AFFECTED) AND SUPPORT TO WOMEN AT RS.50,6 5,125/- AND RS.12,69,629/- RESPECTIVELY. 18. THE LEARNED DR SUBMITTED BEFORE US THAT AS PER THE TERMS OF THE MEMORANDUM OF UNDERSTANDING (MOU), THE ASSESSEE WAS REQUIRED TO SUPPLY RELIEF MATERIALS TO THE AFFECTED PERSONS I.E., POOREST OF POOR, SELECTED ON THE BASIS OF WEALTH R ANKING. HOWEVER, THE ASSESSEE HAS MADE CASH DISTRIBUTION WHICH IS NO T AT ALL TRANSPARENT AS THE SELECTION OF BENEFICIARIES HAVE NOT BEEN MADE BY 13 ITA NO.674 OF 2011 SOCIETY FOR INTEGRATED DEVELOPMENT, HYD. CONSIDERING THE WEALTH RANKING INDICATOR. IT WAS S UBMITTED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT AS PER THE SCHEME THE ASSESSEE WAS REQUIRED TO REPAIR DAMAGED HOUSES AND SUPPLY OF MATERIAL TO THE BENEFICIARIES AND NOT TO DISTRIBUTE CASH. THE LEARNED DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITT ED THAT THE ASSESSEE HAVING NOT ACTED AS PER THE TERMS OF MOU I N THE APPROVED PROJECT BUT HAVING PARTICIPATED IN ANOTHER PROJECT I.E., INDIRAMMA HOUSING PROJECT, IT HAS VIOLATED THE TERMS OF THE M OU AND THEREFORE HAS NOT UTILISED THE TIED-UP GRANTS FOR THE SPECIFI ED PURPOSES. IN THE CIRCUMSTANCES, THE ASSESSING OFFICER WAS JUSTIF IED IN MAKING THE ADDITION. 19. THE LEARNED AR, ON THE OTHER HAND, SUBMITTED TH AT DURING THE YEAR UNDER DISPUTE, THE ASSESSEE RECEIVED THE AMOU NTS FROM THE DONOR AGENCY FOR DISBURSEMENT TO THE FLOOD VICTIMS IN NELLORE, GUNTUR AND TWIN DISTRICTS OF GODAVARI ON ACCOUNT OF TSUNAMI FOR THE PURPOSES OF CONSTRUCTION/RE-CONSTRUCTION/REPAIRS OF THE HOUSES AFFECTED BY THE FLOODS. THE ASSESSEE HAS TAKEN ALL NECESSARY STEPS TO IDENTIFY THE VICTIMS BY SEEKING ASSISTANCE OF VILLAGE ELDERS, VILLAGE OFFICERS, DISTRICT OFFICIALS AND ONLY THEN DISBURSED THESE AMOUNTS TO THE AFFECTED VICTIMS. IT WAS SUBMITTED BY THE LEARNED AR THAT THE AMOUNTS DISBURSED WERE UNIFORM AMOUNT WHICH WAS THE MAXIMUM AMOUNT ALLOWED BY THE DONOR AGENCY AND THIS WAS ALSO BASED ON THE REQUIREMENT OF THE AFFECTED PERSONS WH ICH ALSO INCLUDED THE AMOUNTS GIVEN FOR SUPPORT TO WOMEN. T HE LEARNED AR REFERRING TO AUDITORS REPORT APPEARING AT PAGES 15 AND 16 OF THE PAPER BOOK SUBMITTED THAT ALL THE ACCOUNTS OF THE A SSESSEE ARE AUDITED AND EACH AND EVERY EXPENDITURE IS ACCOUNTE D FOR. THE LEARNED AR REFERRING TO THE REPLY SUBMITTED BEFORE THE ASSESSING 14 ITA NO.674 OF 2011 SOCIETY FOR INTEGRATED DEVELOPMENT, HYD. OFFICER DURING THE ASSESSMENT PROCEEDINGS SUBMITTED THAT ALL THE DETAILS WITH REGARD TO QUOTATIONS OBTAINED FROM DI FFERENT SUPPLIERS WERE SUBMITTED DURING ASSESSMENT PROCEEDING. HOWEV ER, THE ASSESSING OFFICER IGNORING ALL THE INFORMATION SUBM ITTED BEFORE HIM ERRONEOUSLY CONCLUDED THAT AS THE ASSESSEE HAD NOT IDENTIFIED THE VICTIMS SUO MOTO AND RELIED UPON OTHERS AND THEIR R EPORTS, THE AMOUNTS DID NOT REACH THE TARGETED VICTIMS AND BROU GHT TO TAX THE SAME. THE LEARNED AR SUBMITTED THAT WHEN IT IS NOT DISPUTED THAT THE AMOUNT RECEIVED BY THE ASSESSEE FROM THE DONOR AGENCY UNDER MOU IS A TIED-UP GRANT AND THE DONOR AGENCIES HAVE ALSO APPROVED THE DEVIATIONS MADE BY THE ASSESSEE. THERE IS NO J USTIFICATION ON THE PART OF THE ASSESSING OFFICER TO CONSIDER IT AS INCOME OF THE ASSESSEE. 20. WE HAVE HEARD THE SUBMISSIONS OF THE PARTIES AN D PERUSED THE MATERIAL ON RECORD. ON GOING THROUGH THE DISCUSSIO NS MADE BY THE ASSESSING OFFICER, WE ARE OF THE VIEW THAT THE ASSE SSING OFFICER HAS MADE THE ADDITION PURELY ON PRESUMPTIONS AND SURMIS ES AND IRRELEVANT CONSIDERATION. IT IS A FACT ON RECORD T HAT THE GRANT RECEIVED FROM THE DONOR AGENCY IS TO BE UTILISED FO R A SPECIFIC PURPOSE I.E., REPAIR OF HOUSES OF TSUNAMI VICTIMS I N THREE DISTRICTS OF ANDHRA PRADESH I.E., NELLORE, GUNTUR AND GODAVARI. THE FACT THAT THE ASSESSEE HAS SUPPLIED RELIEF MATERIALS FOR CONS TRUCTION OF HOUSES AS WELL AS CASH DISTRIBUTION UNDER CERTAIN MECHANI SM ADOPTED BY THE ASSESSEE IS NOT DISPUTED BY THE ASSESSING OFFIC ER. THE ASSESSING OFFICER HAS ONLY ENTERTAINED A DOUBT BY OBSERVING T HAT THE CASH DISTRIBUTION IS NOT TRANSPARENT AND THE METHOD ADOP TED BY THE ASSESSEE FOR IDENTIFYING THE POOREST OF POOR BENEFI CIARIES IS NOT CORRECT. HOWEVER, IT CANNOT BE DENIED THAT THE ASS ESSEE HAD 15 ITA NO.674 OF 2011 SOCIETY FOR INTEGRATED DEVELOPMENT, HYD. PARTICIPATED IN A PROGRAMME OF GOVERNMENT FOR THE B ENEFIT OF TSUNAMI VICTIMS BY PROVIDING HELP FOR CONSTRUCTION OF THEIR HOUSES. WHETHER IT IS UNDER TSUNAMI PROJECT OR INDIRAMMA PR OJECT DOES NOT MAKE ANY DIFFERENCE WHEN ULTIMATELY THE RELIEF REAC HES THE REAL BENEFICIARIES. THE ASSESSING OFFICER HAS NOT BROU GHT ANY MATERIAL ON RECORD TO SHOW THAT THE AMOUNT HAS NOT BEEN ACTU ALLY DISTRIBUTED BY THE ASSESSEE TO TSUNAMI VICTIMS. SO FAR AS THE ALLEGATION OF THE ASSESSING OFFICER THAT THE ASSESSEE HAS DEVIATED FR OM MOU, THE MATERIALS ON RECORD CLEARLY ESTABLISH THAT SUCH DEV IATION HAS BEEN MADE ON THE APPROVAL OF THE DONOR AGENCY. IN THE A FORESAID CIRCUMSTANCES, THE CONCLUSION ARRIVED AT BY THE ASS ESSING OFFICER CANNOT BE SUPPORTED. IN VIEW OF THE ABOVE, WE UPHO LD THE ORDER OF THE CIT (A) IN THIS REGARD BY DISMISSING THE GROUND RAISED BY THE REVENUE. 21. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 03 -01-2014. S D / - ( B. RAMAKOTAIAH) ACCOUNTANT MEMBER S D / - (SAKTIJIT DEY) JUDICIAL MEMBER HYDERABAD, DATED THE 3 RD JANUARY, 2014. JMR* COPY TO:- 1) DDIT(E)-II,3 RD FLOOR, AAYAKAR BHAVAN, HYDERABAD. 2) SOCIETY FOR INTEGRATED DEVELOPMENT IN URBAN & RURAL AREAS (SIDUR), VIJAYANAGAR COLONY, HYDERABAD. 3) CIT (A)-IV, HYDERABAD. 4) DIT (E), HYDERABAD. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABA D. 16 ITA NO.674 OF 2011 SOCIETY FOR INTEGRATED DEVELOPMENT, HYD. 17 ITA NO.674 OF 2011 SOCIETY FOR INTEGRATED DEVELOPMENT, HYD.