The ACIT, Circle-4(1), Visakhapatnam V. M/s Varalakshmi Mallikarjuna Rao Charitable Trust, Rajam

ITA 694/VIZ/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1128 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 29-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K RAVI
• Assessee Lawyers: Y ANIL KUMAR
• Keywords: Charitable institution
• Section: 12A; 12AA; 12; 11

Judgement Text

ITA NO.694/VIZAG/2013 M/S. VARALAKSHMI MALLIKARJUNA RAO CHARITABLE TRUST, RAJAM 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.694/VIZAG/2013 ( / ASSESSMENT YEAR: 2010-11) ACIT, CIRCLE - 4(1), VISAKHAPATNAM VS. M/S. VARALAKSHMI MALLIKARJUNA RAO CHARITABLE TRUST RAJAM [PAN: AAATV2046F ] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI K. RAVI, DR / RESPONDENT BY : SHRI Y. ANIL KU MAR, AR / DATE OF HEARING : 26.05.2016 / DATE OF PRONOUNCEMENT : 27.05.2016 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THIS APPEAL FILED BY THE ASSESSEE AGAINST THE ORDE R OF CIT(A), VISAKHAPATNAM DATED 12.09.2013 FOR THE ASSESSMENT Y EAR 2010-11. 2. FACTS ARE IN BRIEF THAT THE ASSESSEE IS A CHARIT ABLE TRUST FILED A RETURN OF INCOME ON 13.9.2010 BY DECLARING A TOTAL INCOME OF ` NIL. ITA NO.694/VIZAG/2013 M/S. VARALAKSHMI MALLIKARJUNA RAO CHARITABLE TRUST, RAJAM 2 THE ASSESSING OFFICER HAS NOTED THAT THE ASSESSEE T RUST HAS RECEIVED AN AMOUNT OF ` 40 LAKHS FROM GMR AIRPORTS, BANGALORE, AS A DONATI ON. THE ASSESSEE TRUST HAS ALSO MADE VARIOUS DONATIONS TO O THERS VIZ., MARRIAGE DONATION OF ` 26,500/-, CHILDREN SCHOOL FEES OF ` 13,850/- AND DONATION TO ARYA VYSYA SANGHAM OF ` 30,70,000/-. THE A.O. HAS ASKED THE ASSESSEE TO EXPLAIN WHY THE DONATION MADE TO KURNOO L ARYA VYSYA SANGHAM (KAVS) SHOULD NOT BE DISALLOWED, AS IT WAS GIVEN FOR THE UPLIFTMENT OF A PARTICULAR RELIGIOUS COMMUNITY, WHI CH IS NOT REGISTERED U/S 12A OF THE INCOME TAX ACT, 1961 (HEREINAFTER CA LLED AS 'THE ACT') AND NOT ELIGIBLE FOR EXEMPTION U/S 11 & 12 OF THE ACT A ND ALSO VIOLATION OF SECTION 13(1)(B) OF THE ACT. IN RESPONSE TO QUERY RAISED BY THE A.O., THE ASSESSEE HAS EXPLAINED THAT THE MANAGEMENT OF THE T RUST HAS TAKEN A DECISION TO EXTEND RELIEF TO THE FLOOD AFFECTED POO R PEOPLE IN KURNOOL DISTRICT DURING NOVEMBER, 2009. ACCORDINGLY, AN AM OUNT OF ` 30,70,000/- WAS TRANSFERRED TO THE KAVS, TO DISTRIB UTE VERY SAME FUNDS TO THE POOR PEOPLE WHO ARE AFFECTED IN THE FLOODS. HOWEVER, THE A.O., NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASS ESSEE IS OF THE OPINION THAT THE ASSESSEE HAS MADE A DONATION OF ` 30,70,000/- TO KAVS WHICH IS PURELY A RELIGIOUS COMMUNITY TRUST AND DOES NOT HAVE A REGISTRATION U/S 12A OF THE ACT AND THE SAID AMOUNT OF ` 30.70 LAKHS WAS DISALLOWED ITA NO.694/VIZAG/2013 M/S. VARALAKSHMI MALLIKARJUNA RAO CHARITABLE TRUST, RAJAM 3 AND ADDED BACK TO THE INCOME OF THE ASSESSEE. ON B EING AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD . CIT(A). 3. IT WAS SUBMITTED BEFORE THE LD. CIT(A) THAT THE ASSESSEE TRUST HAS TAKEN A DECISION TO HELP THE POOR FAMILIES WHO ARE AFFECTED DUE TO HEAVY FLOODS IN NOVEMBER, 2009. THE ASSESSEE DO NOT HAVE ANY OFFICE OR INFRASTRUCTURE FACILITY AT KURNOOL, HENCE THE ASSES SEE HAS TAKEN HELP OF THE KAVS FOR PROVIDING HELP TO THE FLOOD VICTIMS. THE ASSESSEE HAS TRANSFERRED AN AMOUNT OF ` 30.70 LAKHS TO THE KAVS BANK ACCOUNT ONLY FOR THE PURPOSE OF HELPING THE FLOOD AFFECTED VICTI MS AND IT IS ONLY FOR A CHARITABLE PURPOSE. THE LD. CIT(A) AFTER CONSIDERI NG THE DETAILED EXPLANATION GIVEN BY THE ASSESSEE, HE IS OF THE OPI NION THAT THE MONEY GIVEN TO THE KAVS IS FOR THE PURPOSE OF PROVIDING R ELIEF TO THE FLOOD AFFECTED POOR PEOPLE AND NOT A DONATION. THE SOCIE TY OF KAVS HAS ACTED ON BEHALF OF THE ASSESSEE TRUST TO GIVE RELIEF TO T HE VICTIMS AND ACCORDINGLY THE ADDITION MADE BY THE A.O. IS DELETE D. ON BEING AGGRIEVED, REVENUE IS IN APPEAL BEFORE THE TRIBUNAL . 4. THE LD. D.R. STRONGLY SUPPORTED THE ORDER PASSED BY THE A.O. 5. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE STRONGLY SUPPORTED THE ORDER PASSED BY THE LD. CIT(A). ITA NO.694/VIZAG/2013 M/S. VARALAKSHMI MALLIKARJUNA RAO CHARITABLE TRUST, RAJAM 4 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE ASSESSEE IS A CHARITABLE TRUST AND ENJOYING REGISTR ATION U/S 12AA OF THE ACT. THE ASSESSEE TRUST HAS TAKEN A DECISION TO HE LP THE POOR FAMILIES WHO ARE AFFECTED DURING THE FLOODS AT KURNOOL AND T RANSFERRED AN AMOUNT OF ` 30.70 LAKHS TO A SOCIETY I.E. KURNOOL ARYA VYSYA S ANGHAM (KAVS) WHICH IS A NON-PROFIT MAKING BODY. ACCORDIN G TO THE A.O., THE AMOUNT TRANSFERRED BY THE ASSESSEE TRUST IS A DONAT ION TO THE KAVS. IT WAS SUBMITTED BEFORE THE A.O. THAT THE ASSESSEE IS NOT HAVING ANY OFFICE OR ESTABLISHMENT TO DISTRIBUTE THE CLOTHS AND OTHER MONEY TO THE FLOOD AFFECTED PEOPLE, THEREFORE, THE ASSESSEE TRUST TRAN SFERRED THE MONEY TO THE SOCIETY I.E. KAVS, THROUGH THEM THE ASSESSEE HA S DISTRIBUTED MONEY AND CLOTHS TO THE FLOOD AFFECTED PEOPLE. THE LD. C IT(A) OF THE OPINION THAT THE AMOUNT TRANSFERRED BY THE ASSESSEE TO THE SOCIETY IS NOT A DONATION. THE ASSESSEE ONLY TAKEN THE HELP FROM TH E KAVS ON BEHALF OF THE ASSESSEE TO DISTRIBUTE THE MONEY RECEIVED FROM ASSESSEE TO THE FLOOD AFFECTED PEOPLE. WE FIND THAT THE ASSESSEE T RUST HAS TAKEN A DECISION TO PROVIDE RELIEF TO THE FLOOD AFFECTED PO OR PEOPLE IN KURNOOL AND MONEY IS TRANSFERRED TO THE KAVS, THROUGH THEM MONEY AND CLOTHS WERE DISTRIBUTED. UNDER THESE ABOVE FACTS AND CIRC UMSTANCES OF THE CASE, IT CANNOT BE SAID THAT ASSESSEE HAS GIVEN A D ONATION TO THE KAVS. ITA NO.694/VIZAG/2013 M/S. VARALAKSHMI MALLIKARJUNA RAO CHARITABLE TRUST, RAJAM 5 ACCORDINGLY, ARYA VYSYA SANGHAM ACTED ON BEHALF OF THE ASSESSEE. WE FIND THERE IS NO VIOLATION UNDER THE ACT PARTICULAR LY ASSESSEE HAS NOT VIOLATED ANY OF THE PROVISIONS OF SECTION 13(1)(B) OF THE ACT. WE FIND NO REASON TO INTERFERE WITH THE ORDER PASSED BY THE LD . CIT(A). THIS APPEAL IS DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED . THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 27 TH MAY16. SD/- SD/- ( . ) ( . ) (G. MANJUNATHA) (V. DURGA RAO) /ACCOUNTANT MEMBER /JUDICIAL MEMBER ! /VISAKHAPATNAM: % /DATED : 27.05.2016 VG/SPS '! (! /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE ACIT, CIRCLE-4(1), VISAKHAPA TNAM 2. / THE RESPONDENT M/S. VARALAKSHMI MALLIKARJUNA R AO CHARITABLE TRUST, GMR NAGAR, RAJAM, SRIKAKULAM DIST. 3. ) / THE CIT, VISAKHAPATNAM 4. ) ( ) / THE CIT(A), VISAKHAPATNAM 5. ! , , , , ! / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // /0 , (SR.PRIVATE SECRETARY) , , ! / ITAT, VISAKHAPATNAM