Biseswar Chattopadhyay Trust, Kolkata V. CIT, (Exemption), Kolkata, Kolkata

ITA 760/KOL/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1487 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 18-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G MALLIKARJUNA
• Keywords: Charitable institution; Revenue expenditure
• Section: 143(3); 80G; 263; 12; 2; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : KOLKATA [BEFORE HONBLE SRI N.V.VASUDEVAN, JM & SHRI WASE EM AHMED, AM ] I.T.A NO.760/KOL/2017 ASSESSMENT YEAR : 2012-1 3 BISESWAR CHATTOPADHYAY TRUST -VS- C.I.T.(EXEMPTI ONS), KOLKATA KOLKATA [PAN : AABTB 2639 M] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI SOUMITRA CHOU DHURY, ADVOCATE FOR THE RESPONDENT : SHRI G.MALLIKARJUNA, CI T(DR) DATE OF HEARING : 26.07.2017. DATE OF PRONOUNCEMENT : 28.07.2017. ORDER PER N.V.VASUDEVAN, JM THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDE R DATED 14.03.2017 OF C.I.T.(EXEMPTIONS), KOLKATA PASSED U/S 263 OF THE I NCOME TAX ACT, 1961 (ACT). 2. THE ASSESSEE IS A TRUST. IT IS REGISTERED U/S 12 AA OF THE ACT AND HAS ALSO APPROVAL U/S 80G OF THE ACT. IT PROVIDES SERVICES IN THE FIELD O F HEALTH AND EDUCATION AND OTHER SOCIAL WELFARE ACTIVITIES TO THE PUBLIC AT LARGE. FOR A.Y. 2012-13 THE ASSESSEE FILED RETURN OF INCOME ON 31.07.2012 DECLARING TOTAL INCOME AT NIL . THE AO PASSED AN ORDER OF ASSESSMENT U/S 143(3) OF THE ACT ON 27.08.2014 ASSE SSING THE TOTAL INCOME OF THE ASSESSEE AT RS. NIL IN THE FOLLOWING MANNER :- 4. THE CASE WAS HEARD AND DISCUSSED WITH THE AUTHO RIZED REPRESENTATIVE OF THE ASSESSEE AND AFTER CONSIDERING THE SUBMISSIONS OF T HE ASSESSEE, THE INCOME OF THE ASSESSEE TRUST IS COMPUTED AS UNDER :- INCOME AS PER INCOME & EXPENDITURE ACCOUNTS RS.58,47,058/- INCOME AVAILABLE FOR APPLICATION (A) RS.58,47,058/ - INCOME EXEMPT U/S 11 APPLICATION OF INCOME TOWARDS OBJECTIVE OF THE TRUST U/S 11 2 ITA NO.760/KOL/2017 BISWESWAR CHATTOPADHYAY TRUST A.YR.2012-13 2 FOR CHARITABLE PURPOSE I)REVENUE EXPENDITURE II)ACCUMULATION U/S 11(1)(A) UPTO ____OF THE INCOME (A)AMOUNTING TO RS.8,77,059/- UPTO THE EXTENT AVAILABLE RS.8,77,059/- RS.49,87,077/- RS.8,59,981/- RS.58,47,058/- TOTAL APPLICATION RS.58,47,058/- AS THE INCOME APPLIED BY THE ASSESSEE FOR CHARITABL E PURPOSE IS IN EXCESS OF 85% OF THE INCOME DERIVED FROM PROPERTY OF THE TRUST, EXEM PTION U/S 11 IS ALLOWED. TOTAL INCOME AVAILABLE FOR APPLICATION RS.58,47,058/- APPLICATION FOR CHARITABLE PURPOSE ACCUMULATIONS U/S 11(1)(A) RS.58,47,058/- RS.NIL TOTAL APPLICATION RS.58,47,058/- TAXABLE INCOME NIL TAX PAYABLE NIL 3. THE CIT IN EXERCISE OF HIS POWERS U/S 263 OF T HE ACT WAS OF THE VIEW THAT THE AFORESAID ORDER OF THE AO WAS ERRONEOUS AND PREJUDI CIAL TO THE INTEREST OF THE REVENUE. ACCORDING TO CIT THE ASSESSEE RECEIVED A SUM OF RS. 9,00,000/- AS DONATION FROM ONE M/S. LUXMI TOWNSHIP LTD. THE ASSESSEE HAD TREATED T HIS DONATIONS AS TOWARDS CORPUS FUND. THERE WAS NO EVIDENCE TO SUGGEST THAT THIS DO NATION WAS TOWARDS CORPUS FUND WITH SPECIFIC DIRECTION AS REQUIRED IN SECTION 11(1)(D) OF THE ACT. ACCORDING TO THE CIT THE AO HAD NOT VERIFIED AS TO HOW THIS DONATION COULD B E TAKEN AS DONATION TOWARDS CORPUS FUND. ACCORDING TO CIT IF THE DONATION IS NOT REGAR DED AS DONATION TOWARDS CORPUS FUND THEN THE INCOME THAT HAS TO BE APPLIED FOR CHARITAB LE PURPOSE (85% OF GENERAL DONATION) 3 ITA NO.760/KOL/2017 BISWESWAR CHATTOPADHYAY TRUST A.YR.2012-13 3 WILL BE MUCH MORE THAN WHAT WAS APPLIED BY THE ASSE SSEE FOR CHARITABLE PURPOSE DURING THE PREVIOUS YEAR AND THEREFORE THERE WOULD BE A SH ORT FALL IN APPLICATION OF THE INCOME TO THE EXTENT OF 85% OF INCOME BY THE ASSESSEE WHIC H HAD TO BE BROUGHT TO TAX. ON THIS BASIS THE CIT ISSUED A SHOW CAUSE NOTICE U/S 263 OF THE ACT AND AFTER HEARING THE OBJECTIONS OF THE ASSESSEE FINALLY CONCLUDED THAT T HERE WAS NO SPECIFIC DIRECTION BY THE DONOR TO TREAT THE CONTRIBUTION AS CORPUS DONATION AND THEREFORE INCOME OF THE ASSESSEE HAD TO BE DETERMINED BY TREATING THE CORPUS DONATIO N AS PART OF THE GENERAL DONATION FOR THE PURPOSE OF APPLICATION AS WELL AS ACCUMULATION. 4. AGGRIEVED BY THE ORDER OF CIT(EXEMPTIONS), KO LKATA THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE HEARD THE SUBMISSIONS OF THE LD. COUN SEL FOR THE ASSESSEE AND THE LD. DR. THE DONATION IN QUESTION WAS GIVEN BY M/S. LUXMI TO WNSHIP LTD PURSUANT TO A REQUEST MADE BY THE ASSESSEE IN A LETTER DATED 02.01.2012. IN THIS LETTER THE ASSESSEE HAS EXPLAINED THAT IT REQUIRES FUND TO SET UP AN EYE HO SPITAL IN THE STATE OF TRIPURA AND THAT THE DONATIONS GIVEN WOULD BE ELIGIBLE FOR DEDUCTION U/S 80G OF THE ACT. THERE IS A SPECIFIC REQUEST IN THIS LETTER THAT THE ASSESSEE R EQUIRES HELP THROUGH A DONATION FOR CORPUS FUND. PURSUANT TO THIS LETTER THE ASSESSEE RECEIVED A SUM OF RS.9,00,000/- AS DONATION FOR WHICH THE ASSESSEE ISSUED A RECEIPT TO THE DONOR IN WHICH IT HAS BEEN SPECIFICALLY MENTIONED THAT THE DONATION IS ON ACCO UNT OF CORPUS FUND. THE LD. COUNSEL FOR THE ASSESSEE AFTER BRINGING TO OUR NOTICE THE A BOVE FACTS SUBMITTED THAT THE CONCLUSION OF CIT THAT THERE WAS NO BASIS FOR TREAT ING THE DONATION AS A CORPUS FUND CANNOT BE SUSTAINED. THE LD. DR RELIED ON THE ORDER OF CIT(EXEMPTIONS). 6. WE HAVE GIVEN A VERY CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS. UNDER SECTION 11(1)(D) OF THE ACT, INCOME IN THE FORM OF VOLUNTAR Y CONTRIBUTIONS MADE WITH A SPECIFIC DIRECTION THAT THEY SHALL FORM PART OF THE CORPUS O F THE TRUST SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE PERSON IN RECEIPT OF THE INCOME. THEREFORE IRRESPECTIVE OF THE APPLICATION OF THE SAID INCOME, THE SAME SHALL NOT BE INCLUDED IN THE TOTAL INCOME. THE RELEVANT STATUTORY PROVISION DOES NOT SPECIFY THE MANNER IN WHICH 4 ITA NO.760/KOL/2017 BISWESWAR CHATTOPADHYAY TRUST A.YR.2012-13 4 SPECIFIC DIRECTION SHOULD BE GIVEN. IN OUR OPINION THE EVIDENCE ON RECORD IS SUFFICIENT TO COME TO A CONCLUSION THAT THE DONATION IN QUESTION WAS TOWARDS CORPUS FUND. WE DO NOT FIND ANY MATERIAL ON THE BASIS OF WHICH THE CIT(EXE MPTIONS) HAS COME TO THE CONCLUSION THAT THERE WAS NO MATERIAL TO SHOW THAT THE DONATION IN QUESTION WAS TOWARDS CORPUS FUND. ORDER OF THE CIT DOES NOT SPELL OUT AS TO WHAT IS THE EVIDENCE REQUIRED TO PROVE THAT THE DONATION WAS TOWARDS CORPUS FUND. TH E POWERS U/S 263 OF THE ACT CAN BE INVOKED ONLY WHEN IT IS SHOWN BY CIT THAT ORDER OF AO WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN THE PRESENT CASE THE CONCLUSION OF CIT THAT ORDER OF AO WAS ERRONEOUS, CANNOT BE SUSTAINED. THERE IS NO MAT ERIAL ON THE BASIS OF WHICH CIT(EXEMPTIONS) HAS COME TO THE CONCLUSION THAT THE DONATION IN QUESTION IS A VOLUNTARY CONTRIBUTION NOT FALLING WITHIN SECTION 1 1(1)(D) OF THE ACT. HIS CONCLUSIONS ON THIS ISSUE IS PURELY ON ASSUMPTIONS AND SURMISES. W E THEREFORE QUASH THE ORDER U/S 263 OF THE ACT AND ALLOW THE APPEAL OF ASSESSEE. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE COURT ON 28.07.2017. SD/- SD/- [WASEEM AHMED] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 28.07.2017. [RG PS] COPY OF THE ORDER FORWARDED TO: 1.BISESWAR CHATTOPADHYAY TRUST, KISHORE BHAVAN, 17, R.N.MUKHERJEE ROAD, KOLKATA- 700001. 2. C.I.T. (EXEMPTIONS), KOLKATA. 3..CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SR. PRI VATE SECRETARY HEAD OF OFFICE/D.D.O., ITAT KOLKATA BENCHES 5 ITA NO.760/KOL/2017 BISWESWAR CHATTOPADHYAY TRUST A.YR.2012-13 5