Sri Muthukumaran Educational Trust, CHENNAI V. DCIT Central Circle 2(1), CHENNAI

ITA 833/CHNY/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6755 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 28-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Charitable institution; Onus to prove
• Section: 6; 10; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , $% & , ) SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER ./ ITA NO. 833/CHNY/2019 / ASSESSMENT YEAR : 2015-16 SRI MUTHUKUMARAN EDUCATIONAL TRUST, 61,RAMASAMY SALAI, K K NAGAR, CHENNAI PAN : AABTS 6980 L V. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(1),M G ROAD, CHENNAI. (./ APPELLANT) (/0./ RESPONDENT) . 1 / APPELLANT BY: MR.G.BASKAR,ADVOCATE /0. 1 / RESPONDENT BY : MR.SRIDHAR DORA,JCIT,DR 1 / DATE OF HEARING : 02.07.2019 1 / DATE OF PRONOUNCEMENT : 02.07.2019 / O R D E R PER VIKRAM SINGH YADAV, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-18, CHENNAI, DATED 18.02.2019. THE LIMITED ISSUE UNDER CONSIDERATION IS TAXATION OF ANONYMOUS DONATIONS U/ S.115BBC OF THE ACT AMOUNTING TO RS.26,43,335/-. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A TRUST ENGAGED IN RUNNING EDUCATIONAL INSTITUTIONS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE LD.ASSESSING OFFICER OBSERVED THAT THE ASSESSEE IS IN 2 I.T.A. NO.833/CHNY/2019 RECEIPT OF DONATIONS FROM PUBLIC TO THE TUNE OF RS. 17,97,96,835/- AND THE ASSESSEE WAS ASKED TO FURNISH THE CONFIRMATION LETT ER, DETAILS OF DD/CHEQUES ETC. FROM WHOM THE DONATIONS WERE RECEIV ED. IN RESPONSE, THE ASSESSEE PRODUCED THE COPIES OF DONATION RECEIP TS, WHICH WERE VERIFIED AND FOUND IN ORDER, EXCEPT FOR AN AMOUNT O F RS.26,43,335/- FOR WHICH NO DETAILS WERE FURNISHED. THEREFORE, IN THE ABSENCE OF THE DETAILS SO CALLED FOR BY THE ASSESSING OFFICER AND THE FACT THAT THE IDENTITY OF THE DONOR COULD NOT BE ASCERTAINED, THE LD.ASSESSING OF FICER BROUGHT THE AMOUNT OF RS.26,43,335/- TO TAX U/S.115BBC OF THE A CT. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE TH E LD.CIT(A), HOWEVER, WITHOUT ANY SUCCESS AS PER LD.CIT(A), ASSESSING OFF ICER HAS GIVEN ADEQUATE OPPORTUNITY TO THE ASSESSEE TRUST TO PRODU CE THE CONFIRMATION DETAILS. HOWEVER, THE ASSESSEE COULD NOT PRODUCE AN Y EVIDENCE AS TO ESTABLISH THE IDENTITY OF THE DONOR, EVEN DURING TH E APPELLATE PROCEEDINGS. IT IS A SETTLED LEGAL PROPOSITION THA T THE ONUS IS ON THE PERSON MAKING THE CLAIM AND IN THE ASSESSEES CASE, THE ASSESSEE HAS CLEARLY FAILED TO DISCHARGE THE BURDEN OF PROOF. TH EREFORE, HE CONFIRMED THE ORDER OF THE ASSESSING OFFICER. AGAINST THE SAI D FINDINGS, THE ASSESSEE TRUST IS NOW IN APPEAL BEFORE US. 3. DURING THE COURSE OF HEARING, THE LD.AR FAIRLY SUBMITTED THAT THE ASSESSEE TRUST DOES NOT HAVE THE DETAILS OF THE DON ATIONS SO RECEIVED DURING THE YEAR AMOUNTING TO RS.26,43,335/-. AT THE SAME TIME, IT WAS SUBMITTED THAT ANONYMOUS DONATIONS CANNOT BE BROUGH T TO TAX BY 3 I.T.A. NO.833/CHNY/2019 INVOKING THE PROVISIONS OF SECTION 115BBC OF THE AC T AS THE SAME IS LESS THAN 5% OF THE TOTAL DONATIONS RECEIVED BY THE ASSE SSEE DURING THE FINANCIAL YEAR RELEVANT TO IMPUGNED ASSESSMENT YEAR . IN THIS REGARD, OUR REFERENCE WAS DRAWN TO THE PROVISIONS OF SECTION 11 5BBC OF THE ACT WHICH READS AS FOLLOWS:- (1) WHERE THE TOTAL INCOME OF AN ASSESSEE, BEING A PERSON IN RECEIPT OF INCOME ON BEHALF OF ANY UNIVERSITY OR OTHER EDUC ATIONAL INSTITUTION REFERRED TO IN SUB-CLAUSE (IIIAD) OR SUB-CLAUSE (VI ) OR ANY HOSPITAL OR OTHER INSTITUTION REFERRED TO IN SUB-CLAUSE (IIIAE) OR SUB-CLAUSE (VIA) OR ANY FUND OR INSTITUTION REFERRED TO IN SUB-CLAUSE ( IV) OR ANY TRUST OR INSTITUTION REFERRED TO IN SUB-CLAUSE (V) OF CLAUSE (23C) OF SECTION 10 OR ANY TRUST OR INSTITUTION REFERRED TO IN SECTION 11, INCLUDES ANY INCOME BY WAY OF ANY ANONYMOUS DONATION, THE INCOME-TAX PA YABLE SHALL BE THE AGGREGATE OF (I) THE AMOUNT OF INCOME-TAX CALCULATED AT THE RATE OF THIRTY PER CENT. ON THE AGGREGATE OF ANONYMOUS DONATION RECEIVED IN EXCESS OF THE HIGHER OF THE FOLLOWING, NAMELY : (A) FIVE PER CENT. OF THE TOTAL DONATIONS RECEIVED BY THE ASSESSEE, OR (B) ONE LAKH RUPEES ; AND (II) THE AMOUNT OF INCOME-TAX WITH WHICH THE ASSESS EE WOULD HAVE BEEN CHARGEABLE HAD HIS TOTAL INCOME BEEN REDUCED B Y THE AGGREGATE OF ANONYMOUS DONATIONS RECEIVED IN EXCESS OF THE AM OUNT REFERRED TO IN SUB-CLAUSE (A) OR SUB-CLAUSE (B) OF CLAUSE (I), AS THE CASE MAY BE. (2) THE PROVISIONS OF SUB-SECTION (1) SHALL NOT APP LY TO ANY ANONYMOUS DONATION RECEIVED BY (A) ANY TRUST OR INSTITUTION CREATED OR ESTABLISHED WHOLLY FOR RELIGIOUS PURPOSES ; 4 I.T.A. NO.833/CHNY/2019 (B) ANY TRUST OR INSTITUTION CREATED OR ESTABLISHED WHOLLY FOR RELIGIOUS AND CHARITABLE PURPOSES OTHER THAN ANY ANONYMOUS DO NATION MADE WITH A SPECIFIC DIRECTION THAT SUCH DONATION IS FOR ANY UNIVERSITY OR OTHER EDUCATIONAL INSTITUTION OR ANY HOSPITAL OR OT HER MEDICAL INSTITUTION RUN BY SUCH TRUST OR INSTITUTION. (3) FOR THE PURPOSES OF THIS SECTION, ANONYMOUS DO NATION MEANS ANY VOLUNTARY CONTRIBUTION REFERRED TO IN SUB-CLAUS E (IIA) OF CLAUSE (24) OF SECTION 2, WHERE A PERSON RECEIVING SUCH CONTRIB UTION DOES NOT MAINTAIN A RECORD OF THE IDENTITY INDICATING THE NA ME AND ADDRESS OF THE PERSON MAKING SUCH CONTRIBUTION AND SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED. U/S.115BBC OF THE ACT. FURTHER, OUR REFERENCE WAS DRAWN TO THE CBDT CIRCUL AR NO.5/2010 DATED 03.06.2010 REPORTED IN 324 ITR 293(ST) WHICH READS AS UNDER:- 39. TAX RELIEF ON ANONYMOUS DONATIONS IN CERTAIN C ASES 39.1 UNDER THE PROVISIONS OF SECTION 115BBC, WHOLLY RELIGIOUS ENTITIES ARE OUTSIDE THE PURVIEW OF TAXATION OF ANONYMOUS DO NATIONS. PARTLY RELIGIOUS AND PARTLY CHARITABLE ENTITIES HAD ALSO B EEN EXEMPTED FROM THE TAXATION OF ANONYMOUS DONATIONS, EXCEPT WHERE THE A NONYMOUS DONATION IS MADE TO AN EDUCATIONAL OR MEDICAL INSTI TUTION RUN BY SUCH ENTITY IN WHICH CASE SUCH DONATIONS WERE TAXED AT T HE RATE OF 30 PER CENT. IN THE CASE OF WHOLLY CHARITABLE ENTITIES, AL L ANONYMOUS DONATIONS ARE TAXED AT THE RATE OF 30 PER CENT. 39.2 IT WAS OBSERVED THAT IN THE CASE OF SOME SUCH INSTITUTIONS, THERE ARE PRACTICAL DIFFICULTIES TO MAINTAIN COMPLETE REC ORDS OF DONATION RECEIVED. IN ORDER TO MITIGATE THE COMPLIANCE BURDE N, THE ABOVE SECTION WAS AMENDED AND SOME RELIEF WAS PROVIDED TO SUCH OR GANIZATIONS BY EXEMPTING A PART OF THE ANONYMOUS DONATIONS FROM BE ING TAXED. THE AMENDMENT HAS RESULTED IN THE FOLLOWING SCHEME :- 5 I.T.A. NO.833/CHNY/2019 1. ANONYMOUS DONATIONS RECEIVED BY WHOLLY RELIGIOUS INSTITUTIONS SHALL REMAIN EXEMPT FROM TAX. 2. IN THE CASE OF PARTLY RELIGIOUS AND PARTLY CHARI TABLE INSTITUTIONS, ANONYMOUS DONATIONS DIRECTED TOWARDS A MEDICAL OR E DUCATIONAL INSTITUTIONS RUN BY SUCH ENTITIES SHALL BE TAXABLE ONLY TO THE EXTENT SUCH DONATIONS EXCEED 5 PER CENT. OF TOTAL DONATIONS REC EIVED BY SUCH TRUST OR INSTITUTION OR A SUM OF RS. 1 LAKH, WHICHEVER IS MORE. OTHER DONATIONS TO PARTLY RELIGIOUS AND PARTLY CHARITABLE INSTITUTI ONS SHALL REMAIN EXEMPT FROM TAXATION. 3. IN THE CASE OF WHOLLY CHARITABLE INSTITUTIONS, A NONYMOUS DONATIONS SHALL BE TAXABLE ONLY TO THE EXTENT SUCH DONATIONS EXCEED 5 PER CENT. OF TOTAL DONATIONS RECEIVED BY SUCH TRUST OR INSTITUTI ON OR A SUM OF RS. 1 LAKH, WHICHEVER IS MORE. 39.3 APPLICABILITY.-THESE AMENDMENTS HAVE BEEN MADE APPLICABLE WITH EFFECT FROM 1ST APRIL, 2010 AND WILL ACCORDINGLY AP PLY FOR ASSESSMENT YEAR 2010-11 AND SUBSEQUENT ASSESSMENT YEARS. 4. THE LD.DR IS HEARD WHO HAS RELIED ON THE FINDING S OF THE LOWER AUTHORITIES. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE ASSESSEE COULD NOT FURNI SH THE PARTICULARS OF THE DONORS FROM WHOM IT HAS RECEIVED DONATIONS AMOUNTIN G TO RS.26,43,335/-. THEREFORE, THE DONATIONS FALL IN THE CATEGORY OF AN ONYMOUS DONATIONS. IN TERMS OF SECTION 115BBC OF THE ACT, AS WE HAVE NOTED ABOV E, SUCH DONATIONS COULD BE BROUGHT TO TAX WHERE IT EXCEEDS 5% OF THE TOTAL DONATION RECEIVED BY THE TRUST, OR A SUM OF RS.1/- LAKH WHICHEVER IS MORE. I N THE INSTANT CASE, THE ANONYMOUS DONATIONS CONSTITUTE ONLY 1.47% OF THE TO TAL DONATION RECEIVED BY THE ASSESSEE TRUST DURING THE YEAR. THEREFORE, IN TERMS OF THE PROVISIONS OF 6 I.T.A. NO.833/CHNY/2019 SECTION 115BBC OF THE ACT, THE ANONYMOUS DONATION S O RECEIVED BY THE ASSESSEE TRUST CANNOT BE BROUGHT TO TAX. HENCE, THE ADDITION SO MADE BY THE ASSESSING OFFICER IS HEREBY DIRECTED TO BE DELETED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 02 /07/2019 AT CHENNAI. SD/- SD/- ( ) ( $% & ) (GEORGE MATHAN) (VIKRAM SINGH YADAV) /JUDICIAL MEMBER / ACCOUNTANT MEMBER /CHENNAI, 8 /DATED, THE 02 ND JULY, 2019. KS SUNDARAM 1 /&$ :$ /COPY TO: 1. ./ APPELLANT 2. /0. / RESPONDENT 3. ; () /CIT(A) 4. ; /CIT 5. $ / /DR 6. /GF.