ITO, CHENNAI V. Ramanaidu Charitable Trust, CHENNAI

ITA 919/CHNY/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4708 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2017
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 30-01-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 24-04-2015
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH JT
• Assessee Lawyers: V S MANOJ
• Keywords: Reopening of assessment; Search and seizure; Charitable institution; Cost of acquisition; Fair market value; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 143(3); 12A; 147; 148; 12; 11

Judgement Text

1 ITA NO.917 TO 922/MDS/2015 (AY 2005-06 TO 2010-11 ) ITO V. RAMANAIDU CHARITABLE TRUST , , IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C, CHENNAI , . , ! ' BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ITA NOS.917 TO 922/MDS/2015 & CO NOS. 55 TO 58/MDS/2015 (IN ITA NOS. 917 TO 920/MDS/2015) ! # $# / ASSESSMENT YEARS : 2005-06 TO 2010-11 INCOME TAX OFFICER (EXEMPTIONS), WARD-4, AAYAKAR BHAVAN, ANNEXE BUILDING, III FLOOR, 121, MG ROAD, NUNGAMBAKKAM, CHENNAI 600 034. VS. RAMANAIDU CHARITABLE TRUST, NO.15, A-BLOCK, PRINCE VILLA, RAJAMANAR STREET, T.NAGAR, CHENNAI 600 017. [PAN: AAATR 0554J] ( /APPELLANT ) ( / RESPONDENT ) %& ( ) / APPELLANT BY : SHRI A.V.SREEKANTH , JT. CIT *+%& ( ) / RESPONDENT BY : SHRI V.S.MANOJ, ADVOCATE ( , / DATE OF HEARING : 30.01.2017 -$ ( , / DATE OF PRONOUNCEMENT : 28.04.2017 /O R D E R PER BENCH : THIS IS A SET OF FIVE APPEALS BY THE REVENUE ASSES SEE AND CORRESPONDING CROSS OBJECTIONS BY THE ASSESSEE, ARISING OUT OF A COMMON ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-17, CHENNAI ( CIT(A) FOR SHORT) DATED 22.12.2014, PARTLY ALLOWING THE ASSESSEES APPEALS CONTESTING ITS ASSESSMENTS 2 ITA NO.917 TO 922/MDS/2015 (AY 2005-06 TO 2010-11 ) ITO V. RAMANAIDU CHARITABLE TRUST U/S. 143(3) R/W S. 147 AS WELL AS U/S. 143(3) OF TH E INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR ASSESSMENT YEARS (AYS.) 2005- 06 TO 2010-11. WHILE THE REVENUE IS IN APPEAL FOR ALL THE YEARS, THE ASSESSE E CHALLENGES THE REOPENING OF THE ASSESSMENT, I.E., FOR AYS. 2005-06 TO 2008-09. THE APPEALS RAISING COMMON ISSUES, WERE POSTED FOR HEARING AND, ACCORDINGLY, H EARD TOGETHER, AND ARE BEING DISPOSED OF PER A COMMON ORDER. 2. THE ASSESSEE, A PUBLIC CHARITABLE TRUST FORMED IN THE YEAR 1990, IS REGISTERED AS A CHARITABLE INSTITUTION UNDER SECTIO N 12A OF THE ACT, ALSO APPROVED UNDER SECTION 80-G THEREOF. IT HAS, DURING THE PERI OD OF ITS EXISTENCE, AS CLAIMED, PUT UP OLD-AGE HOMES, EYE HOSPITAL, MEDICA L DISPENSARY, SPORTS STADIUM, DRINKING WATER FACILITIES, IMPROVED IRRIGA TION FACILITIES IN RURAL AREAS, DONATED FOR EDUCATION, FLOOD RELIEF FUND, ETC., APA RT FROM RUNNING A FILM TRAINING INSTITUTE TO IMPART KNOWLEDGE AND MAKE PEOPLE FIT F OR EMPLOYMENT. THAT ITS ACTIVITIES ARE CHARITABLE IN NATURE IS NOT IN DISPU TE. THE MANNER IN WHICH IT RAISES FUNDS FOR PURSUING ITS CHARITABLE OBJECTS, HOWEVER , IS, AND IT IS THIS THAT IS THE BONE OF CONTENTION BETWEEN THE ASSESSEE AND THE REV ENUE. THE REVENUE DENIES IT EXEMPTION U/SS. 11 AND 12 OF THE ACT ON THE BASI S THAT THE SAME, APART FROM CONSTITUTING A BUSINESS TRANSACTION, IS CONVOLUTED, WHEREBY THE TRUST ACTS AS A BRIDGE BETWEEN RELATED PARTIES TO LESSEN OR POSTPON E THEIR LIABILITY TO TAX ON INCOME. ITS ACTIVITIES THUS ENURE FOR THE BENEFI T OF THE PERSONS SPECIFIED IN SECTION 13(3) AND, ACCORDINGLY, ARE HIT BY SECTION 13(1)(C), BESIDES BEING OUSTED U/S. 2(15) OF THE ACT, I.E., FOR AYS. 2009-10 AND 2 010-11, INASMUCH AS THEY CONSTITUTE BUSINESS. THE ASSESSEE, WHILE FINDING FA VOUR WITH THE LD. CIT(A) ON MERITS, HAS NOT ON THE ASPECT OF REOPENING OF ASSES SMENT/S WHICH, BEING ANTECEDENT, SHALL BE TAKEN UP FIRST BY US. 3 ITA NO.917 TO 922/MDS/2015 (AY 2005-06 TO 2010-11 ) ITO V. RAMANAIDU CHARITABLE TRUST ASSESSEES APPEALS (AYS. 2005-06 TO 2008-09) 3. THE BASIS OF THE ASSESSEES CHALLENGE BEFORE THE FIRST APPELLATE AUTHORITY, AND WHICH CONTINUES TO OBTAIN BEFORE US AS WELL, IS THAT ITS METHOD OF ACCOUNTING AND THE MANNER OF OPERATIONS REMAINING T HE SAME, I.E., FOR A NUMBER OF YEARS IN THE PAST, THE REOPENING, GIVEN NO CHANG E IN FACTS/CIRCUMSTANCES, AMOUNTS TO A CHANGE OF OPINION, BEING, FURTHER, WIT HOUT REFERENCE TO ANY FRESH OR NEW MATERIAL. THIS STANDS REPUDIATED BY THE LD. CIT (A) VIDE PARAS 4.3 TO 4.5 OF THE IMPUGNED ORDER, WITH REFERENCE TO A NUMBER OF D ECISIONS, MEETING EACH OF THE ARGUMENTS RAISED QUA DIFFERENT ASPECTS. THE IMPUGNED ASSESSMENT/S, TO B EGIN WITH, IS MERELY ACCEPTANCE OF THE RETURN/S UNDER SE CTION 143(1), SO THAT THERE WAS NO QUESTION OF ANY CHANGE OF OPINION, CITING CIT V. KELVINATOR OF INDIA LTD [2010] 320 ITR 56 (SC), RELIED UPON BY THE ASSESSEE ITSELF, AND ASST. CIT V. RAJESH JHAVERI STOCK BROKERS (P.) LTD. [2007] 291 ITR 500 (SC), REPRODUCING FROM BOTH. NOTICE U/S. 148 CANNOT BE QUESTIONED ON THE GROUND THAT NOTICE U/S. 143(2) HAD NOT BEEN ISSUED ( KFC V. JT. CIT [2009] 308 ITR 434 (KER); DTTDC LTD. V. DY. CIT [2013] 350 ITR 216 (DEL) AND REMFRY AND SAGAR V. CIT [2013] 351 ITR 75 (DEL)). AS EXPLAINED IN THE LATTER, WHAT IS RELEVANT AT THE STAGE OF ISSUE OF NOTICE U/S. 148, IS A HONEST BELIEF AS TO ESCAPEMENT OF INCOME, BASED ON SOME MATERIAL, THE SUFFICIENCY OR CORRECTNESS OF WH ICH IS NOT TO BE CONSIDERED AT THAT STAGE, ALSO CITING RAYMOND WOOLLEN MILLS LTD V. CIT [1999] 236 ITR 34 (SC). IN FACT, IN THE PRESENT CASE, THE ASSESSING O FFICER HAD, AS REQUIRED BY GKN DRIVESHAFTS (INDIA) LTD. V. ITO [2003] 259 ITR 19 (SC), DISPOSED THE ASSESSEES OBJECTIONS TO REASSESSMENT/S, FILED CONSEQUENT TO T HE FURNISHING OF THE COPY OF THE REASONS RECORDED U/S.148(2). THERE WAS IN FACT NO NECESSITY TO FURNISH THE SAID REASONS ALONG WITH THE NOTICE, AS CLARIFIED TH EREIN, AS WELL AS IN K.M. BANSAL V. CIT [1992] 195 ITR 247 (ALL). 4 ITA NO.917 TO 922/MDS/2015 (AY 2005-06 TO 2010-11 ) ITO V. RAMANAIDU CHARITABLE TRUST 4. WE HAVE HEARD THE SPARTIES, AND PERUSED THE MATE RIAL ON RECORD. NO CONTENTION, MUCH LESS BY SHOWING ANY INFIRMITY IN T HE IMPUGNED ORDER IN THIS REGARD, I.E., REOPENING OF ASSESSMENT, WAS MADE DUR ING HEARING. EACH YEAR BEING A SEPARATE AND DISTINCT UNIT OF ASSESSMENT, ALLUDIN G TO ASSESSMENTS FOR PRECEDING YEARS, AND WHICH IS WITHOUT SHOWING ANY FINDING WIT H REFERENCE TO OR QUA THE SPECIFIC ISSUE RAISED BY THE REVENUE, WOULD BE OF L ITTLE MOMENT. IF ONLY TO CLARIFY THE LAW IN THE MATTER, THE HONBLE APEX COU RT IN CIT V. BRITISH PAINTS INDIA LTD . [1991] 188 ITR 44 (SC), MADE IT ABUNDANTLY CLEAR THAT THERE IS NO ESTOPPLE AGAINST LAW, AND MERELY BECAUSE A METHOD O F ACCOUNTING OR A PARTICULAR STATE OF AFFAIRS WAS NOT QUESTIONED IN THE PAST, WO ULD BE NO GROUND FOR NOT BRINGING THE CORRECT INCOME TO TAX FOR THE CURRENT YEAR. AS EXPLAINED IN CIT V. SESHASAYEE INDUSTRIES LTD . [2000] 242 ITR 691 (MAD), THE FACT THAT ITS CLAIM WAS NOT QUESTIONED IN EARLIER YEARS DOES NOT ENTITL E THE ASSESSEE TO CONTEND THAT THE LAW SHOULD NOT BE APPLIED FOR THE CURRENT YEAR. THE PRINCIPLE OF RES JUDICATA IS NOT APPLICABLE TO THE PROCEEDINGS UNDER THE ACT ( M.M. IPOH V. CIT [1968] 67 ITR 106 (SC)). REFERENCE IN THIS CONTEXT, AGAIN FOR THE SAKE OF COMPLETENESS OF OUR ORDER, MAY BE MADE TO THE DECISION BY THE HONB LE APEX COURT IN NEW JEHANGIR VAKIL MILLS CO. LTD. V. CIT [1963] 49 ITR 137 (SC). WE, ACCORDINGLY, FIND NO MERIT IN THIS CHALLENGE TO THE INITIATION O F REASSESSMENT PROCEEDINGS, AND WHICH THEREFORE FAILS. WE DECIDE ACCORDINGLY, DISMI SSING THE ASSESSEES APPEALS CROSS OBJECTIONS. REVENUES APPEALS (AYS. 2005-06 TO 2010-11) BACKGROUND FACTS; THE ISSUE AND THE RESPECTIVE CASE S 5. THE DELINEATION OF THE ISSUE ARISING FOR ADJUDIC ATION WOULD REQUIRE US TO FIRST UNDERSTAND THE TRANSACTIONS UNDERTAKEN BY THE ASSESSEE-TRUST FOR RAISING RESOURCES, IN THE MAIN, AND WHICH IS BY WAY OF ROYA LTY ON ASSIGNING THE FEATURE FILMS SETTLED ON IT. TOWARD THIS WE MAY EXTRACT T HE RELEVANT PART OF THE A 5 ITA NO.917 TO 922/MDS/2015 (AY 2005-06 TO 2010-11 ) ITO V. RAMANAIDU CHARITABLE TRUST SETTLEMENT DEED DATED 15/2/2002 BETWEEN SREE SURESH PRODUCTIONS, A PROPRIETARY CONCERN OF D. RAMANIDU AND THE ASSESSEE-TRUST (FORM ING PART OF THE PAPER-BOOK), AS UNDER: WHEREAS THE SETTLOR IS THE PRODUCER OF THE TELUGU FEATURE FILM TITLED AS 'NEE PREMAKAI' FEATURING ABBAS, VINEETH, LAYA AND OTHERS , MUSIC BY S.A . RAJ KUMAR, DIRECTED BY MC SHIVA IN COLOUR 35MM, HEREINA FTER CALLED 'THE PICTURE OR THE SAID PICTURE.' THE SETTLOR HAS TO COVER RS.2,01,15,3801- (RUPEES TWO CRORES ONE LAKH FIFTEEN THOUSAND THREE HUNDRED AND EIGHTY ONLY) TOWARDS - APPROXIMATE COST OF PRODUCTION OF THE SAID PICTURE ARRIVED AT ON THIS DATE. WHEREAS THE SETTLOR IS OF THE FIRM OPINION THAT TH E PICTURE WILL COLLECT A FAIRLY GOOD AMOUNT OVER AND ABOVE THE SAID SUM OF RS . 2,01,15, 380 (RUPEES TWO CRORES ONE LAKH FIFTEEN THOUSAND THREE HUNDRED AND EIGHTY ONLY) WHEREAS THE SETTLOR INTENDS TO SETTLE ITS RIGHTS O F THEORETICAL (SEEMS TO BE A TYPO ERROR, SHOULD READ AS THEATRICAL)EXHIBITION AND EXP LOITATION OF THE SAID PICTURE ON PERPETUAL BASIS IN FAVOUR OF THE SETTLEE FOR THE ENTIRE AREA OF ANDHRA PRADESH AS POPULARLY KNOWN IN THE FILM TRADE SUBJECT TO THE CONDITION THAT THE SETTLEE PAYS TO THE SETTLOR A SUM OF RS.2,01,15,380 (RUPEES TWO CRORES ONE LAKH FIFTEEN THOUSAND THREE HUNDRED AND EIGHTY ONLY) AS A DOWN PAYMENT AND ACCEPTS TO PAY A FURTHER SUM OF RS.12,00,000/- (RUPEES TWELVE LAKHS ONLY) PER YEAR STARTING WITH THE YEAR ENDING 31 ST MARCH 2003 AND CONTINUE TO PAY THE SAID ANNUAL AMOUNT FOR A FURTHER PERIOD OF 25 YEARS STARTING FROM THAT DATE . CLAUSE 4 OF THE SETTLEMENT DEED , READS AS UNDER: IT IS THE INTENTION OF THE SETTLOR THAT ALL THE RE ALI Z ATION S E ITH E R THROU G H EXPLOITATION OR BY L EASE REALIZATIONS OR BY ANY OTHER MODE SHALL BE TAK E N BY THE SETTLEE AS ITS INCOME AND CAN BE USED BY TH E SE TTL EE FOR AND IN TH E FURTHERANCE OF AN Y OF ITS ACTIVITI E S . THE SETTLEMENTS, AS WELL AS THEIR SUBSEQUENT ASSIGN MENT, IS BY AND TO TRUSTEES OR CONCERNS IN WHICH THEY ARE PROPRIETORS/PARTNERS/DIR ECTORS, I.E., PERSONS COVERED U/S.13(3). THIS, IN FACT, IS ADMITTED. THE SAME WAS , HOWEVER, FOUND AS NOT VIOLATIVE OF SECTION 13(1)(C) BY THE LD. CIT(A) INA SMUCH AS THE AMOUNT REALIZED BY THE TRUST ON SUBSEQUENT ASSIGNMENT (OF FILMS) IS MUCH MORE THAN THE CONDITIONAL AMOUNT FIXED BY THE DONOR/S , WHICH IS STATED BEFORE US TO BE ONLY SUFFICIENT TO COVER THE COST OF THE FILM, SO THAT T HE TRUST COULD GENERATE 6 ITA NO.917 TO 922/MDS/2015 (AY 2005-06 TO 2010-11 ) ITO V. RAMANAIDU CHARITABLE TRUST ENORMOUS AMOUNT (OF RESOURCES) TO MEET ITS OBJECTS OVER A PERIOD OF TIME, AND WHICH IT DOES. NO UNDUE BENEFIT THUS ACCRUES TO THE INTERESTED PERSONS THROUGH THE TRANSACTIONS DONE BY THE TRUST. THIS IN FACT SU MS UP THE ASSESSEES CASE BEFORE US AS WELL. THE REVENUE MAKES ITS CASE WITH REFERENCE TO THE SETTLEMENT DEEDS (FORMING PART OF THE RECORD/PAPER-BOOKS), EXT RACTING DIFFERENT CLAUSES THEREOF (PER THE WRITTEN SUBMISSIONS, WHICH WERE AD DUCED BY EITHER PARTY, AND REFERRED TO DURING HEARING). ON THAT BASIS, IT IS U RGED THAT THE DEED/S OF SETTLEMENT, ASSIGNING RIGHTS FOR CONSIDERATION, IS IN FACT A DEED OF SALE . THERE IS, THEREFORE, NO CASE OF DONATION, MUCH LESS CORPUS DO NATION. TWO, EVEN SO, IT IS A COMMERCIAL TRANSACTION, SO THAT THE ASSESSEE IS THE REBY UNDERTAKING BUSINESS, WHICH SHALL OPERATE TO OUST ITS CASE U/S. 2(15), I .E., AY 2009-10 ONWARDS. THIRDLY, IT IS ALLEGED THAT THE TERMS OF THE DEED/S , I.E., BOTH FOR PURCHASE AND SALE OF THE RIGHTS IN FEATURE FILMS, PROVIDE FOR TRANSFER OF THEIR PROFITS BY RELATED PERSONS , THUS EVADING TAXES, EITHER PERMANENTLY OR BY DEFE RRING THE SAME. THE ARRANGEMENT IS THUS ONLY AN ARTIFICE, WITH THE ASSE SSEE-TRUST ACTING AS A CONDUIT . DISCUSSION 6. WE HAVE HEARD BOTH THE PARTIES, AND PERUSED THE MATERIAL ON RECORD. CLEARLY, THE PURPORT OF THE IMPUGNED ORDER, I.E., O N MERITS, IS THE NON- APPLICATION OF SEC.13(1)(C) OF THE ACT INASMUCH AS NO UNDUE BENEFIT IS STATED AS CONFERRED ON ANY RELATED PARTY BY THE ASSESSEE-TRUS T. IT IS, HOWEVER, APPARENT THAT THE INFERENCE FOR THE OBSERVATION AS TO THE TRANSAC TION/S BETWEEN THE ASSESSEE AND THE RELATED PERSONS BEING AT ARMS LENGTH, AND WHIC H FORMS THE BASIS OF THE FINDING BY THE LD. CIT(A) OF NO UNDUE BENEFIT ARISI NG TO THE RELATED PARTIES, IS THE ENORMOUS PROFIT GENERATED OR ARISING TO THE ASSESSE E-TRUST ON THE ACQUISITION AND THE SUBSEQUENT DISPOSAL OF THE DISTRIBUTION AND EXH IBITION RIGHTS IN THE FEATURE FILMS. THE TRANSACTION/S HAS BEEN SEEN BY HIM FROM THE STANDPOINT OF THE ASSESSEE-TRUST AND NOT IN ITS ENTIRETY, AS INDEED OUGHT TO BE THE CASE, ADDRESSING 7 ITA NO.917 TO 922/MDS/2015 (AY 2005-06 TO 2010-11 ) ITO V. RAMANAIDU CHARITABLE TRUST THE VARIOUS CONCERNS OF THE REVENUE IN THE MATTER ( REFER PARA 5) AND, FURTHER, AS SOUGHT TO BE PROJECTED PER ITS SEVERAL GROUNDS BEFO RE US. AS WE SHALL PRESENTLY SEE, EXAMINING DIFFERENT ASPECTS THEREOF, THE TRANS ACTIONS HAVE SEVERAL DIMENSIONS THERETO. THE SETTLEMENT AT A COST CANNOT BE REGARDED AS A SE TTLEMENT, WHICH NECESSARILY IMPLIES A TRANSFER FOR A CONSIDERATION. THE SAME, EVEN AS THE REVENUE ARGUES, IS THUS A PURCHASE TRANSACTION FOR ACQUISITION OF RIGHTS - NOTHING MORE AND NOTHING LESS, I.E., DESPITE THE EMPLOYMENT OF THE WORD SETTLEMENT. THE ASSESSEE IS, THUS, UPON ACCEPTING THE SO-CALLED SETTLEMENT, ENTERING A BUSINESS TRANSACTION, ASSUMING A BUSINESS RISK. WHE THER THE PURCHASE/ACQUISITION COST IS LOW, AT PAR OR HIGHER THAN THE FAIR MARKET VALUE, WHICH ITSELF IS A MATTER OF ASSESSMENT, REQUIRING BUSINESS ACUMEN AND EXPERIENC E IN THE RELEVANT TRADE, AND WHICH AGAIN MAY VARY FROM REGION TO REGION AS WELL AS FROM TIME TO TIME, IS ANOTHER MATTER. THE RISK ASSUMED WOULD VARY INVERSE LY WITH THE COST, MAKING THE SAME ALSO SIGNIFICANT. WHY, AS EXPLAINED, ASCER TAINING THE REASONABLE VALUE OF THE RIGHTS UNDER THE GIVEN CIRCUMSTANCES IS ITSE LF A BUSINESS DECISION, REQUIRING RELEVANT EXPERIENCE AND SKILLS. INASMUCH AS THE ASSESSEE IS THUS UNDERTAKING A BUSINESS ACTIVITY, ITS CHARITABLE PU RPOSE, WHICH FALLS UNDER THE CATEGORY ADVANCEMENT OF ANY OBJECT OF GENERAL PUBL IC UTILITY, WOULD STAND TO BE OUSTED UNDER SECTION 2(15) AS A CHARITABLE PURPO SE (FOR AY 2009-10 AND SUBSEQUENT YEARS). TWO, THE SAME CANNOT BY ITSELF B E SAID TO RESULT IN ANY ACCRETION TO THE CAPITAL OF THE ASSESSEE SO AS TO M AKE IT AN ACT OF CONTRIBUTION THERETO BY THE PERSON/S SETTLING THE RIGHTS, MUCH LESS VOLUNTARY. BE IT TOWARD CORPUS OR OTHERWISE, VOLUNTARINESS IS AN ESSENTIAL INGREDIENT FOR A CONTRIBUTION TO BE EXEMPT - EITHER PER SE (S.11(1)(D)) OR ON ITS APPLICATION (S.11(1)(A)). I N OTHER WORDS, THERE IS, FIRSTLY, NO CONTRIBUTION, BEING ON LY A BUSINESS TRANSACTION AT A PRICE, REASONABILITY OF WHICH IS A MARKET DRIVEN PH ENOMENON, TO WHICH THERE IS NO REFERENCE NOR THE ASSESSEE QUALIFIED TO ASSESS. 8 ITA NO.917 TO 922/MDS/2015 (AY 2005-06 TO 2010-11 ) ITO V. RAMANAIDU CHARITABLE TRUST WE MAY NEXT EXAMINE THE CORRESPONDING PART OF THE T RANSACTION. THAT IS, THE SIMULTANEOUS SALE OF THE DISTRIBUTION AND EXH IBITION RIGHTS SO ACQUIRED, WHICH IS AT A HIGHER VALUE. THIS DOES MITIGATE THE BUSINESS RISK ASSUMED (ON ACQUISITION), ALSO REMOVING, TO A LARGE EXTENT, THE OBLIGATION ON IT (TRUST) TO MAKE AN ASSESSMENT OF THE PRICE FOR PURCHASE AND/OR SA LE, INASMUCH AS IT CAN CHOOSE TO REMAIN PASSIVE AS IT ONLY STANDS TO GAIN SOMETHI NG, WITHOUT BEING UNDULY CONCERNED ABOUT ITS QUANTUM. THIS WOULD, HOWEVER, YET NOT MAKE THE ACCEPTANCE OF THE RIGHTS OR THEIR ACQUISITION AS A SETTLEMENT. THE TRUST IS IN FACT OBLIGED TO ACT, ENTERING INTO BOTH THE TRANSACTIONS , I.E., FOR PURCHASE AND SALE, SIMULTANEOUSLY, TO ENSURE A SURPLUS, WHICH (SURPLUS ) IN FACT IS STATED TO CONSTITUTE A (CORPUS) DONATION. FURTHER, THE TRANSACTIONS BEIN G SEPARATE AND DISTINCT CONTRACTS, RISK TO THAT EXTENT CONTINUES TO OBTAIN, AS THE DEBTOR COULD DEFAULT WITHOUT ANY RECOURSE (FOR THE ASSESSEE) TO THE CRED ITOR, WHO SHALL, IN ANY CASE, HAVE TO BE PAID. AGAIN, THERE MAY BE, AS INDEED ARE , TIMING DIFFERENCE/S AS WELL, SO THAT WHILE THE PRODUCER IS TO BE PAID UPFRONT IN WHOLE OR IN PART, THE SALE PROCEEDS ARE REALISABLE ONLY OVER A PERIOD OF TIME. THAT IS, DESPITE MITIGATION OF BUSINESS RISK TO A CONSIDERABLE EXTENT, INASMUCH AS TRANSACTIONS ARE SIMULTANEOUS AND, AS APPARENT, PREMEDITATED, THE SA ME DOES NOT MAKE THE TRANSACTIONS AS EITHER A DONATION OR AS NOT CONSTIT UTING BUSINESS. THE CONCOMITANT OF THE ASSESSEE UNDERTAKING BUSINESS IS THAT THE PROFITS GENERATED ARE BUSINESS PROFITS, AND WHICH IS CORROBORATED BY THE FACT THAT NEITHER THE PRODUCER (SELLER) NOR THE EXHIBITOR (PURCHASER) OF THE FILM RIGHTS CLAIMS (OR COULD CLAIM) DEDUCTION (U/S. 80-G) IN RESPECT OF THIS SO- CALLED VOLUNTARY CONTRIBUTION OR DONATION, PUT PAYING ANY CLAIM IN THIS RESPECT . HOW COULD, ONE MAY ASK, THE SURPLUS ARISING ON THE (SUBSEQUENT) ASSIGNMENT OF I TS OWN RIGHTS BE REGARDED AS A DONATION, MUCH LESS A CORPUS DONATION THERETO ? THAT APART, THE BUSINESS IS NOT IN ANY MANNER INCIDENTAL TO THE ASSESSEES OBJECTS, AS REQUIRED BY S.11(4A), AND NEITHER ANY SEPARATE BOOKS OF ACCOUNT MAINTAINED FO R THE SAID BUSINESS BY THE 9 ITA NO.917 TO 922/MDS/2015 (AY 2005-06 TO 2010-11 ) ITO V. RAMANAIDU CHARITABLE TRUST TRUST AS ALSO CONFIRMED BY THE LD. AR DURING HEAR ING, I.E., FOR THE SAID PROFIT TO BE SUBJECT TO EXEMPTION U/S.11(1)(A) ON ITS APPLICA TION. LIKEWISE, BEING A BUSINESS PROFIT, THE QUESTION OF CLAIM U/S.11(1)(D) , I.E., QUA CORPUS DONATION, VOLUNTARY IN NATURE, ALSO DOES NOT ARISE. SUCCINCTLY PUT, THE FACT OF THE PROFITS GENERATED BEING UPON ENTERING INTO TRANSACTIONS BY THE ASSESSEE IS INCONSISTENT WITH ITS CLAIM OF BEING THUS IN RECEIPT OF VOLUNTA RY CONTRIBUTIONS FROM TRADE PARTNERS . THERE BEING NO SETTLEMENT, WITH THE TRANSACTIONS BEING COMMERCIAL IN NATURE, THE ASSESSEE IS ENGAGED IN BUSINESS, MAKING THE RELEVANT PROVISIONS OF THE ACT APPLICABLE. THE EARNING OF INCOME AS BEING FROM A PROPERTY HEL D UNDER TRUST, WHICH IS A PREREQUISITE FOR EXEMPTION UNDER SECTION 11, IS MISSING . A TRUST CAN, WE MAY THOUGH ADD, SURELY ENGAGE IN BUSINESS F OR ITS OBJECTS/PURPOSES, PROVIDED IT HAS THE REQUISITE POWERS UNDER ITS CHA RTER, AND WHICH ASPECT SHALL HAVE TO BE EXAMINED. THIS BRINGS US TO THE THIRD ASPECT OF THE TRANSACTI ONS. AND WHICH IS AS TO WHY SUCH CONVOLUTED TRANSACTIONS SHOULD AT ALL BE E NTERED INTO, I.E., IN THE FIRST PLACE. BOTH THE PRODUCER AS WELL AS THE DISTRIBUTOR /EXHIBITOR BEING IN THE FILM TRADE, WHICH IN FACT IS A PREREQUISITE FOR UNDERTAKING THE SAID BUSINESS , THEY MAY AS WELL CHOOSE TO TRANSACT BUSINESS BETWEEN THEMSEL VES, VOLUNTARILY CONTRIBUTING TO THE TRUST FROM THEIR BUSINESS PROFITS AND, FURTH ER, WITHOUT NECESSITATING ITS UNDERTAKING BUSINESS. THE ANSWER LIES IN THE TAX ADVANTAGE THAT ENURES THUS, AND WHICH THE REVENUE SPEAKS OF. IT IS CLEAR THAT T HE PROFITS THAT ARE CONTRIVED TO ARISE TO THE TRUST ON THE ACQUISITION (PURCHASE) AN D DISPOSAL (SALE) OF THE FILM RIGHTS ARE ONLY THAT FOREGONE BY EITHER OR BOTH THE CORRESPONDING PARTIES. DONATING DIRECTLY TO THE TRUST, I.E., BY CONTRIBUTI NG VOLUNTARILY OUT OF THEIR BUSINESS PROFITS, WOULD REQUIRE THEM TO INCUR TAX L IABILITY THEREON TO THAT EXTENT, I.E., THE AMOUNT SOUGHT TO BE TRANSFERRED OR DONAT ED TO THE ASSESSEE-TRUST. THE ARRANGEMENT UNDER REFERENCE THUS CONFERS A TAX ADVA NTAGE TO THEM, CONSIDERING THAT NO TAX LIABILITY IS SUSTAINED ON THE PROFIT FO RFEITED IN FAVOUR OF THE ASSESSEE- 10 ITA NO.917 TO 922/MDS/2015 (AY 2005-06 TO 2010-11 ) ITO V. RAMANAIDU CHARITABLE TRUST TRUST, WHICH WOULD OTHERWISE HAVE TO BE OUT OF TAX PAID PROFIT. THE BENEFIT IS REAL, ACTUAL BENEFIT, WITHIN THE CONTEMPLATION OF S ECTION 13(1)(C) OF THE ACT, WHICH HAS TO BE CONSIDERED BROADLY, IN A PRACTICAL, COMMON SENSE WAY. THE MODEL OR THE MODUS OPERANDI HAS BEEN IN FACT FURTHER FINE TUNED OR REFINED B Y ARTIFICIALLY JACKING UP THE (SALE) PRICE OF THE FIL MS SETTLED ON THE TRUST WHICH HAVE NO OR LITTLE MARKET VALUE, I.E., ON THE ASSIGN MENT OF DISTRIBUTION/EXHIBITION RIGHTS THEREIN. THIS RESULTS IN HUGE PROFITS (IMP LYING FUNDS) IN THE HANDS OF THE TRUST, WHILE THE ENHANCED PURCHASE COST (TO THE DIS TRIBUTOR /EXHIBITOR), RESULTS IN A CORRESPONDING DEDUCTION IN HIS HANDS, AVAILABLE FOR SET OFF AGAINST HIS BUSINESS PROFITS FROM OTHER FILMS. THIS IN FACT EMANATES FRO M THE ASSESSEES OWN LETTER DATED 26/3/2001 (TO THE DY. CIT (EXEMPTIONS)-IV, CH ENNAI/PAPER-BOOK PAGE 62), THE RELEVANT PART OF WHICH READS AS UNDER: HAVING SAID SO, WE WOULD LIKE TO INTIMATE YOU THAT THE TRUST HAS RECEIVED THE FOLLOWING PICTURES ON SETTLEMENT FROM VARIOUS PERSO NS DURING THESE YEARS 1. RAKTHA THILAKAM AND DHRUVA NAKSHATRAM 2. DILWALA 3. PARUVU PRATISHTA 4. NAYUDUGARI KUTUMBAM 5. SUPER HEROES THE SETTLERS WHILE SETTLING THE RIGHTS OF EXPLOITAT ION OF THE PICTURES IN FAVOR OF THE TRUST HAVE STIPULATED A CONDITION THAT SUCH SETTLEMENT TAKES E FFECT IF THE TRUST PAYS THEM THE COST WHICH THEY HAVE INCURRED IN PRODUCING THE FILMS OR IN ACQUIRIN G THE SAME. THIS IS THE PRECONDITION FOR SETTLEMENT . THE TRUST AND THE DONORS KNOW THAT THE RIGHTS ARE M UCH WORTHIER THAN THE COST. THUS THE ASSET IS MORE VALUABLE THAN THE COST AND IS CAPABLE OF GENER ATING INCOME MUCH OVER AND ABOVE THE COST WHICH IS CLEARLY ESTABLISHED BY THE VERY FACT THAT THE TRUST COULD LATER SELL THE RIGHTS AND RECEIVE H UGE AMOUNT OF ROYALTIES YEAR AFTER YEAR. [IN THE ABOVE PARA, ASSESSEE CLAIMS THAT THE RIGHTS ARE MUCH WORTHIER THAN THE COST AND IS CAPABLE OF GENERATING INCOME MUCH OVER AND ABOVE TH E COST. THE MOVIES INCLUDED IN THE LIST ARE RAKTHA THILAKAM, DHRUVA NAKSHATRAM AND DILWALA. ] (OUR COMMENTS) [HOWEVER, IN RESPECT OF THE VERY SAME MOVIES, NAMEL Y, RAKTHA THILAKAM DHRUVA NAKSHATRAM AND DILWALA HERE IS WHAT. THE ASSESSEE STATES ON PAGE 55 OF THE VERY SAME PAPER BOOK WHICH READS AS UNDER:] (OUR COM MENTS) 11 ITA NO.917 TO 922/MDS/2015 (AY 2005-06 TO 2010-11 ) ITO V. RAMANAIDU CHARITABLE TRUST 'SINCE THE ASSETS CONFERRED OR SETTLED ARE FEATURE FILMS, MOSTLY OLD PICTURES, THERE EXISTS A VERY LIMITED MARKET FOR THEIR DISPOS AL. SINCE THE MARKET AVAILABLE IS RESTRICTED THE TRUSTEES THEMSELVES OR THE CONCERNS IN WHICH THEY ARE INTERESTED HAVE BROUGHT BACK THE SAID RIGHTS IN THE FEATURE FILMS A T A VERY HIGH AND SUBSTANTIAL PRICE THEREBY CONFERRING ENORMOUS BENEFIT TO THE TRUST. T HE PRICE PAID IS VERY HIGH AND IN FACT SOME OF THE PICTURES LIKE 'RAKTHA THLLAKAM', D HRUVA NAKSHASTRAM', AND 'DILWALA' COULD NOT HAVE BEEN SOLD AT ALL. THAT IS TO SAY, QUITE APART FROM THE TAX BENEFIT ON THEIR REGULAR DONATIONS OR CONTRIBUTIONS TO THE ASSESSEE-TRUST BY FORFEITING THEIR NORMAL BUSINESS PROFITS BY ARRANGEMENTS CALCULATED FOR INCOME TO ARISE IN T HE ASSESSEES HANDS, THE TRUSTEES HAVE EXTENDED THIS PRACTICE FURTHER, PERFE CTING IT INTO A FINE ART, USING THE TRUST AS A TOOL TO SIPHON OFF TAX BY ARTIFICIALLY I NFLATING ITS PROFITS AND, CORRESPONDINGLY, DEFLATING THE PROFITS OF THEIR BUS INESSES. THERE IS, THUS, COUPLED WITH THE DIVERSION OF PROFITS, AS NOTICED EARLIER, A SUPPRESSION OF PROFITS AS WELL, FOLLOWING THE SAME MODUS OPERANDI ; THE VALUE AT WHICH THE RIGHTS IN FEATURE FILMS ARE ACQUIRED AND DISPOSED OF BY THE ASSESSEE- TRUST BEING HARDLY A MATTER OF CONCERN FOR IT, I.E., AS LONG AS THE TRANSACTIONS R ESULT IN PROFIT IN ITS HANDS. IN FACT, CORRECTLY SPEAKING, THE ASSESSEE, IN VIEW OF THE BACK-TO-BACK ARRANGEMENTS, ACQUIRING AND DISPOSING THE RIGHTS IN FILMS, IS NOT UNDERTAKING ANY BUSINESS, SO TO SPEAK, AND IS MERELY USED AS A DEVICE TO SIPHON OFF THEIR FUNDS THERETO, AVAILING TAX BENEFIT IN THE BARGAIN IN SHORT, DEF RAUD THE REVENUE. WE ARE NOT IN ANY MANNER, WE MAY CLARIFY, DOUBTING THAT THE FUNDS GENERATED IN THE TRUSTS HANDS ARE DEPLOYED FOR ITS PURPOSES AND OBJECTS, C HARITABLE IN NATURE. THE SAME IS, HOWEVER, CONTRIVED, SO AS TO BE AT THE COST OF THE EXCHEQUER. THE TRANSACTIONS SERVE NO OTHER FUNCTION BUT TO YIELD AN UNDUE AND U NMERITED TAX ADVANTAGE BY MEANS OF AN ARTIFICE, INTRODUCING THE ASSESSEE AS A MIDDLEMAN AND ROUTING THE BUSINESS THROUGH IT. THIS IS A CLEAR CASE OF A TAX FRAUD . WHY, THE ASSESSEE ITSELF IN THE COURSE OF ITS SUBMISSIONS BEFORE THE REVENU E (IN ASSESSMENT AND APPELLATE PROCEEDINGS) AS WELL AS BEFORE THE DIRECT ORATE OF EXEMPTIONS, EXPLAINED, EMPHATICALLY AT THAT, THAT THE FAIR MARK ET VALUE OF THE (RIGHTS IN) 12 ITA NO.917 TO 922/MDS/2015 (AY 2005-06 TO 2010-11 ) ITO V. RAMANAIDU CHARITABLE TRUST FEATURE FILMS IS MUCH MORE THAN THE AMOUNT AT WHICH THE SAME STAND TRANSFERRED TO THE TRUST, SO THAT THE DIFFERENCE, THOUGH REALIZ ABLE OVER TIME, BE CONSTRUED AS A CORPUS DONATION, WHICH WE HAVE, FOR REASONS AFORENO TED, FOUND NOT VALID OR ACCEPTABLE. THIS IN FACT IS BORNE OUT BY THE FACT O F ENORMOUS PROFITS IN THE ASSESSEES HANDS. CONCLUSION 7. WE MAY NEXT CONCLUDE OUR ORDER, WHICH MAY THOUGH BE READ IN FULL, I.E., ALONG WITH THE FOREGOING PART THEREOF. THE PRIMARY FACTS ARE NOT IN DISPUTE. THE QUESTION IS IF THE TRANSACTIONS ENTERED INTO BY THE TRUST ARE REGULAR, BUSINESS TRA NSACTIONS, TO WHICH THEREFORE THE LAW SHOULD ACCORD ITS SANCTION, APPLYING THE RELEVA NT PROVISIONS AS INCIDENT THEREON. AN EXAMINATION THEREOF, ASSUMING THE ASSESSEE, A PUBLIC CHARITABLE TRUST, BEING EMPOWERED UNDER ITS CHARTER TO UNDERTA KE BUSINESS , REVEALS THE TRANSACTIONS AS CONTRIVED, DESIGNED TO GENERATE PRO FIT IN THE HANDS OF THE TRUST AT THE COST OF THE DONATING FIRMS, I.E., BOTH THE S ELLER AND THE BUYER OF THE FILM RIGHTS, THE TRANSACTIONS BEING UNDERTAKEN IN CONCER T. THE SAME CANNOT BE REGARDED AS EITHER A (VOLUNTARY) DONATION TO THE AS SESSEE OR OF IT BEING IN BUSINESS, MUCH LESS ONE HELD BY IT, I.E., BY WAY OF A PROPERTY HELD IN TRUST, INCOME FROM WHICH IS EXEMPT U/S. 11 R/W S.12. THERE IS, IN FACT, BOTH, DIVERSION AS WELL AS SUPPRESSION OF PROFITS OF THE CORRESPOND ING ENTITIES, SERVING THE TWIN PURPOSE OF AVOIDING TAX ON THEIR PROFIT S, WHILE AT THE SAME TIME GENERATING TAX-EXEMPT FUNDS IN THE ASSESSEES HANDS. PLAYING W ITH THE PRICES, FOR EXAMPLE, AS OF OLD FILMS, LONG PAST THEIR PRIME, WITH LITTLE VALUE, BEING SOLD AT PRICES MUCH HIGHER THAN THE PREVAILING MARKET PRICE, SUPPRESSIN G THUS THE PROFIT OF THE BUYER FIRM WITH CONCOMITANT TAX ADVANTAGE INASMUCH AS THE LOSS ARISING ON THE TRANSACTION COULD BE SET OFF AGAINST ITS REGULAR PR OFITS. WHY, EVEN WHERE THE SALE (TO THE ASSESSEE) IS AT A PROFIT, I.E., BY PRESCRIB ING PAYMENTS OVER AND ABOVE THE UPFRONT AMOUNT WHICH IN THE FILM TRADE IS REFERRE D TO AS THE MINIMUM 13 ITA NO.917 TO 922/MDS/2015 (AY 2005-06 TO 2010-11 ) ITO V. RAMANAIDU CHARITABLE TRUST GUARANTEE, IS STIPULATED, THE SAME ARE STAGGERED OV ER A LONG PERIOD OF TIME (20- 25 YEARS), DEFERRING THE INCIDENT TAX LIABILITY, WH ILE AT THE SAME TIME ENSURING INCOME OVER A LONG PERIOD OF TIME, WHOLLY UNRELATED TO THE SALABILITY OR THE SHELF-LIFE OF THE FILM. THE PURCHASE AND SALE PRICE S OF FILMS, WHICH ARE ESSENTIALLY MARKET-DRIVEN, REQUIRING AN ASSESSMENT OF THE MARKET CONDITIONS, POTENTIAL, ETC., AND OF WHICH THEREFORE, THE ASSESS EE HAS NO EXPERIENCE BEING NOT A BUSINESS ENTERPRISE, MUCH LESS IN THE RELEVAN T TRADE, SO AS TO UNDERTAKE BUSINESS, ARE MANIPULATED SO AS TO FOIST THEIR PR OFITS ON THE ASSESSEE OR, IN SOME CASES, GENERATE ASSURED INCOME FOR THEMSELVES IN A STAGGERED MANNER. EVEN IF, IN SUCH A (LATTER) CASE, THE OVERALL (AGGREGATE) PR ICE IS A FAIR PRICE WHICH IS AGAIN A MATTER OF ASSESSMENT BASED ON TRADE PARAMET ERS, THE PURPOSE OF STAGGERING OF INCOME OVER SUCH A LONG PERIOD, UNREL ATED TO TRADE OR TRADE PRACTICES, IS UNMISTAKABLE, I.E., TO CONFER A TAX A DVANTAGE. EITHER WAY, BESIDES ATTRACTING S. 13(1)(C), THE REVENUES CHARGE OF THE ASSESSEE ACTING AS A CONDUIT IS PROVEN. THE FACTS EMANATE FROM THE TRANSACTIONS ENT ERED INTO, AS EVIDENCED BY THE SETTLEMENT DEEDS, AS WELL AS THE ASSESSEES OWN SUBMISSIONS BEFORE THE TAX AUTHORITIES, SO THAT THE SAME ARE ADMITTED. THE ASS ESSEE HAS IN FACT NOT REBUTTED THESE CHARGES AT ANY STAGE, WHICH FIND MENTION AND DESCRIPTION IN THE ASSESSMENT ORDERS; RATHER, AS AFORE-NOTED, THE SAME FORM THE B ASIS OF THE RELIEF ALLOWED TO IT BY THE LD. CIT(A), I.E., OF THE TRANSACTIONS HAVING LED TO ENORMOUS PROFITS IN THE ASSESSEES HANDS, SO THAT IT CANNOT BE REGARDED AS HAVING BEEN OVER-CHARGED, CONFERRING ANY UNDUE BENEFIT TO THE TRADE PARTNERS. IT IS IN FACT THE SURPLUS IN THE ASSESSEES HANDS, WHICH IS CLAIMED AS A (CORPUS) DO NATION THERETO! THE APPLICABILITY OF LAW, OR THE RELEVANT PROVISION S OF LAW, IS ON THE PREMISE OF THE TRANSACTIONS BEING GENUINE, AND WHIC H IS CLEARLY NOT SO IN THE INSTANT CASE, BEING ONLY TAX MOTIVATED, VIOLATING T HE PROVISIONS OF THE TRUST ACT, 1882 ITSELF. THIS IS AS DEFEATING TAX LAWS CAN ONLY BE REGARDED AS OPPOSED TO PUBLIC POLICY, ATTRACTING SECTIONS 2 AND 3 OF THE S AID ACT. WHEN THE TRANSACTIONS, 14 ITA NO.917 TO 922/MDS/2015 (AY 2005-06 TO 2010-11 ) ITO V. RAMANAIDU CHARITABLE TRUST ON THE BASIS OF WHICH EXEMPTION/S IS BEING CLAIMED, ARE THEMSELVES NOT GENUINE, THE FURTHER QUESTION OF ANY EXEMPTION UNDER LAW WIT H REFERENCE THERETO, DOES NOT ARISE INASMUCH AS THEY CANNOT BE REGARDED AS VALID IN LAW. THIS (GENUINENESS) IN FACT IS A FUNDAMENTAL CONDITION OR ASSUMPTION FOR T HE LAW TO ACCORD PRIMACY OR ITS SANCTION TO ANY TRANSACTION, MUCH LESS ANY BENE FIT THERE-UNDER. RATHER, IN OUR VIEW, THERE IS THUS REASON ENOUGH FOR EVEN A WITHDR AWAL OF REGISTRATION (UNDER THE ACT), EVEN AS WE MAY CAUTION THAT A REVERSE ARG UMENT WOULD NOT HOLD, SO THAT NON-WITHDRAWAL OF REGISTRATION FOR THE RELEVAN T YEARS WOULD NOT BY ITSELF JUSTIFY OR VALIDATE A CLAIM AS TO THE GENUINENESS O F ITS ACTIVITIES IN THE FACE OF CLEAR FINDINGS TO THE CONTRARY, AND WHICH REMAIN UN -REBUTTED; RATHER, PROVED. IN FACT, WEVE EVEN FOUND THE CONDITIONS (INCLUDING S. 13(1)(C)) OF THE RELEVANT PROVISIONS OF THE ACT, VIZ. SECTIONS 11 AND 12, BEI NG NOT MET, SO THAT, WITHOUT PREJUDICE, THE ASSESSEE SHALL NOT BE ENTITLED TO AN EXEMPTION THERE-UNDER. FURTHER STILL, AND AGAIN WITHOUT PREJUDICE, EVEN IF THE TRA NSACTIONS ARE REGARDED AS GENUINE, AND THE ASSESSEE AS UNDERTAKING BUSINESS, THE SAME WOULD OUST ITS CASE U/S. 2(15) OF THE ACT FOR AYS. 2009-10 AND 2010-11. WE ARE CONSCIOUS THAT IT IS NOT CLEAR IF THE ASSESSEE IS EMPOWERED TO DO BUSINE SS AND, FURTHER, BEING A SPECIALIZED TRADE, INCOMPETENT SO TO DO. HOWEVER, S . 2(15) REQUIRES THE ACTIVITY TO BE IN THE NATURE OF TRADE, COMMERCE OR BUSINESS, OR SERVICES IN RELATI ON THERETO, SO THAT IT SHALL APPLY EVEN IF THE ACTIVIT Y MAY NOT BE, STRICTLY SPEAKING, REGARDED AS BUSINESS. IN FACT, NO CASE QUA THE NON-APPLICATION OF THIS PROVISION WAS MADE OUT DURING HEARING, WHICH WAS LIMITED TO T HE NON-APPLICATION OF S. 13(1)(C), EVEN AS HELD BY THE LD. CIT(A), WHO, WE A RE AFRAID TO SAY, HAS CONSTRUED THE REVENUES CASE WHICH WE UPHOLD, IN A VERY LIMITED MANNER. THE RELIANCE BY THE LD. CIT(A) ON DIT(EXEMPTIONS) V. WILLINGTION CHARITABLE TRUST [2011] 330 ITR 24 (MAD) IN THIS REGARD, IS MISPLAC ED INASMUCH AS THE SAID DECISION, WHICH IS EQUALLY BIN DING ON US, SHALL OPERATE TO EXCLUDE THE APPLICATION OF SECTION 11(4A) AND NOT S . 2(15). IN CIT V. NAGI REDDY 15 ITA NO.917 TO 922/MDS/2015 (AY 2005-06 TO 2010-11 ) ITO V. RAMANAIDU CHARITABLE TRUST CHARITIES [2000] 241 ITR 431 (MAD), ALSO RELIED UPON BY THE ASSESSEE, THE ASSIGNMENT OF FILM RIGHTS WAS WITHOUT COST AND, IN FACT, SUBJECT TO THE DISTRIBUTION ARRANGEMENT ALREADY MADE BY THE DONORS PRIOR TO SUCH ASSIGNMENT. IT WAS UNDER SUCH CIRCUMSTANCES THAT THE HBLE HIGH COURT FOUND THE ASSIGNMENT TO BE A VALID DONATION TOWARD CORPUS, I.E., OF THE SUMS THAT MAY BE REALIZED ON DISTRIBUTION. IN FACT, IN THE SAID DECISION, THE HO NBLE COURT ISSUED A CLEAR FINDING AS TO THE ASSESSEE BEING NOT THEREBY DOING ANY BUSINESS. BEFORE PARTING WITH OUR ORDER, WE MAY ADD THAT, SO HOWEVER, THE ASSESSING OFFICER HAS, AS WE OBSERVE, FOR SOME YEAR S, INCLUDED BOTH, THE AMOUNT RECEIVED AS CORPUS DONATION (DISREGARDING IT AS SO) AS WELL AS THAT APPLIED FOR CHARITABLE PURPOSES (IN VIEW OF S. 13(1)(C)). THE S AME WOULD BE JUSTIFIED ONLY WHERE THE ASSESSEE HAS CLAIMED SEPARATE EXEMPTIONS U/SS.11(1)(A) AND 11(1)(D) OF THE ACT, I.E., QUA CORPUS DONATIONS AND OTHER THAN CORPUS DONATIONS. WHERE NOT SO, THIS WOULD AMOUNT TO A DOUBLE ADDITION, WHI CH IS NOT PERMISSIBLE. THOUGH NOT RAISED BY THE ASSESSEE, WE YET CONSIDER IT ONLY PROPER, WITH A VIEW TO DETERMINE THE CORRECT TAX LIABILITY, WHICH IS THE P REMISE OF A TAX APPEAL, THAT THE TWO SIMULTANEOUS ADDITIONS SHALL BE SUBJECT TO A FI NDING BY THE AO OF THE ASSESSEE HAVING CLAIMED TWO SEPARATE DEDUCTIONS. TH E ASSESSEE SHALL PROVIDE THE RELEVANT ASSISTANCE REQUIRED IN THIS REGARD, I.E., AT THE TIME OF FRAMING THE CONSEQUENTIAL ORDER. REFERENCE TO OTHER CASE LAW, I NCLUDING CIT V. THE TRUSTEES OF NIZAMS TRUST FOR EDUCATION AND LEARNINGS [2013] 359 ITR 419 (AP), REFERRED TO BY THE ASSESSEE PER ITS WRITTEN SUBMISS IONS, IS NOT BEING SPECIFICALLY MADE IN THIS ORDER UPON FINDING, UPON PERUSAL THERE OF, AS NOT RELEVANT, BEING ALSO NOT SPECIFICALLY ARGUED DURING HEARING, SHOWING ITS RELEVANCE. IN VIEW OF THE FOREGOING, WE DO NOT FIND ANY MERIT IN THE ASSESSEES CROSS OBJECTIONS AND, SUBJECT TO THE VERIFICATION AFORESA ID BY THE AO, UPHOLD THE REVENUES APPEALS. 16 ITA NO.917 TO 922/MDS/2015 (AY 2005-06 TO 2010-11 ) ITO V. RAMANAIDU CHARITABLE TRUST 9. IN THE RESULT, THE REVENUES APPEALS ARE ALLOWED ON THE AFORESAID TERMS, AND THE ASSESSEES CROSS OBJECTIONS ARE DISMISSED. ORDER PRONOUNCED ON APRIL 28, 2017 AT CHENNAI . SD/- SD/- ( . ) ( ) (G. PAVAN KUMAR) (SANJAY ARORA) ! /JUDICIAL MEMBER /ACCOUNTANT MEMBER /CHENNAI, . /DATED, APRIL 28, 2017. EDN / ( *!,01 21$, /COPY TO: 1. %& /APPELLANT 2. *+%& /RESPONDENT 3. 3, ( )/CIT(A) 4. 3, /CIT 5. 145 *!,! /DR 6. 56# 7 /GF