2013 (8) TMI 974 - AT - Income Tax

Benefits of exemption u/s 11 &12 - addition of corpus donation to the returned income of the assessee trust u/s 68 on the ground of being genuineness of which remained unverified - Held that - The decision of Hon ble Delhi High Court in the case of Keshav Social and Charitable Foundation (2005 (2) TMI 84 - DELHI High Court) squarely covers the case of the assessee because assessee had provided list of donors and donations were found to be applied for charitable purposes. Since the above material findings of the learned CIT(A) regarding application of donations was for charitable purposes and furnishing of list of donors along with their identity by furnishing the amount through account payee cheques, their being PAN holders and their assessment to tax has not been rebutted by the revenue before the Tribunal, we do not find reason to interfere with the first appellate in this regard, merely because the assessee could not produce these donors before the Assessing Officer or they were not found at their given addresses during the proceeding before the authorities below. It is accordingly upheld. - Decided against revenue

Summary

Issues: Revenue challenging first appellate order on exemption u/s 11 & 12 and deletion of corpus donation addition u/s 68.

Exemption u/s 11 & 12:
The revenue challenged the first appellate order, arguing that the genuineness of the claimed corpus donation of Rs. 10,83,000 was not established by the assessee, yet the CIT(A) allowed exemptions under sections 11 and 12 of the Income-tax Act, 1961. The Assessing Officer added the amount under section 68 as the genuineness was not proven. Despite opportunities, the assessee failed to produce the donors, M/s Lab Tronics Overseas Pvt. Ltd. and M/s Rabik Exports Ltd. The CIT(A) deleted the addition, stating that the corpus donation was received through account payee cheques from identifiable parties with PAN and tax assessments. Citing the Delhi High Court case of DIT(E) Vs. Keshav Social and Charitable Foundation, the CIT(A) emphasized that the disclosure of donations along with donor lists, application of donations for charitable purposes, and the use of account payee cheques establish the genuineness. The Tribunal upheld the CIT(A)'s decision, noting that the revenue did not rebut the findings regarding the charitable use of donations and the donors' identity, despite their absence during proceedings.

Cross Objection:
The cross objection raised by the assessee against the first appellate order was dismissed as not pressed during the Tribunal hearing. The objection pertained to the validity of the assessment under sections 147 and 143(3) of the Act, as well as the charging of interest under sections 234B, 234C, and 234D. Ultimately, both the revenue's appeal and the assessee's cross objection were dismissed, affirming the decisions of the CIT(A) and the Assessing Officer.

In conclusion, the Tribunal upheld the CIT(A)'s decision to allow exemptions under sections 11 and 12 based on the genuineness of the corpus donation, supported by donor lists and the charitable application of funds. The cross objection raised by the assessee regarding assessment validity and interest charges was dismissed. The judgment emphasized the importance of substantiating donations and maintaining transparency in charitable activities to qualify for tax exemptions.