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2014 (11) TMI 350 - AT - Income TaxApplicability of section 115BBC Addition of donations Donations made can be treated as anonymous or not - Held that - The names of the donors along with their addresses were furnished before the Investigation Wing of the department and were also recorded in the books produced by the assessee before the AO - such donations cannot be classified as anonymous donations as per the provisions of section 115BBC(3) of the Act - the only requirement u/s. 115BBC(3) is that the names and addresses of the donors are to be recorded - CIT(A) has wrongly applied the provisions of section 68 in the case of the assessee by stating that the recipient society should also be in a position to identity the donors and establish the capacity to give a donation of the amount mentioned against their names following the decision in Hans Raj Samarak Society Versus Assistant Director of Income-tax (Exemptions), Trust Circle-II, Delhi 2011 (9) TMI 369 - ITAT DELHI - the CIT(A) erred in confirming the addition of ₹ 12,50,000 as anonymous donations attracting the provisions of s. 115BBC Decided in favour of assessee. Expenses u/s 40(a)(ia) disallowed Applicability of provision of section 10(23C) Held that - The total receipts reflected in the Income & Expenditure Statement as tuition fees was ₹ 82,89,000 - with respect to suppression of receipts, the AO has to thoroughly verify and examine and arrive at the amount over and above the actual fees accounted for - the eligibility for the assessee u/s 10(23C) is to be determined only after such exercise by the AO, the receipts are at ₹ 82,89,000 and if the suppression of the receipts which totals to ₹ 18,24,000 is being reduced on verification by the AO then the total receipts might figure at less than ₹ 1 crore, which would entitle the assessee for the benefit of section 10(23C) - if the assessee is exempted u/s. 10(23C) the income is not computed u/s 30 to 38 in order to attract disallowance u/s. 40(a)(ia) Decided in favour of assessee. Addition of expenses Capital expenses or not Held that - The assessee submitted that exemption has been claimed u/s. 10(23C)(iiiad) which states that income received from any university or other educational institution existing solely for educational purposes will not form part of the total income thus, the matter is remitted back to the AO for adjudication Decided in favour of assessee. Unexplained cash credits u/s 68 Held that - The assessee filed the confirmation letter which stated that the sources of the creditor are the compensation from the Andhra Pradesh Government - FAA in spite of the evidences filed before him ignored the fact of compensation received by the creditor - Copies of confirmation letter, land acquisition draft order, Bank statement of the assessee filed before the First Appellate Authority were filed before Tribunal also - the assessee has proved the cash credit with sufficient evidence Decided in favour of assessee.
Issues Involved:
1. Addition of anonymous donations under Section 115BBC for A.Y. 2007-08 and 2008-09. 2. Disallowance of expenditure under Section 40(a)(ia) for A.Y. 2008-09. 3. Non-applicability of Section 10(23C) exemption for A.Y. 2008-09. 4. Addition of unaccounted receipts for A.Y. 2008-09. 5. Addition of unexplained cash credits under Section 68 for A.Y. 2009-10. Detailed Analysis: I.T.A. No. 1179/Hyd/2014 - A.Y. 2007-08 Issue: Addition of Rs. 12,50,000 as Anonymous Donations under Section 115BBC Facts: - A search and seizure action at the residence of Dr. K. Ramachandra led to the discovery of documents belonging to the assessee society. - The society received corpus donations of Rs. 12,50,000 from 43 persons with amounts ranging from Rs. 23,000 to Rs. 25,000. - The Assessing Officer (AO) added this amount as anonymous donations under Section 115BBC, stating the society had not commenced its educational activities, and no confirmations from donors were provided. CIT(A) Findings: - The CIT(A) upheld the addition, stating that mere submission of names and addresses was insufficient to satisfy Section 115BBC requirements. The society failed to maintain contemporaneous records of the donors. Tribunal Findings: - The Tribunal found that names and addresses of donors were furnished and recorded in the books produced before the AO. - Section 115BBC(3) only requires the maintenance of names and addresses of donors. - The Tribunal concluded that the CIT(A) wrongly applied Section 68 principles and allowed the appeal. Result: - The appeal for A.Y. 2007-08 was allowed. I.T.A. No. 1180/Hyd/2014 - A.Y. 2008-09 Issues: 1. Addition of Rs. 21,30,000 as Anonymous Donations under Section 115BBC - Similar to the previous year, the society provided names and addresses of 85 donors contributing Rs. 21,30,000. - The CIT(A) upheld the addition, citing lack of contemporaneous records at the time of search. - The Tribunal, following its previous decision, allowed the appeal, stating the records were sufficient under Section 115BBC(3). 2. Disallowance of Expenditure under Section 40(a)(ia) - The AO disallowed Rs. 3,30,000 paid as interest without TDS. - The CIT(A) upheld the disallowance, stating the society was not registered under Section 12A. - The Tribunal directed the AO to re-examine the issue based on the society's eligibility for exemption under Section 10(23C). 3. Non-applicability of Section 10(23C) Exemption - The CIT(A) held that the society's receipts exceeded Rs. 1 crore, disqualifying it from Section 10(23C) exemption. - The Tribunal directed the AO to verify the actual receipts and determine the eligibility for exemption. 4. Addition of Unaccounted Receipts - The AO added Rs. 18,24,000 as unaccounted receipts based on seized receipt books. - The Tribunal directed the AO to verify the actual fees accounted for and determine the correct amount of unaccounted receipts. 5. Addition of Rs. 3,57,569 as Capital Expenditure - The CIT(A) upheld the addition, stating the society was not eligible for exemption under Section 10(23C). - The Tribunal remitted this issue to the AO for re-examination based on the society's eligibility for exemption. Result: - The appeal for A.Y. 2008-09 was partly allowed for statistical purposes. I.T.A. No. 1181/Hyd/2014 - A.Y. 2009-10 Issue: Addition of Rs. 10,00,000 as Unexplained Cash Credits under Section 68 Facts: - The society claimed to have received Rs. 10,00,000 as an unsecured loan from Sri K. Krishnaiah. - The AO added this amount as unexplained cash credit, stating the society failed to establish the creditworthiness of the creditor. CIT(A) Findings: - The CIT(A) upheld the addition, doubting the creditor's capacity to lend such an amount based on his agricultural income and lack of evidence for compensation received from the government. Tribunal Findings: - The Tribunal found that the assessee provided sufficient evidence, including confirmation letters and land acquisition documents. - The Tribunal deleted the addition, concluding that the assessee had proved the cash credit with sufficient evidence. Result: - The appeal for A.Y. 2009-10 was allowed. Order Pronounced: - The orders were pronounced in the open court on 7th November 2014.
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