2013 (8) TMI 324 - AT - Income Tax

Addition u/s 68 - Corpus donation - Donor was a non-resident - Proof and identity of donor - Held that - The assessee was a charitable trust and was engaged in charitable activities as held by CIT (A). This fact has been admitted by the Assessing Officer himself in the Assessment Year 2005-06. CIT (A) granted the relief to the assessee for the year under consideration for claim of exemption u/s 11 of the Act. During the year, the voluntary contribution of corpus donation was received which was clear from the computation of income submitted to the income-tax department - During the relevant period, the assessee enjoying the status of a Trust registered u/s 12A read with section 12AA of the Income-tax Act, 1961. During this period, the assessee was also enjoying the benefit of exemption under section 80G(5)(vi) of the Act. The assessee produced the all details before the Assessing Officer with regard to the corpus donations received by it - The Assessing Officer insisted for the presence of the donor which could not be done for the reason that the donor was located outside India during the relevant period. Donor was a non-resident - To strengthen the claim of the assessee regarding the genuineness of the corpus donation further documents like bank statement of the donor and ITR of donor were filed as additional evidence which had not been admitted by the CIT (A). This stand of CIT (A) was without any cogent reason. The donations were received by cheques from none other than the settler of the trust - assessee was able to discharge the onus by proving the identity of the donor and also the genuineness of the transaction. No adverse inference can be drawn regarding the capacity of the donor - Decided in favour of assessee. Exemption u/s 11 & 12 - Charitable activity or not - Held that - assessee trust was doing charitable activities during the relevant period also. The Assessing Officer himself conducted thorough examination of the activities for the Assessment Year 2005-06 and 2007-08. There is no change in the facts for this year and the Assessing Officer has not brought out any specific instance which goes contrary to the finding of the Assessing Officer for Assessment Years 2005-06 and 2007-08 - The assessee is a trust enjoying the benefit of registration u/s 12A of the Income-tax Act, 1961 and was also granted exemption u/s 80G of the Act. The Trust was engaged in the various charitable activities during the year under consideration. During the year, the assessee trust entered into a property transaction - Decide in favour of assessee.

Issues Involved:
1. Addition of Rs. 72,04,404/- on account of corpus donation.
2. Non-admission of additional evidence submitted by the assessee.
3. Exemption under sections 11 and 12 of the Income-tax Act, 1961.
4. Additions of Rs. 3,00,00,000/- on account of transfer of flat, Rs. 15,60,000/- on account of security deposit, Rs. 54,65,000/- on account of rent received, and Rs. 44,277/- on account of interest.

Issue-wise Detailed Analysis:

1. Addition of Rs. 72,04,404/- on account of corpus donation:
The assessee, a charitable trust, received a corpus donation of Rs. 72,04,404/- from Shri Yash Pal Chabra, a trustee and settler of the trust. The Assessing Officer (AO) added this amount to the income of the assessee, questioning the genuineness of the donation as the donor could not be produced before the AO. The AO applied section 68 of the Income-tax Act, 1961, concluding that the assessee failed to provide a satisfactory explanation. The CIT (A) confirmed this addition. However, the Tribunal found that the assessee had provided sufficient documentary evidence, including the donor's identity, PAN, and confirmation, proving the genuineness of the donation. The Tribunal concluded that the provisions of section 68 were not applicable since the donation was already considered income under section 2(24)(iia) and exempt under section 11(1)(d). Therefore, the addition was unjustified, and the appeal was allowed.

2. Non-admission of additional evidence submitted by the assessee:
The assessee submitted additional evidence before the CIT (A) to support the corpus donation, including the donor's bank statement and income tax return details. The CIT (A) did not admit this additional evidence. The Tribunal found that the CIT (A) had no cogent reason for not admitting the additional evidence, which further proved the genuineness of the donation. Hence, the Tribunal set aside the orders of the authorities below.

3. Exemption under sections 11 and 12 of the Income-tax Act, 1961:
The revenue appealed against the CIT (A)'s decision to allow the benefit of exemption under sections 11 and 12 to the assessee. The CIT (A) had previously held that the assessee was involved in charitable activities for the assessment years 2005-06 and 2007-08, and there was no change in facts for the year under consideration. The Tribunal upheld the CIT (A)'s decision, noting that the assessee continued to enjoy registration under section 12A and exemption under section 80G. The revenue's appeal was dismissed.

4. Additions of Rs. 3,00,00,000/- on account of transfer of flat, Rs. 15,60,000/- on account of security deposit, Rs. 54,65,000/- on account of rent received, and Rs. 44,277/- on account of interest:
The AO made these additions, which the CIT (A) confirmed. The assessee argued that the property transaction involving Shri Yash Pal Chabra did not materialize as the assessee could not make the full payment, and the property was transferred back to Shri Chabra. The security deposit and rent received were also returned to Shri Chabra, who declared this income in his tax return. The Tribunal found that the property never became the asset of the assessee, and the rental income was not the assessee's income. The security deposit was returned, and the interest income was exempt under section 11. The Tribunal set aside the orders of the authorities below and allowed the assessee's appeal.

Conclusion:
The Tribunal allowed the appeals filed by the assessee (ITA No.2198/Del/2012 and ITA No.2199/Del/2012) and dismissed the revenue's appeal (ITA No.2487/Del/2012). The order was pronounced in open court on July 31, 2013.

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