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TMI Blog2012 (5) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowances by the Income-Tax Officer in a summary manner under various heads, i.e., salary Rs. 10,00,000/-, Telephone / Mobile Rs. 28,356/-, Advertisement Rs.1,00,823/-, and Hotel Moonlight Rs. 12,000/ though the AO has rightly made said addition as per facts of the case." 3. We have heard the parties, and perused the material on record. The disallowance of expenditure on salary was on the premises that the assessee had employed staff in excess of the norms of the Dental Council. The assessee-trust is running a Dental College. In our view, the ld. CIT(A) is right when he says that the same; the norm being again per 100 students, cannot by itself form the basis of the disallowance. The only issue that is relevant is whether the claim for salary represents a genuine claim, i.e., actually paid by the assessee in lieu of the services rendered by the respective doctors for the dental college. The assessee has explained that some doctors had left and in their place other doctors were employed, so that the norms could not be strictly complied with, and which rather by itself shows the exigency of the situation. The argument cannot be faulted with. So however, we find that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm the basis of disallowance. Similarly, it has been explained that the bill of hotel Moonlight for boarding and lodging is of the doctors who had come for inspection of the college on behalf of the Dental Council of India. However, with regard to the expenses on telephone/ mobile, disallowed @ 1/5th, the same is only on account of the relevant bills being in the personal name of the trustees, and the assessee being unable to furnish the complete details of the expense. The said disallowance is accordingly upheld. 5. The C.O. for A.Y. 2004-05 is largely supportive in nature, so that the same warrants no independent adjudication, apart from its Ground No. 3, which concerns the confirmation of the disallowance in the sum of Rs. 10,156 u/s. 40A(3) of the Act. While the basis of the AO's stand is the attraction of s. 40A(3), the ld. CIT(A) has not given any specific reason in upholding the AO's action, even as the assessee (refer pages 34 and 35 of the appellate order) specifically argues before him that the said provision is not applicable thereto in view of its income being subject to exemption u/s. 11 of the Act, so that its income would not be subject to computation under Chapter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the deletion of the disallowance in the sum of Rs. 2.00 lacs in respect of hostel and mess expenses, claimed at a total of Rs. 10,01,123/- and Rs. 25,36,240/- respectively. The assessee explained that the heavy expenditure in the month of March, 2005 was for purchase of heavy quantity of sweetmeats, namkin, dry fruits, cents, etc., which it had to in view of the inspection of the college on March 10 & 11, 2005 for starting of the classes of the Third Year. We are unable to appreciate as to why such huge expenditure had to be incurred? The inspection team would consist of only a few members. It is only the expenditure for their purpose/s, even as clarified by us in respect of the Revenue's appeal for the assessment year 2004-05, whereat such expenditure was disallowed at Rs. 12,000/-, and which stood deleted by us. The staff is in any case supposed to work, and all the facilities would already be in place. Even if some of the staff members were required to work overtime for a couple of days during the inspection period, or even for some time prior thereto, of which though there is no claim, this would not lead to such an exaggerated claim, i.e., the expenditure in that case would b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether the amount under reference, i.e., traveling expenses in the sum of Rs. 6,55,931/- (the correct amount though seems to be Rs. 6,55,631/-), was genuinely incurred for the object/s of the trust, the onus to prove which is on the assessee; the disallowance having been made only in view of the inability of the assessee to establish the same as having been incurred for the purpose of college by the trustee/s. The ld. CIT(A) has not gone into this aspect of the matter, allowing the assessee's appeal on generalized grounds, even as the matter is purely factual. When the assessee itself says before the assessing authority that it is trying to obtain the necessary evidence/s to establish the business purpose of the visit to USA of Sh. Gaurav Gupta, a trustee, how else could the AO, we wonder, in the absence of such relevant materials frame the assessment, which has to be on the basis of the material on record, with the onus to prove its return or the claims preferred thereby being on the assessee. The assessment stands modified by the ld. CIT(A) without either reference to such material/s or by confronting the same to the AO, as required by law. There should in fact be a plethora of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) or by any hospital or other institution referred to in sub-clause (iiiae) or sub-clause (via) of clause (23C), of section 10. Explanation.- For the purposes of this sub-clause, "trust" includes any other legal obligation; As such, a voluntary contribution would qualify to form a part of the income of the recipient trust. The only exception is where such income is directed to form part of the corpus of the trust or institution, as being claimed in the instant case; it in that case, in view of the specific provision of section 11(1)(d) of the Act, which reads as under, being not even liable to be applied for charitable purposes, i.e., for being claimed exempt:- 11. Income from property held for charitable or religious purposes. (1) Subject to the provisions of sections 60 to 63, the following income shall not be included in the total income of the previous year of the person in receipt of the income-- (a) .... . (d) income in the form of voluntary contributions made with a specific direction that they shall form part of the corpus of the trust or institution.' 14.2 Apart from the legal position as clarified above, we find a clear contradiction in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, or to be used, for its purposes. In view of the foregoing, we remand the matter back to the file of the AO to allow an opportunity to the assessee to present its case, and who shall decide the relevant issues arising out of the factual considerations and findings, in accordance with law. We decide accordingly. The ld. AR during hearing would contend that such a course would amount to allowing an opportunity to the Revenue to improve its case. We do not think so. Our foregoing observations emanate only from the respective cases of both the parties before us; we only endeavoring to clarify the legal position that obtains in the matter; particularly considering that the material on record in the matter is sparse. The ld. CIT(A), nevertheless, admitted the assessee's plea of the donations being for the corpus of the trust, which necessarily requires a donor/s and, secondly, of him to have no interest except philanthropy in giving donation to the assessee. The matter having been decided, thus, de hors the relevant material on record and without issuing proper findings, has necessarily to be restored back, delineating the issues arising in their proper perspective. 15. The C.O. of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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