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TMI Blog2014 (11) TMI 350X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2007-08, the assessee AOP started construction of a college. It was noticed from the Receipts Payments A/c. that the society was in receipt of unsecured loans, loan on FDR and also corpus donations of ₹ 12,50,000. The entire amount received under these heads was invested in FDs and construction of the building. During the assessment proceedings, it was noticed that 43 persons have contributed amounts ranging from ₹ 23,000 to ₹ 25,000, which totalled to ₹ 12,50,000. The society claimed that since they have filed the names and addresses of the donors, the corpus donation shall not be added u/s 115BBC of the IT Act. The AO pointed out that the assessee AOP applied for registration u/s. 12A after the search and seizure action took place and further it was also not clear as to why these persons gave the alleged donation to the society. The claim of the assessee was rejected on the following grounds: 1) It has not commenced its activity of imparting education. 2) No reason was offered by the society regarding the alleged donation received from various persons. 3) In general, donation may be given at the time of admission. 4) In the present case, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed and misleading and the purpose behind the section is to prevent unaccounted money being introduced in the books of trusts as tax exempt donations. Hence, he concluded that the principles applied in the case of unexplained cash credits shall also apply in the case of anonymous donations u/s. 115BBC. The CIT(A) pointed out that the burden of proof on the assessee society does not shift merely by submission of the names and addresses of the donors but the recipient society should also be in a position to identify the donor, and establish his capacity to give a donation of the amount mentioned against his name. It was sated by the CIT(A) that the assessee society did not maintain any records of the donations made, at the time of search at the residence of Dr. K. Ramachandra, founder secretary of the society and the submissions, regarding names and addresses of donors, was given subsequent to the search and seizure action during the course of post search enquiries carried out by the Investigation Wing. The CIT(A) observed that at the time of search, there was no record available regarding any of the donors and hence it cannot be held that the assessee had maintained a complete re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... classified as anonymous donations as per the provisions of section 115BBC(3) of the Act. Section 115BBC(3) is as under: 115BBC. (1) ... (2) (3) For the purposes of this section, anonymous donation means any voluntary contribution referred to in sub-clause (iia) of clause (24) of section 2, where a person receiving such contribution does not maintain a record of the identity indicating the name and address of the person making such contribution and such other particulars as may be prescribed.] 13. Hence, we are of the opinion that the only requirement u/s. 115BBC(3) is that the names and addresses of the donors are to be recorded. The learned 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. In this context, reliance is placed on the decision of the Delhi Bench of this Tribunal in the case of Hansraj Samarak Society (133 ITD 530) wherein ht has been held as under: ... 4.4 Sub-section (1) of the aforesaid provision provides that where the income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer, as acknowledged in the assessment order. 4. The learned First Appellate Authority failed to appreciate the legal position that appellant maintained and produced before the Assessing Officer the record of identity indicating the name and address of the donor, such donations cannot be classified as Anonymous donation as per the provisions of s. 158BBC(3) of the IT Act. 5. The learned First Appellate Authority failed to appreciate that the Assessing Officer, in spite of having all the information on record made the addition without bringing on record anything contradicting the said details. 6. The learned Commissioner of Income-tax (Appeals) is not justified in confirming the addition on account of disallowance of expenditure of ₹ 3,30,000 u/s. 40(a)(ia). 7. The learned First Appellate Authority is not justified In holding that provisions of sec 10(23C) are not applicable to the facts of the case. 8. The learned Commissioner of Income-tax (Appeals) is not justified in confirming the addition of ₹ 3,57,569 representing capital expenditure. The learned Commissioner of Income-tax (Appeals) is rot justified in confirming the addition of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings, it has been submitted by the assessee society as under: The figure of ₹ 36,22,500 consisted of the following three different Items: (a) Donations of ₹ 21,30,000 by 85 persons (b) Corpus/Building fund of ₹ 14,82,500 paid by 228 students; and (c) Donation of ₹ 10,000 by Dr. B. Manoharamma, w/o. Sri K. Ramachander, Joint Secretary of the Assessee Society by SBI crossed cheque No. 658504. In regard to item (a) above, i.e., donations of ₹ 21,30,000, the details of donations from 85 persons were furnished during the course of assessment proceedings. A copy of the list is enclosed for perusal. In regard to item (b) i.e., Corpus/Building fund of ₹ 14,82,500, the list of 228 students, who contributed to corpus/building fund, amounting to ₹ 14,82,500 was also submitted to the Assessing Officer. A copy of the list is enclosed for perusal. In view of the above, the addition u/s. 115BBC is unwarranted and unjustified since names of donors along with their addresses were recorded by the assessee society, which were produced before the Assessing Officer. Hence, the Society had fulfilled the requirements laid down u/s. 115BBC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. Each student has paid ₹ 6,500/Rs. 6,000 and the payment is stated to be towards corpus/building fund. The CIT(A) was of the opinion that the assessee's contention is correct and the above cannot be treated as an anonymous donation. In view of the same, he deleted the addition of ₹ 14,92,500 on account of anonymous donation u/s. 115BBC. Accordingly, he allowed Ground No. l partly. 25. Aggrieved, the assessee is in appeal before us in respect of addition of ₹ 21,30,000. 26. The learned counsel for the assessee brought to our notice that the record of donors has been acknowledged in the assessment order itself by the Assessing Officer and hence submitted that the CIT(A) is incorrect in his statement that the record of donors was not available at the time of search. As in the A.Y. 2007-08, since the assessee maintained and produced before the Assessing Officer, the record of identity indicating names and addresses of the donors, in our opinion such donations cannot be classified as anonymous donations as per the provisions of section 115BBC(3) of the Act. This issue is similar to the issue decided in the A.Y. 2007-08 and the same conclusion is to be d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted as income from business and all provisions applicable to business income shall apply in the case of the assessee. In view of the same, he held that the addition made by the Assessing Officer is correct and sustained the same. Accordingly, the CIT(A) dismissed this ground. Aggrieved, the assessee is in appeal before us. 30. We find that during the assessment proceedings, the total receipts reflected in the Income Expenditure Statement as tuition fees was ₹ 82,89,000. It was held by the Assessing Officer that during the course of search seizure operations certain receipt books are found and seized and placed in the Annexure A/RAM/Res/PO34. On examination of seized material the receipts between 02.10.2007 and 20.10.2007 has not been accounted. The details are as under: Date Amount (Rs.) 02.10.2007 86000 03.10.2007 86000 04.10.2007 86000 05.10.2007 86000 06.10.2007 86000 06.10.2007 86000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ross receipts referred to in section 10(23C) do not include extraordinary items and the learned counsel for the assessee relied on two case laws (i) DDIT vs. Madarasa E Bakhiyath vs. Salihath Arabic College (62 SOT 1) (Chennai) and Param Hans Swami Uma Bharti Mission vs. ACIT (140 ITD 429) (Delhi). It was further submitted that the Income Expenditure A/c. signed by the CA shows that the gross receipts are less than ₹ 1 crore and hence the exemption u/s. 10(23C) is to be granted to the assessee. 34. We find that with respect to suppression of receipts, the Assessing Officer has to thoroughly verify and examine and arrive at the amount over and above the actual fees accounted for. Further, the eligibility for the assessee u/s. 10(23C) is to be determined only after such exercise by the Assessing Officer as in this case, 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 Assessing Officer then the total receipts might figure at less than ₹ 1 crore, which would entitle the assessee for the benefit of section 10(23C). Hence, we direct the Assessing Officer to work out the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the confirmation letter before concluding that the confirmation letter did not contain any particulars of the sources/bank account copies and PAN etc. In fact, the amount of ₹ 10 lakhs was received through crossed bank cheque, This can be seen from the copy of the assessee's State Bank of India account, which is available with the learned Assessing Officer. Copy of ) the account is enclosed. The creditor, Sri Krishnaiah is only an agriculturist and not an income tax assessee. A fresh confirmation letter from Sri K. Krishnaiah is now submitted separately. This letter explains that the amount is given by ING Vysya Bank Cheque No. 912427 and that the sources of the amount was out of savings from agricultural income and compensation received from Government for compulsory acquisition of agricultural lands. Copies of the (i) land acquisition draft declaration and (ii) pattadar pass book are enclosed to the confirmation letter. It is, therefore, prayed that the Hon'ble Commissioner of Income Tax (Appeals) be pleased to admit the fresh evidence in the interests of justice and direct the learned Assessing Officer to delete the addition of ₹ 10 lakhs u/s. 68. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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