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TMI Blog2015 (12) TMI 1116X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome filed by the Assessee nor in the proceedings before the AO. The claim was made for the first time before CIT(A). The CIT(A)’s findings on this aspect have already been given in the earlier part of this order. The evidence referred to in the findings of CIT(A) are relevant only with regard to the claim of the Assessee that ₹ 4,54,11,300/- was repayment of loans which had been taken by the Assessee in the earlier AYs and used for charitable purpose and repaid during the PY. There is no material on record to substantiate the claim of the Assessee that a sum of ₹ 8,54,26,519/- was accumulated deficit. Admittedly such accumulated deficit has not been determined in any assessment proceedings and therefore the claim of the Assessee in this regard was wrongly allowed by the CIT(A). - Decided against assessee Genuity of Repayments of loans - Held that:- The loans were stated to be availed between the year 1980 to June, 2003 when the Assessee did not have funds to carry out charitable activities. In the year in which the loans were availed, there was no scrutiny assessment. In fact the Assessee has started filing returns of income only after AY 2002-03. Therefore the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst the order dated 12.11.2008 of CIT(A)-XL, Kolkata, relating to AY 2005-06. 2. The assessee is a trust. The trust was created by a deed of Trust dated 21.06.1950 by Smt. Shakti Sudha Devi, w/o Debi Shankar Bandopadhya of labour, District-Birbhum. There is no dispute that the objects of the trust were charitable in nature. The trust was accorded registration u/s 12AA of the Income tax Act, 1961 (Act) vide Registration No.DIT(E)/T/548D dated 06.12.1980. 3. For A.Y.2005-06, the assessee filed return of income showing Nil income. During the previous year the assessee received interest income on FDRs in a sum of ₹ 5,10,22,844/-. 4. The computation of total income of the Assessee is at page-25 of the paper book and it shows that the Assessee had declared gross income of the Trust at ₹ 5,10,22,844. Sec.11 of the Act provides as follows: Sec.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) income derived from property held under trust wholly for ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e return of income filed for AY 2005-06. 6. The AO started the computation of total income as per the return of income filed by the Assessee. As we have already seen, the Assessee had claimed that it had, during the previous year, repaid loans taken by it in the past AYs for the purpose of carrying out the charitable objects of the trust and had in fact applied loans for charitable purposes in the past AYs in which loans were taken. The Assessee claimed that the repayment of loans during the previous year of loans so taken in the past AYs would amount to application of income for charitable purpose and exemption u/s.11 of the Act ought to be allowed to the Assessee to the extent of repayment of loans. There is no dispute that repayment of loan taken for charitable purposes had to be treated as application of income for charitable purposes. CBDT in Circular No.100 dated 24.1.1973 had accepted this position, as given below: where a trust incurs a debt for the purpose of the trust whether the repayment of the debt would amount to an application of income for the purposes of the trust Board has decided that repayment of the loan originally taken to fulfil one of the objects ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e already filed the detailed list of advances amounting to ₹ 8,69,47,275.97 along with the confirmation from each of the loan creditor whom the trust had procured. Late Mrs. Anita Banerjee was one of the main loan creditors in the period between 1956 and 1993. It is worthwhile to mention here that after search seizure conducted by the Income Tax Department in 1980 practically the entire activities of the trust became loan dependent only. 9. The AO however did not accept the claim of the Assessee. The AO firstly held that the Assessee had given only details of repayment of loan but did not give details of when and how the loans were availed. The AO held that the confirmations filed from the loan creditors contained only the balance as on 31.03.2005. The assessee has failed to give details relating to the actual receipt of the loans. The reply of the Assessee was that the loans were received during the period from 1956 to 1993, which according to the AO was vaguereply. He therefore held that the assessee has failed to fulfill its primary onus to file confirmation showing the details of loans. The AO held that to allow repayment loans as application of the year, out of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... already set out in the earlier part of this order. This was not the computation of total income filed by the Assessee nor was a plea to the above effect taken before the AO. 13. The case of the AO before the CIT(A) in the remand report was that the Assessee was not filing any return of income prior to AY 2002-03 and the loans were stated to have been received during the period from 1956 to 1993. The purpose of the loan and its utilization for charitable purpose in the past was not established by the Assessee. The accumulated deficit of the past AYs was therefore not established by the Assessee. 14. The CIT(A) s findings on the above claim of the Assessee was as follows: I have carefully gone through the submissions made by the Id. A/R of the appellant and the order passed by the A.O. The A.O. has not brought my concrete evidence in support of his disallowance of ₹ 4,78,81,9781- under the head accumulated deficit, The A.O. has stated in his order that the appellant has failed to submit details and books of accounts. The assessment record for the relevant assessment year was requisitioned. It is evident from the assessment record that the appellant submitted all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itable purpose and therefore the benefit of deduction u/s.11(1)(a) of the Act had to be allowed to the Assessee. The Assessee also challenged the disallowance of administrative expenses and donations and charity given during the previous year. 16. On the above submission the learned CIT(A) held as follows: I have carefully gone through the submissions made by the ld. A/R of the appellant and the contention of the A.O. The A.O. has made disallowances of ₹ 4,85,52,165/- under the head i.e. loan repayment of ₹ 4,54,11,300/-, charity donation of ₹ 31,01,525/- and administrative expenses of ₹ 39,340/-. The appellant filed details of these expenses during the course of assessment proceeding before the A.O. and also before me. It is evident from the records submitted to this office that the assessee trust paid loan of ₹ 4,54,11,300/- by cheque. The A.O. has failed to make any enquiry to prove the genuineness of creditworthiness. He had not brought any thing on record nor he has gone through the details/evidences filed by the appellant during the course of assessment proceedings in support of his contention. Loan is neither treated as income nor repa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the loans were taken during 1956 to 2003. 5. On the facts and circumstances of the case, Ld. CIT(A) was not justified in accepting the balance sheet of 1980 which were not submitted before the AO without giving opportunity to the AO. 6. On the facts and circumstances of the case, Ld. CIT(A) was not justified in allowing the charity and donation of ₹ 31,01,525/- and administrative expenses of ₹ 39,340/- though neither books of accounts nor the bills vouchers were produced. 18. The learned DR reiterated the stand of the revenue as reflected in the grounds of appeal raised before the Tribunal. The learned counsel for the Assessee reiterated stand of the Assessee as put forth before the CIT(A). Our attention was drawn to the paper book filed before us, wherein the confirmation of the persons who advanced loans to the Assessee are placed. Our attention was also drawn to the details of charity and donations along with supporting evidence and details of administrative expenses. 19. We have given a very careful consideration to the rival submissions. In so far as Gr.No.1 raised by the revenue is concerned, it is a fact that the Assessee did not file re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es had to be treated as application of income for charitable purposes. The evidence on record indicates that there are loan confirmations by the following persons for the following amounts: 1. Jadavlal Trust Estate Rs.96,00,000 2. Devi Lachmi Debottar Estate Rs.14,00,000 3. Smt.Anita Banerjee (decd) Rs.4,80,00,000 4. Sri Keshab Narayan Banerjee Rs.1,66,00,336 5. Sri.Subhashis Bandopadhyay Rs.5,04,000 6. Sri.Debashis Banerjee Rs.5,04,000 7. Smt.Maitree Mukherjee Rs.5,04,000 Advances Dubrajpur Rice Mills Pvt.Ltd. Rs.86,24,940 Jadavlal Trust Estate Rs.12,00,000 Rs.8,69,47,276 A matching ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... haritable activities. The mere assertion of the Assessee in this regard without evidence cannot be the basis to uphold the claim of the Assessee in this regard. We therefore do not agree with the conclusions of the CIT(A) in this regard. We therefore reverse the order of the CIT(A) and restore the order of the AO in this regard. 21. As regards ground No.6, the AO did not allow the claim of the Assessee for the reason that only a list of payments had been filed which was neither supported by any bills and vouchers nor any books of accounts sowing the actual expenditure. The bills and vouchers had been filed before the AO. A specific ground had been raised by the Assessee before CIT(A) in this regard. The CIT(A) has also held that the bills and vouchers evidencing expenses were filed before the AO. The details of charity and donations and the supporting vouchers are at page 75 to 91 of Assessee s paper book. The details of administrative expenses are placed at page-92 of the paper book and the payments in question were made by cheques. The expenditure in question is reasonable and deserves to be accepted. We are of the view that the CIT(A) rightly deleted the addition made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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