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TMI Blog2017 (2) TMI 725X X X X Extracts X X X X X X X X Extracts X X X X ..... s donations. Hence, first allegation of the AO is not sustainable. As find from the copy of the assessment order (for AY 2009-10 placed at pages 235 to 257 of APB) it is clear that the assessing officer has not made any addition pertaining to voluntary contributions to the assessee trust and thus it is presumed that the same AO has accepted fact of voluntary contributions by the said company to the assessee trust and this amount was given by the donor to the assessee trust with specific directions that the same should be used for construction of building therefore it formed part of corpus donations and thus source of impugned amounts is clearly discernable from the above noted facts and documents. When the donor M/s Goel International Pvt. Ltd. is surrendering huge amounts including the amounts which were voluntarily contributed and donated to the assessee trust for the purpose of construction of building then the amount which has been surrendered in the case of M/s Goel International Pvt. Ltd. and all due taxes and interest etc. has been paid by the said company then the source of expenditure incurred by the assessee trust on construction of building has to be held as explai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther on the facts and in the circumstances of the case the Ld. CIT(A) was right in deleting the addition of ₹ 2,87,91,723/-, u/s 69C of the I.T. Act, 1961 when the assessee had actually admitted undisclosed income at the time of search and has also made surrender to that extent on the based on the seized documents. Sole ground of Revenue for AY 2010-11 reads as follows. Whether on the facts and in the circumstances of the case the Ld. CIT(A) was right in deleting the addition of ₹ 3,21,88,455/-, u/s 69C of the I.T. Act, 1961 when the assessee had actually admitted undisclosed income at the time of search and has also made surrender to that extent on the based on the seized documents. 2. We have heard arguments of both the sides and carefully perused the materials placed on the record of the Tribunal, inter alia, impugned assessment first appellate orders, paper books of the assessee and revenue and also considered ratio of the decisions relied by both the parties and cited at bar. 3. The Ld. CIT (DR) submitted that the CIT (A) has erred in deleting the addition made u/s 69 C of the Income Tax Act, 1961 (for short the Act) when the assessee had actual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 69C of the Act. Placing reliance on the decisions of Hon ble Bombay High Court in the case of B.R. Banisi vs. CIT 83 ITR 223 (Bombay), Hon ble High Court of Delhi in the case of Moolchand Khairatiram Tust vs. DIT (E) reported as (2015) 59 taxman.com 398 (Del.) and order of ITAT Mumbai Bench B in the case of the Trustees, B.N. Gamadia Parsi vs. ADIT (E) reported as (2002) 77 TTJ 274 the Ld. DR submitted that the Revenue can take alternate plea for supporting action of the AO. He also contended that the assessee would not be entitled to exemption u/s 11 of the Act if its activities are outside scope of its objects. He also contended that benefit of section 11 is available on the income and not for deemed income. He lastly submitted that the baseless order of CIT(A) may be set aside by restoring that of the AO. 5. Replying to the above contentions, the Ld counsel of the assessee submitted that assessee is a trust created for charitable objects and thus it has been granted registration u/s 12 A of the Act. Assessees premise is situated at village Dinarpur and the Goel group is in village Taroli. He further pointed out that the showing the source of Land and Funds used for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uilding was not shown in the Balance Sheet drawn on 22.6.2009. He also submitted that the assessee misleaded the facts before CIT (A) and thus he misunderstood the facts and consequently ignored the contradictions in the previous B/s of 22.06.2009 and subsequent Balance Sheet prepared on 9.12.2011 after the search. He lastly pointed out that for making addition u/s 69C of the Act no head of income is required thus addition made by the AO must be sustained. 8. On careful consideration of above noted rival submissions at the outset we note that the CIT (A) granted relief to the assessee with following observations and conclusion: The trust deed of the assessee dated 7.4.2008 is placed at pages 20-48 of the paper-book filed. The head office is at 1102, Sector-13, Urban Estate, Karnal. The aims and objectives for which the trust is established are relief of the poor, education, health, social welfare, advancement of technology, disaster prevention and management, rural upliftment and advancement of any other object of general public utility not involving the carrying on of any activity for profit. The seized document A-12 is placed from pages 50 to 120 of the PB. Perusal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der: We have considered the rival submissions. The Madras High Court in Rao Bahadur Calavala Cunnan Chetty Charities' case [(1982) 135 ITR 485 (Mad)] observed. . Taking into account the purpose for which the conditions of section ll(l)(a) are imposed, it would be clear that we have to consider the income as arrived at in the context of what is available in the hands of the assessee, subject of course to any adjustment for expenses extraneous to the trust. If the expression income is so understood, then we have to take the accounts of the assessee with reference to the receipts and deduct therefrom the expenses necessary for earning or looking after that income. The net amount that remains would be available for distribution or application for charitable purpose. In applying the income for charitable purposes, even capital expenditure may be incurred. Therefore, the nature of the expenditure in the hands of the entity which receives the money is not criterion. So long as the assessee disburses the amount for charitable purposes, whether the amounts are utilized for capital and revenue purposes, by the charity concerned, the assessee would have complied with that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd of appeal no 3. 9. First of all, we may point out that Section 69C of the Act provides as follows: 69C. Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year;] of peak 10. In the present case, the Assessing Officer made addition under Section 69C of the Act by alleging four points viz., (I) the trust has violated the provisions of Section 11(1)(d) of the Act (II) the assessee failed to explain the source of fund used in cash expenditure for the purpose of construction of building (III) the assessee never took the plea that the amount of peak has been incurred on expenditure made on behalf of M/s Galaxy Global Educational Trust by M/s Goel International Private Limited (IV) there is no entry of ₹ 6,09,80,178/- in the books of accounts of the assessee hence expenditure mentioned in the seized documents from the premi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he impugned addition is that the assessee trust could not explained the source of expenditure incurred by it on construction of building. In this situation when the funds have been used as per specific directions of the donors of voluntarily contributions for the purpose of construction of the building then violation of provisions of section 11(1)(d) of the Act, cannot be labelled against the assessee. we may also observed that from page 197 (APB) in the notes of accounts forming part of balance sheet as on 31.03.2009 mentions that the assessee trust receive voluntarily contributions and corpus donations represents acquisitions of assets i.e. land building etc. on behalf of the trust by the trustee s. Page 199 of the (APB) further manifest that the assessee trust also received corpus fund from Shri Devi Chand, Vinod Goel, Vijay Goel, Krisnhan Goel, Raj Bala, Rajni Goel, Seema Goel, with specific directions as per notes to accounts (Supra), In the notes to accounts it has also been mentioned that the corpus donations which are represented by acquisitions of assets such as land building etc. by the trust then it cannot be held that voluntarily contributions received by the assessee w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eon after filing return of income in response to the notice of the AO under section 153A of the Act. When the donor M/s Goel International Pvt. Ltd. is surrendering huge amounts including the amounts which were voluntarily contributed and donated to the assessee trust for the purpose of construction of building then the amount which has been surrendered in the case of M/s Goel International Pvt. Ltd. and all due taxes and interest etc. has been paid by the said company then the source of expenditure incurred by the assessee trust on construction of building has to be held as explained and the same amount which was surrendered and taxed in the hands of M/s Goel International Pvt. Ltd. cannot be taxed again in the hands of assessee trust under section 69C of the Act, and obviously it would amount to double taxation on the same amount which is not permissible as per well accepted principle of the tax jurisprudence. 15. So far as third allegation of the AO that the assessee never took the plea that the amount of peak has been incurred on expenditure made on behalf of M/s Galaxy Global Educational Trust by M/s Goel International Private Limited is concerned we are of the view that th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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