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TMI Blog2020 (1) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... religious and charitable trust. For the A.Y.2007-08, the assessee filed the return of income declaring total income of Rs.Nil. Subsequently, the Assessing Officer(AO) found that there was an escapement of income chargeable to tax under the head 'Capital Gains', hence issued notice u/s 148 for reopening the assessment. During the reassessment proceedings, the AO found that the assessee had transferred the Trust properties to the persons interested in the Trust or to the members of the Society for a consideration less than the market consideration as per the details given under : S.No. Document No. Name of the buyer Consideration received Market value as per the sub-registrar 1. 1960/2007 of SRO, Guntur dt.27.01.2007 Gundiga Jojappa Rs. 4,99,000 Rs. 5,66,500 2. 1959/2007 of SRO, Guntur dt.27.12.2006 Malapati Marreddy Rs. 17,09,000 Rs. 33,79,000 3. 1958/2007 of SRO, Guntur dt.27.01.2007 Yerukala Raghunatha Rao Rs. 0 Rs. 3,74,000 The AO issued show cause notice to the assessee and assessee filed the reply to the show cause notice along with resolution of the Society, extract of the minutes and submitted that the Diocese intended to start engineering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no provision in the statute to look into the intentions or motives before invoking the provisions of section 13(1)(c) r.w.s 13(2)(g) of the I.T. Act. No discretionary power has been conferred by the statute on the AO to look into the intentions of the trust for invoking the provisions of section 13(1)(c) r.w.s 13(2)(g) of the Act. Therefore, on occurring the events specified in those sections of the statute, the provisions would come into play and the trust forfeits exemption in respect of the income or property applied directly or indirectly for the benefit of the persons specified in section 13(3) of the I.T. Act. Therefore, the AO viewed that the assessee society had forfeited the exemption for the A.Y. 2007-08 and hence the provisions of section 11 and 12 are not applicable for computing the income of the Trust for the A.Y. 2007-08. Accordingly, assessment was completed denying exemption. Further, it was a case of non filing the return of income in response to notice u/s. 148 of the I.T. Act, the AO completed the assessment u/s. 144 of the I.T. Act. The AO viewed that the assessee is not entitled for exemption u/s 11 and 12 since, the assessee had transferred the properties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und that out of the six properties under reference, four properties were come back to the Diocese at a later date by way of gift deeds or by way of cancellation of earlier transfer deeds and left were only two properties which were sold to third parties and the sale proceeds in entirety were credited to the account of the Diocese. 3.1. From the said two sale deeds the assessee received total sale consideration of Rs. 295.15 lakhs shown in the receipts and payments account for the A.Y 2012-13. The assessment proceedings for the AY 2012-13 were concluded by the AO on 12-03-2015 accepting the income returned without making any adjustments to the taxable/exempt income. 3.2. The Ld.CIT(A) viewed that by accepting the amount of Rs. 295.15 lakhs to be proceeds from sale of land, which includes the land that was already transferred by the assessee to the members of the society in AY 2007-08, the department or the AO, had accepted that the transfer affected in AY 2007-08 was only a paper transfer without any substantial transfer of rights/interest/ownership of the said property to different members of the society. It goes to say that the interests of the society were in no way affected by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Society's account, subsequent actions are immaterial, hence argued that the Ld.CIT(A)'s order required to be set aside and the revenue's appeal to be allowed. 5. On the other hand, the Ld.AR submitted that the assessee is a Christian institution with religious and charitable objectives and the assessee intended to start engineering college for the benefit of the whole community and impart education to the public at large. Since the Society was having scarcity of funds, Society intended to sell the lands to mobilize the funds. At this juncture, the Society's President during the discussion with the Hon'ble Chief Minister, had an impression that the Govt. of Andhra Pradesh is intending to bring a legislation to prohibit the Christian Institutions for transfer of the lands. Therefore, to prevent the situation, the assessee had preempted by transferring the lands to the Trust and the members of the Society for Nil consideration. The society had transferred the lands to the members of the Society and they were holding the lands as a custodian but not as the owner. The Society did not receive a penny from the transferees of the land and the Society also did not give possession of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven by the Govt. of Andhra Pradesh that the churches would be barred from selling the immovable properties, the Society had transferred the lands to the members of the Society to preempt the legislation, so that it can procure the funds without any difficulty. Though the Society had transferred the lands to the members of the Society, the lands were in possession of the Society and the Society did not receive any amount from the purchasers of the land which was evidenced from the order as well as the appellate order. As seen from the orders of the lower authorities, the purchasers were not in a position to make the payment even for stamp duty charges, hence the Society had to incur the stamp duty charges for registering the properties in the names of the purchasers. The assets continued to be held by the Society. It is apparent from the orders of the lower authorities and from the facts that though the lands were transferred in the name of G.Jojappa and others, they were holding the lands as custodians, but not as the owners. Subsequently, the lands were gifted back to the Society or the sale proceeds of the lands were directly deposited in the Society's account. The assets were re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Catholic Syrian Bank 50,00,000 21.03.2011 Catholic Syrian Bank 10,00,000 Total amount invested 3,40,01,000 8.1. The AO observed that the amounts were deposited in the bank accounts prior to its receipt, hence called for the source of the deposits made in the bank accounts. The assessee explained that the assessee had sold two properties at Takkellapadu village admeasuring 4.4 acres for a sale consideration of Rs. 70,12,000/- and deposited in the bank account against the consideration registered in the sale deed was Rs. 39,60,000/- as per the registered document. Similarly, the assessee submitted that the Society has 2.6 acres of land in D.No.386, 387, 388 & 389 Gorantla and D.No.56/C2/59, Gorantla. The Society intended to make lay out of 250 sq.yds plots and help 400 families of Christian population to construct houses and received Rs. 1.00 lakh each from various parishes through priests. The total amount of Rs. 1,80,00,000/- was received for various places was as under : Place Area Amount Phirangipuram 25 plots 25,00,000.00 Durgi 10 * 10 10,00,000.00 Edlapadu 08 * 10 08,00,000.00 Emani 07 * 10 07,00,000.00 Karempudi 25 * 10 25,00, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For the sake of clarity we, extract the relevant part of the order of the Ld.CIT(A) extracted as under: "I have gone through the facts of the case, contents of the assessment order, written submissions filed by the assessee and the case laws relied by the assessee. AO has computed the total income the assessee at Rs. 2,10,52,000/- against the ROl at Rs. Nil. While doing so the AO has added an amount Rs. 2,10,52,000/- on the plea that the assessee has not produced proper explanations and evidences nor correlated the sale of lands. It has also not produced Minute's Register to verify that these transactions are duly authorised by board and the consolidated depreciation schedule annexed to the financial, statements filed along with the return of income, that against the head 'land Rs. 4,80,29,765.21/- shown under the column balance as on 01.04.2010' and an amount of Rs. 3,61,36,800/- was shown under the head 'deletions' and an amount of Rs. 2,10,52,000/- (land advance of Rs. 1,80,00,00+Rs. 30,52,000/- explained amount in sale of land at TakkeIla padu) is added to the returned income of the assessee's society as unexplained cash investments/anonymous donati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or sub-clause (via) or any fund or institution referred to in sub-clause (iv) or any trust or institution referred to in sub-clause (v) of clause (23C) of sect/on 10 or any trust or Institution referred to in section 11, included 4, the total income of such assessee, Incometax shall be payable at the rate of thirty per cent. It is further proposed to provide that the pro visions of said new section 115BBC shall not apply to any anonymous donation received by (a) any trust or institution created or established wholly for religious purposes and (b) any trust or institution created or established wholly for religious and charitable purposes, other than any anonymous donation is for any university or other educational institution or any hospital or other medical institution run by the trust or institution. It is also proposed to provide that the anonymous donation shall mean 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 of the person making such contribution indicating the name, address and such other particulars of the person as may be prescribed. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e anonymous donations received by religious, charitable Trust which includes other purposes, not entitled for exemption. Therefore, argued that the Ld.CIT(A) has erred in deleting the addition, hence, requested to set aside the order of the Ld.CIT(A) and allow the appeal of the revenue. 11. On the other hand, the Ld.AR relied on the order of the Ld.CIT(A) and argued that as per sub section 2 of section 115BBC, sub clause (b), anonymous donations received by any Trust or institution created or established only for religious and charitable purposes were also excluded from taxing the same u/s 115BBC r.w.s.69 of the Act. Therefore, argued that the Ld.CIT(A) rightly deleted the addition and no interference is called for. 12. We have heard both the parties and perused the material placed on record. The assessee is religious charitable Trust having religious as well as objects of charitable in nature. For the year under consideration, the assessee had received a sum of Rs. 2,10,52,000/- from unknown sources which was taxed by the AO u/s 69 r.w.s. 115BBC of the Act. As provided u/s 115BBC sub section 2 allows anonymous donations to be excluded from the purview of section 115BBC in the f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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