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TMI Blog2021 (2) TMI 469X X X X Extracts X X X X X X X X Extracts X X X X ..... uare yard for month. The rent of ₹ 50,000/- per year on 1355 sq.yds of land in the vicinity of Visakhapatnam district appears to be reasonable and there is no reason to suspect the reasonableness of payment of rent. Payment of salary to Sri P.Prabhakar, who is working in the orphanage home for 24 x 7 cannot be said to be unreasonable by any stretch of imagination - CIT(E) ought to have considered the minimum wages as per the act in the area as decided by the District Collector, working hours and compared the salary paid to Sri P.Prabhakar with the minimum wages to arrive at the reasonableness. Defects of donations, Loyola Sweet Home is stated to be the name of orphanage home and on the receipt, registered number of the society was also duly printed and no defects were brought on record with regard to accounting of the receipts in the society s books, thus, there is no reason to suspect the genuineness of the activity of the society. Donations deposited in the bank account on 15.11.2016 and 25.11.2016, the sums of ₹ 1.00 lakh and ₹ 10,000/- respectively, the assessee submitted that the same were directly deposited in the in the bank account and duly acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessment Year (A.Y.) 2019-20. 2. Ground No.1 and 2 are related to the rejection of application filed by the assessee society for registration u/s 80G of the Income Tax Act, 1961 (in short Act. 3. Ground No.4 is general in nature which does not require specific adjudication. 4. Ground No.3 is related to the initiation of proceedings for cancellation of registration u/s 12AA of the Act which was not argued by the Ld.AR and hence, the same is dismissed. 5. With regard to ground No.1 2, the brief facts of the case are that the assessee is a society registered under Societies Act with objectives to promote social service and strive for the development of social welfare, to promote sports and drama activities, to promote knowledge among the members of the public by setting up of libraries and to promote unity in the community. The assessee filed application in Form No.10G seeking registration u/s 80G of the Act on 29.03.2019. On receipt of the application, the Ld.CIT(E) issued notice on 14.08.2019 calling for the details and the books of accounts etc., and in response to which the assessee complied with the notice and furnished the details. On verification of the details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has received the donation of ₹ 1.00 lakh on 15.11.2016 and ₹ 10,000/- on 25.11.2016 and the corresponding entries were not made in the cash book, hence doubted the genuineness of the said donations. (g) It was also found that the assessee owned Maruti van which was not appearing in the balance sheet. The assessee has filed it s explanation stating that Maruti van was purchased prior to grant of registration on 12.05.2009 for a sum ₹ 2,19,510/- and prior to the registration, proper care was not taken for accounting, since, the activity was very low key. It has further submitted that subsequent to grant of registration, the society is maintaining the regular books of accounts and there were no violations. It was also submitted that the van was purchased in the name of the society and used for the purpose of society. However, the Ld.CIT(E) was not convinced with the explanation of the assessee. (h) The assessee has received the interest free loans of ₹ 14,40,000/- and furnished the confirmations but unable to furnish the satisfactory explanation with regard to genuineness and credit worthiness of the creditors. Therefore, the Ld.CIT(E) viewed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d very less compared to the minimum wages prescribed by District Collector. 6.3. The next issue is with regard to donation receipt of Loyola Sweet Home . The Ld.AR submitted that Loyola Sweet Home is the name of orphanage/old age home and the donations are accepted in the name of Loyola Sweet Home and accounted in the books of accounts and there is no violation with regard to accounting of donations. Merely because of the name of orphanage home is written on the receipt, the same cannot go against the assessee for granting approval u/s 80G of the Act. The Ld.AR further submitted that the society s registration number was also printed on the receipt. 6.4. With regard to deposit of donations in the bank and non-issue of receipts, the Ld.AR submitted that all the donations were duly accounted in the books of accounts. Some donations were deposited by the donors directly in the bank account without the knowledge of the organizers for which the receipts could not be issued. However, submitted that the donations were duly accounted in the books of accounts and hence there is no defect on the part of the organization. Merely because of the reason that some donors have deposited mon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 13(1) of the Act, daughters of the founder of the society had purchased site admeasuring 1355 sq.yards. Though Ld.CIT(E) expressed suspicion with regard to the source, he did not bring any evidence to show that the society had funded the daughters for acquiring the land, thus, there is no basis for suspecting the source of income of the daughters for purchase of land. It is observed that the assessee society is paying the rent of ₹ 50,000/- per year for 1355 sq.yds of land which is leased to the society for 15 years for the purpose of construction of old age home which works out ₹ 3.00 per square yard for month. The rent of ₹ 50,000/- per year on 1355 sq.yds of land in the vicinity of Visakhapatnam district appears to be reasonable and there is no reason to suspect the reasonableness of payment of rent. 8.2. With regard to payment of salary of ₹ 7500/- paid to Sri P.Prabhakar, who is working in the orphanage home for 24 x 7 cannot be said to be unreasonable by any stretch of imagination. The Ld.CIT(E) ought to have considered the minimum wages as per the act in the area as decided by the District Collector, working hours and compared the salary paid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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