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TMI Blog2016 (6) TMI 1484X X X X Extracts X X X X X X X X Extracts X X X X ..... year as corpus fund from eight different individuals apart from the managing trustee's contribution of ₹ 40,000/-. On the basis of the details furnished by the assessee, summons was issue to various donors as well as the loan creditors who appeared before the AO and statements were recorded from them. The above, at Sl. No. 1, 7 and 8, i.e., D. Jayakumar has confirmed that he has given ₹ 2,00,000/- from his salary savings through his bank account and furnished details before the Assessing Officer; similarly, Shanmugam and Sundaram VN have also confirmed having given the donations of ₹ 50,000/- and ₹ 2,00,000/- from their salary savings through banking channel and therefore, the above three amounts cannot be brought under section 68 of the Act as unexplained credits. With regard to other donors, the donors are either related to the assessee or closely known to them. Concrete proof for giving these donations was not given by five donors and the sources explained by them are inadequate to support the payment of such donations. The income of a trust would not be exempt unless it has obtained registration u/s 12A of the Act. A conjoint reading of sections 11, 12 and 12A of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces cannot be accepted for the reasons as stipulated in the assessment order that it is unambiguously provided in section 10(23C) (iiiad) that the exemption is available to any university or other educational institution existing solely for educational purposes and not for purposes of profit if the aggregate annual receipts of such university or educational institution do not exceed the amount of annual receipts as may be prescribed . From the details filed it can be seen that the assessee trust has utilised the funds brought in as discussed above only for procurement of lands as admitted by the assessee in its letter dated 20.10.2011. Evidently no other activities were found to have been seen or established. They also have stated that the trust has not commenced any activities. The assessee trust has also filed a copy of the trust deed before the Assessing Officer and on scrutiny of the trust deed, as per Clause 6 of the trust deed there are 42 items listed as objects of the trust and according to the Assessing Officer it is obvious that the trust is certainly not existing solely for the purpose of education, thereby disqualifying itself for the possible claim of exemption under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received ₹18,19,000/- during the year as corpus fund from 8 different individuals apart from the Managing Trustee's contribution of ₹ 40,000/-. The Assessing Officer has briefly examined all the donors as well as the loan creditors and also elaborately discussed in the assessment order the various findings during the course of statement recorded from them. The amount received from the donors could not be proved to the satisfaction of the Assessing Officer. The Assessing Officer found that many of the donors could not explain their sources to support the payment of such donations. The assessee could not produce any proof to the effect that the amounts were received towards corpus funds. After discussing the facts in detail in the assessment order, the Assessing Officer has concluded that the income of the trust could not be exempt unless it has obtained registration 12A of the Act. Unless and until the institution is registered under section 12A of the Act, it cannot claim the benefit of section 11(1)(a) of the Act. That being the situation, the assessee cannot take shelter of section 12 of the Act to claim that what has been received was corpus donation and subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The loans and corpus donations received were stated to have been fully utilised towards purchase of land for the trust. As per the details filed, the Assessing Officer has observed that the assessee has received ₹ 18,90,000/- during the year as corpus fund from eight different individuals apart from the managing trustee's contribution of ₹ 40,000/-. On the basis of the details furnished by the assessee, summons was issue to various donors as well as the loan creditors who appeared before the Assessing Officer and statements were recorded from them. The brief deposition made by the donors is as under: 1. D. JAYAKUMAR Rs. 2,00,000 - He has confirmed that he has given this donation from his salary savings through his bank account and furnished details. 2. S. KAMALAM Rs. 5,00,000 - She is the mother of the Managing trustee and also a trustee herself. It was claimed that she is very old and can not appear in office in response to summons. A confirmation letter is filed. However, no evidence for source of income is produced. Considering her age and in the absence of independent source of income, this donation was not satisfactorily proved. 3. R. NIRMALA DEVI Rs. 50,000 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. Accordingly, the donations stated to have been received from the five parties amounting to Rs. 14,40,000/- was rightly treated as income and taxed in the status of AOP. In view of the above, the amount of donations received from three parties as stated above in Sl. No. 1, 7 8 in para 5, which cannot be brought under section 68 of the Act. 5.2 With regard to the loans received, the details are as under:-- LOANS RECEIVED FROM SHRI. VASANTH KUMAR JAIN AND BHAVESH KUMAR JAIN: Shri. Vasantha Kumar Jain and his son Shri. Bhavesh Kumar Jain have advanced the loans to the tune of Rs. 30 lakhs as per the details below:-- Both Shri. Vasantha Kumar Jain and his son Shri. Bhavesh Kumar Jain, in their respective sworn statement recorded at the time of their appearance in response to summons issued under section 131 of the IT act, have categorically stated that the entire amount was deposited in their bank accounts, both in individual and HUF status by the trust by using their own funds. He has clearly stated that only the bank accounts in the name of his son and himself both in individual and HUF status were allowed to be used for the purpose of accommodating the loans. He also claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ozen by the DVAC and will be paying the mourns the case before DVAC is over. Further to the both have claimed that the money given to Prahar foundation is shown as assets and they have shown the money paid by Prahar foundation is liability. To the contrary in their balance sheet for the year ended the 31.03.2009, they have shown the money lent to Prahar foundation as asset and there is no mention of Prahar foundation on the liability side. Their balance sheet certified by the chartered accountant is enclosed it with for your records. In fact it is represented by capitol fund and unsecured loan from others. We request you to take the legal notice as well as the balance sheet on record and do the needful. However, the depositions made by the creditors are contrary to the claim of the assessee. They have stated that the balance sheets etc filed by the trust were not correct. They also categorically stated that they have sent a legal notice only in order to claim the commission amount promised by the trust. The creditors have left no ambiguity in their statements while denying the said loans. The assessee was given adequate opportunity to cross examine the creditors as sought, which ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfactorily explained. LOAN FROM M/s. POINT RED TELECOM P LTD : An amount of Rs. 25 lakhs, is shown as loan availed from the above creditor, as per the details filed by the assessee trust. Summons under section 131 were issued to the principal officer of the company, to verify the correctness of the loan credit. In response, Mr. K. Radhakrishnan, claiming to be an employee of the parent company of the creditor appeared on 1 July 2011 and sought time till third week of July for Shri R Vijayakumar, managing director of the company to appear and furnish details. Later Shri G Sridhar, Manage:-- operations of the company appeared in person to explain the transaction with Prahar foundations and filed a copy of bank Ledger account, wherein the transaction towards the loan is shown. However, it was noticed that cash of Rs. 25 lakhs was remitted in their bank account in order to facilitate the loans. As he was unable to explain the transaction fully, he sought further time to enable the managing director to explain the loans and the sources of funds for the same. In spite of reminders, no further details were furnished to satisfy the existence of loans and sources for the same. The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subject, I would like to submit the following facts. The institution during the year 2008-09 has carried on no other operations other than buying land (or the college which was approved by the AICET and the course of architecture was started during academic year 2009-10. The lands ore purchased to put of buildings for the college as per AICET norms. Hence the trust has carried on activities only to run the college (i.e.) the activities of the trust was purely for educational purposes. Hence, we would like to claim exemption under section 10 (23C) (iii ad) for the any income that is to be arrived by you by disallowance of corpus collections and also treating certain unsecured loans of the trust has the income of the trust. The assessee has resorted to claim exemption under section 10(23), as an alternative source to claim exemption, when the assessee has left with no option. Having become aware that many of the loan creditors introduced by the assessee have turned hostile and denied having lent money and these credits are likely to be treated as income, the assessee has made attempt to take shelter under section 10(23C)(iii ad) of the Act. The assessee's intentions are clear th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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