9911796707
TMI Blog2023 (9) TMI 1522X X X X Extracts X X X X X X X X Extracts X X X X ..... TAT in numerous decisions as above uniform view on the issue is that corpus donations are capital in nature. We have even noted that decision relied upon by the ITAT Chennai Bench while taking up contrary view of U.P. Forest Corporation [ 2007 (11) TMI 699 - SUPREME COURT] has been considered in the case of R.D. Foundation [ 2019 (2) TMI 787 - ITAT DELHI] and after considering the same has still held that corpus donations to be capital in nature. In view of the same therefore we have no hesitation in confirming the finding of the ld.CIT(A) that corpus donations were capital in nature and could not be added therefore to the income of the assessee while computing the same as per normal provisions of the Act. As for the argument of the ld.DR that since section 11(d) specifically exempts corpus donation therefore corpus donations are to be treated as income in terms of section 2(24)(iia) of the Act need not to be dealt with by us considering the uniform view taken by the ITAT on the issue as above treating it as capital in nature. In conclusion on the first aspect of the income of the assessee computed by the AO by including voluntary donations we find the same to be in accordance with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter all the entire donations have been treated as ingenuine u/s.68 of the Act and hence anonymous donations for invoking section 115BBC - there has to be finding of all donations being ingenuine and it cannot be based on generalizations. Even otherwise based on the theory of sampling also quantum of data based on which the AO has sought to generalize his finding to the rest of the corpus donors is too miniscule and by theory of sampling also generalization cannot be applied from such a small sample data. Pleading of the ld.DR before us that affidavits of other co- donors had been entertained by the CIT(A) without confronting to the AO and the Ld.CIT(A) should have exercised his coterminous powers of the AO in effect is asking for examination of these four donors. Which as we have held above is of no consequence to the rest of the donors. At the most therefore the CIT(A) in exercising of his co- terminus power would also be accepted to examine these five donors only. Therefore we hold that there is no case for holding the entire donations received by the assessee as non genuine u/s 68 of the Act. Conclusion - We agree with the Revenue and uphold the order of the AO treating the vol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e further noted that other than the confirmation along with copies of 7/12 utaras filed by the assessee in various names no copies of income-tax returns were provided by the assessee of the various donors. He accordingly held that onus was on the assessee to prove genuineness of the transaction. There after he asked the assessee to produce five persons for examination before him who did not appear despite repeated opportunities granted. Ultimately AO issued summons under section 131 directing the said persons to produce copies of 7/12 utaras bills for purchase of pesticides seeds proof of agriculture income earned etc. Out of five only one it has been noted by the AO to have appeared and his statement was recorded. The ld.AO noted from the statement that the said person was not credit-worthy enough to provide donation to the assessee and further noted the fact that other four did not appear he held that the entire corpus donations were bogus and were in fact own money of the assessee. The ld.AO on this basis therefore invoked provisions of section 115BBC of the Act relating to anonymous donations and levied tax at the rate of 30% of the anonymous donations including both corpus and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpt. 3. The learned Id. CIT(Appeals) has erred in relying on sworn affidavit of alleged donors without giving any opportunity to the AO who has given clear finding that such persons had not attended before him. 4. The learned Id. Ld.CIT(Appeals) has erred in accepting the contention of the assessee that the sum of Rs. 1,93,75,000/- credited in balance sheet is capital receipt without examining the real nature of such receipts. 5. The learned ld.CIT(Appeals) has erred in holding that Section 115BBC provisions are not applicable to the assessee. 6. On the facts and circumstances of the case the Ld.CIT(A) ought to have upheld the order of the Assessing Officer. It is therefore prayed that the order of the learned CIT(Appeals) may be set aside and that of the A.O. be restored to the above extent. 6. The ld.DR argued at length before us challenging all actions of the ld.CIT(A) which in turn were countered by the ld. counsel for the assessee before us. We have heard both the parties at length. 7. To proceed further it is necessary to break down the case into its significant aspects in a logical manner to expedite adjudication of the issue. 8. The AO made addition to the assesses income o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e subjected to tax it would not result in any taxable income of the assessee. He pointed out from the assessment order that taxable income computed by the AO under the normal provisions of Act had resulted only on account of corpus donations added to the income of the assessee. The income computed by the AO as per normal provisions of the Act at page 5 of the assessment order is as under: 12. Ld. Counsel for the assessee pointed out from the above that the corpus donations are to the tune of Rs. 1.93 Crs while the income of the assessee as per the normal provisions of the Act has been assessed at Rs. 1.67 Crs which clearly shows that it comprises completely of corpus donations alone. He therefore contended that since the taxable income comprised only of corpus donation the debate over taxability of voluntary donation was only an academic exercise. The Ld DR fairly agreed with the same. In view of the above concession of the Ld.AR and even on merits we hold that the voluntary contributions received by the assessee to the tune of Rs. 1,09,50 000/- are taxable. Even otherwise we agree with the Ld.DR that the definition of income in section 2(24)(iia) of the Act categorically includes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. He further pointed out that section 11 which deals with exemption of income of such registered trusts specifically provided in sub-clause (d) of sub-section (1) thereto that voluntary contribution made with specific direction that it shall form part of the corpus trust shall be exempted from tax. He contended therefore that it is evident from the above that even corpus donations are in the nature of voluntary contributions and are excluded or exempted from taxation only on account of specific exemption provided under the Act which is applicable to trusts which are registered under section 12A. The voluntary contributions even in the corpus donations are to be subjected to tax. On this proposition that corpus donations are also treated as income of the trusts which are not eligible to exemption under section 11 of the Act he placed heavy reliance on the decision of ITAT Chennai Bench in the case of Veer avel Trusts Vs. ITO 129 taxmann.com 358 (Chennai-Trib). The ld.DR pointed out that the ld.CIT(A) has relied upon various decisions of the ITAT to hold that corpus donations are capital in nature but he contended that the above decision of the Chennai Bench of the Trust being late ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) which was relied upon by the ITAT Chennai Bench while taking a contrary view on the issue. He therefore contended that having regard to the consistent view of the Tribunal holding corpus donation in capital nature stand which was confirmed by the Hon ble Delhi High Court also act of the ld.CIT(A) in treating the corpus donation as capital in nature is in accordance with law. 15. The issue to be considered on the aspect of computation of income as per normal provision is whether corpus donations are to be treated as capital or revenue and accordingly its treatment as income in the hands of the assessee. Corpus donations by their very nature are towards the corpus of the trust. They are not freely available for utilization by the trust. There is plethora of decisions of the ITAT and even Hon ble Delhi High Court holding corpus donations to be capital in nature; some of which decisions cited before us are as under: i) ITO Vs. Gaudiya Granth Anuved Trust 48 taxmann.com 348 (Agra-Trib.) ii) ACIT Vs. Geetanjali Education Society 22 SOT 15 (Jodh) (URO); iii) Pentafour Software Software Employees Welfare Foundation Vs. ACIT IT Appeal Nos.751 752/Mad/2007; iv) ITO (Exemption) Vs. Smt. Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to lay down the position of law in all possible conceivable facts and circumstances. Income tax Act accordingly brings out what constitutes income and how it is to be computed and subjected to tax. Law cannot provide alternate treatment for the same nature of income and leave it to the whims and fancies of AO s to apply any such alternate situation. 21. The order of the AO taxing assesses income in two ways alternately only goes to demonstrate that he was not clear as according to which provision of law the income of the assessee is liable to tax. Be that so we find that two situations envisaged by the AO for assessing the income of the assessee are not alternate situation but a contradictory situation for the reason that in the first situation the income of the assessee has been assessed considering the fact that it is not registered as charitable entity in terms of section 12A of the Act and hence not entitled to exemption of its income under section 11 of the Act. The alternative position taken by the AO of taxing the assessee s corpus donations received as anomalous donations on flat rate of 30% in terms of section 115BBC of the Act we find that section 115BBC of the Act is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received by the assessee; or (B) one lakh rupees and (ii) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the aggregate of anonymous donations received in excess of the amount referred to in sub- clause (A) or sub-clause (B) of clause (i) as the case may be. (2) The provisions of sub-section (1) shall not apply to any anonymous donation received by (a) any trust or institution created or established wholly for religious purposes; (b) any trust or institution created or established wholly for religious and charitable purposes other than any anonymous donation made with a specific direction that such donation is for any university or other educational institution or any hospital or other medical institution run by such trust or institution. (3) For the purposes of this section anonymous donation means 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 indicating the name and address of the person making such contribution and such other particulars as may be prescribed. 26. Section 115BBC(1) brings ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) had erred in admitting their affidavits to the effect that they had appeared before the AO without confronting the said affidavits to the AO which act was in gross violations of Rule regarding admission of additional evidences as provided under Rule 46A of the Income Tax Rules 1962. He further vehemently argued that in the line of facts before the ld.CIT(A) where out of five persons four could not be examined by the AO the ld.CIT(A) having co-terminus power with the AO ought to have exercised his power and got others also examined instead of simply adjudicating the issue on the basis of material placed before him and on the basis of the fact that four donors had not been examined by the AO. 31. The ld. counsel for the assessee on the other hand contended that in the present case there were 184 donors who had made donations. Complete list had been provided to the AO along with their confirmations and land holding records and the AO had chosen to examine only 5 persons out of 184 persons and on the basis of his finding regarding these 5 persons he had applied his finding across the board to 184 corpus donations which was not justifiable. The ld.counsel for the assessee contend ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
