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TMI Blog2023 (9) TMI 1522X X X X Extracts X X X X X X X X Extracts X X X X ..... roceeded to compute the income of the assessee as per the normal provisions of the Act and accordingly he picked up total profit from income &expenditure account of the assessee amounting to Rs. 3,45,721/- and noting that corpus donations received by the assessee during the year amounting to Rs. 1,93,75,000/- was not included in the same he added the same to the said profits holding that exemption of corpus fund/donation was available only as per section 11(1)(d) of the Act and since the assessee was not eligible to exemption u/s 11 of the Act provisions of section 11(1)(d) would not be applicable. Accordingly he computed the taxable income of the assessee at Rs. 1,67,24,902/- after allowing depreciation as per the rates prescribed under the Income Tax Act. The computation of the taxable income is reproduced at page 5 of the order as under; 3. Alternatively the AO also noted that entire corpus funds had been received from various persons in cash. The ld.AO noted that this fact indicated that the donations were in fictitious names. He 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 return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usts which were registered under section 12A of the Act. He further pleaded that genuineness of the donors having been duly established by him and out of five donors who were called by the AO for examination one had confirmed the fact of giving donations and other four who were also present and waiting to be examined by the AO were not examined by him at all. Affidavits to this effect of other two donors was placed before the ld. CIT(A). The ld.CIT(A) found merit in the contentions of the assessee and allowed all the grounds raised by the assessee. 5. Aggrieved by the same Revenue has come up in appeal before the Tribunal raising the following grounds: "1. The learned Id. CIT(Appeals) has erred in law and on facts in deleting the cash donations of Rs. 3,03,25,000/- from the income of the assessee. 2. The learned Id. CIT(Appeals) has erred in ignoring the binding decision of the Hon'ble Apex Court in the case of Emil Webber vs. CIT 200 ITR 483 that income is an inclusive definition and all receipts are taxable unless specifically exempt. 3. The learned Id. CIT(Appeals) has erred in relying on sworn affidavit of alleged donors without giving any opportunity to the AO who h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-trust was not registered under section 12A of the Act and computation of its income therefore- had to be made as per the normal provisions of Act. 10. Vis-à-vis voluntary contributions of Rs. 1,09,50,000/- being treated as gifts the ld.DR referred to provisions of section 2(24)(iia) of the Act which is the definition of "income" pointing out that it specifically including voluntary contributions received by trusts created for charitable and religious purpose to be treated as income. The ld.DR argued that definition of income being so clear the voluntary donations were wrongly excluded by the ld.CIT(A) from being treated as income by holding that they were in the nature of gifts. The ld. DR emphasized that there is no great difference between contribution and donations. He contended therefore that there was no scope for the treating the voluntary donations as gifts and thus excluding them from being treated as income of the assessee. 11. The ld.AR per contra contended that he was refraining from making any arguments on this issue since even if voluntary contributions were subjected to tax it would not result in any taxable income of the assessee. He pointed out from the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corpus donations were voluntary donations and corpus donations were only a subset of voluntary donations; that as per section 2(24)(iia) they were therefore in the nature of income only. The ld.DR contended that it was only by virtue of section 11(1)(d) of the Act that corpus donations were specifically excluded from being treated as income in the case of trusts claiming exemption under section 11 of the Act . He contended therefore that trusts which were not so claiming exemption the corpus donation had to be treated as their income. The ld.DR contended that but for section 12A of the Act which entitles exemption to charitable trusts on being granted registration under the said section all voluntary contributions both gifts and corpus would have been subjected to tax. He clarified stating that for the purpose of claiming exemption of income under section 11 of the Act section 12A makes it mandatory for an eligible trust/society to be registered as charitable trust under the said section and it is only when such registration is granted the eligibility of claiming exemption came into force. He further pointed out that section 11 which deals with exemption of income of such register ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of ITO Vs. Smt.Basanti Devi and Shri Chakhan Lal Garg Education Trust in IT Appeal No.5082 (Delhi) of 2010 dated 30.1.2009 had been upheld by the Hon'ble High Court in the Revenue's appeal filed to it and the Revenue's further appeal to the Hon'ble Apex Court had been dismissed for non-prosecution vide judgment in Civil Appeal No.7036 of 2011. The ld.counsel therefore pointed out that there are numerous decisions of the ITAT to the effect that corpus donations are to be treated as capital in nature there was no question of applying decision of Chennai Bench as stated by the ld.DR. He contended that any order of the ITAT latest in time does not make it better to be followed and ideally the Chennai Bench of the Tribunal ought to have referred the matter to the Special Bench before making any contrary view against the consistent view taken by the ITAT in various other decisions. He further pointed out that ITAT Delhi Bench in the case of R.D. Foundation Vs. ITO in ITA No.7877/Del/2018 had taken note of the decision of Hon'ble Apex Court in the case of U.P. Forest Corporation (supra) which was relied upon by the ITAT Chennai Bench while taking a contrary view on the issue. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 18. 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. 19. 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 law. Corpus donations however have been rightly held to be capital in nature by the Ld.CIT(A). The grounds raised by the Revenue in ground no.1 & 2 are partly allowed. 20. Coming to the alternative stand taken by the AO treating the donations as anonymous donations and subjecting them to tax in terms of provisions of section 115BBC of the Act firstly we hold there cannot be any situation in law of assessing income in different alternate manner. The purpose of any law is to lay down the position of law in all possible conceivabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which were registered under section 12AA of the Act. 25. On this aspect we are in complete agree with the ld.CIT(A) that section 115BBC is applicable only on trust which are registered under section 12A of the Act. A bare reading of section clearly brings out this interpretation. Provisions of section are being reproduced hereinbelow: 115BBC. (1) Where the total income of an assessee being a person in receipt of income on behalf of any university or other educational institution referred to in sub- clause (iiiad) or sub-clause (vi) or any hospital or other institution referred to in sub- clause (iiiae) 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 section 10 or any trust or institution referred to in section 11 includes any income by way of any anonymous donation the income-tax payable shall be the aggregate of- (i) the amount of income-tax calculated at the rate of thirty per cent on the aggregate of anonymous donations received in excess of the higher of the following namely:- (A) five per cent of the total donations received by the assessee; or (B) one lakh rupee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nations to the assessee. His statement recorded by the AO categorically proved that he was man of no- means and could definitely not afford to have given huge corpus donation of Rs.3.5 lakhs. He drew our attention to the finding of the AO regarding his credit-worthiness to give donation from the statement recorded at para-12 as under: "12. Only one person Shri PrabhudasPathubhai Chaudhary attended in response to summons issued who has submitted in his statement that- 1. He owns only one house having one kitchen and one room. 2. He does not have any car. 3. He does not have any tractor and is doing farming with the help of ill bullock. 4. He has no investment in form of FDR shares or any other assets. The relevant portion of his statement is reproduced bellow: 14. Though he was asked to produce sale bills of agricultural produce he could produce bills of Rs. 59 ,150/- only prior to date of donation. 15. Though he had unpaid bank loans which is mentioned in 7/12 Utara of his land. He preferred to give donation of Rs. 3,50,000/- which I sounds irrational. " 30. Thereafter he stated that other four persons summoned by the AO did not appear before him and the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions. This is an admitted fact. The only basis for holding them ingenuine is the examination by the AO of five donors out of 184 donors four of whom did not appear allegedly in response to summons while one appeared and confirmed giving donation to the assessee but was found to be not creditworthy by the AO. 34. We agree with the Ld.Counsel for the assessee that the finding of non genuine credits has to be specifically arrived at with respect to all such credits. It cannot be based on generalizations and assumptions. After all the entire donations have been treated as ingenuine u/s.68 of the Act and hence anonymous donations for invoking section 115BBC of the Act. Therefore there has to be finding of all donations being ingenuine and it cannot be based on generalizations. 35. 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. 36. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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