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TMI Blog2017 (4) TMI 1650X X X X Extracts X X X X X X X X Extracts X X X X ..... on direction letter issued by multiple donors ranging from 2-5 donors and Demand draft/Pay order mentioned in said common donation letter are also same being consolidated amount covered for the donation in the said letter as donated by 2-5 donors. We find that assessee is not a religious trust hence the amount is hit by provisions of Section 115 BBC of the Act and the onus is on the assessee to prove that it is covered by exceptions to chargeability to tax as is provided by provisions of Section 115BBC of 1961 Act, namely that the assessee maintained a record of the identity indicating the name and address of the person making such contribution and such other particulars as may be prescribed or else it is a religious trust. The selection of donors shall be on random basis at the sole discretion of the AO, which short listed list of donors shall be supplied by the AO to the assessee for necessary compliance as per our above directions. If so required for ensuring compliance of Section 115BBC of 1961 Act and for establishing genuineness of the said donations the AO can enhance the number of persons to be produced by the assessee before him higher than minimum stipulated by us as abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n law, the learned CIT(Appeals) erred in upholding the action of the AO of invoking the provisions of section 115BBC of I.T. Act, without appreciating the facts and circumstances of the case. 4. On the facts and under the circumstances of the case and in law, the learned CIT(Appeals) erred in upholding the action of the AO of not appreciating the facts and circumstances of the case and explanations offered in support of the Appellant's claim of corpus donations. 5. On the facts and under the circumstances of the case and in law, the learned CIT(Appeals) erred in upholding the order of the AO, of holding that the Option exercised in respect of unspent income of Rs. 1,35,70,000/- is not in conformity with the provisions of Explanation 2 below Section 11 (1) of I.T. Act. 6. On the facts and under the circumstances of the case and in law, the learned CIT(Appeals) erred in not appreciating the facts and circumstances and the explanations offered in regard to the Option exercised u/s 11(1) of I T Act, in respect of the unspent income of Rs. 1,35,70,000/-. 3. The brief facts of the case are that the assessee is a trust registered as a charitable organization with DIT (E), Mumbai u/s 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trust join together and out of that someone contributes land another contributes seeds another contributes irrigation and another contributes labour and so on and cultivate the land jointly to produce wealth out of which part is utilised for charitable purpose at the village level and part of which is donated to trust by way of corpus donation. Therefore individual shares in the produce is an unidentified even amongst themselves and therefore, the certificate of the representative of that group is sufficient enough and acceptable to treat it as corpus donation. These activities are taken turn by turn from one village to another in subsequent year and this activity goes on. In these circumstances, the claim of the assessee that it is a corpus donation is in order and is acceptable and the AO is directed to treat as corpus donation. Wherever directions letters were not filed, they are available with the assessee which may be obtained and placed on record. The assessee has produced the sample copies of receipts issued to the donors in respect of corpus donations. The assessee also submitted direction letters for the period for verification. The assessee has also submitted PAN which w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conformity with the objects of the trust, which requires more planning , time and funds.It was submitted that the project could be launched once the plans are finalized and funds are available for utilization . The assessee submitted revised option letter containing specific reasons for exercising the option. The A.O. observed that as per explanation (2) to section 11(1) of 1961 Act, if in the previous year, the income applied to charitable or religious purposes falls short of 85% of the income derived during that year for two reasons namely (i) for the reason that the whole or any part of the income has not been received during the year , or (ii) for any other reasons , the benefit under explanation 2 to Section 11(1) of 1961 Act shall be available. The AO received that clause (i) is not applicable as the assessee duly received the said income while clause (ii) is applicable and the assessee s exercise of option u/s 11(1) of 1961 Act vide letter dated 22.09.2010 , reads as under:- Re:- Assessment year 2010-11 PAN AAATM7188H Option exercised u/s 11 of the Income Tax Act, 1961 With reference to above, we have to inform you that is unspent amount for the assessment year 2010-11. We, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0-02-2014 passed by the ld. CIT(A), the assessee filed an appeal before the Tribunal. 6. The ld. counsel for the assessee submitted that the donations were received by the assessee against the corpus fund and they are not anonymous donations. It is submitted that all the donations were accompanied by letters of directions of the donors that they shall form part of corpus fund. It was submitted that authorities below erred in rejecting the claim of the assessee and bringing to tax the said corpus donations as anonymous donations u/s 115BC of 1961 Act . The learned counsel submitted that identity , PAN and addresses of the donors will be submitted if one more opportunity is provided to the assessee. However, the ld. counsel submitted that if an opportunity is given to the assessee, the assessee can produce the said donors before the A.O. and also furnish the PAN and address of all the donors. Similarly, with respect to ground No. 5 and, it is submitted that the assessee trust is a registered trust under section 12A of 1961 Act. It was submitted that 85% of the amount of income received was spent and only 15% of the income received was accumulated for being spent during the next year. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be prescribed or else it is a religious trust. Section 115BBC of 1961 Act is reproduced hereunder: [Anonymous donations to be taxed in certain cases. 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 on the income by way of any anonymous donation, at the rate of thirty per cent; and (ii) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income referred to in clause (i). The following clauses (i) and (ii) shall be substituted for the existing clauses (i) and (ii) of sub-section (1) of section 115BBC by the Finance (No. 2) Act, 2009 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O as to compliance of Section 115BBC of 1961 Act and as to genuineness of the said donation. The assessee is directed to furnish PAN , addresses and all other relevant details of all the said donors before the AO to satisfy mandate of Section 115BBC of 1961 Act. The assessee is directed to produce before the AO donors , 25% in numbers for donation up-to Rs 20,000/- and 10% in number for donations above Rs. 20,000/- to satisfy the AO about compliance of mandate of Section 115BBC of the Act and genuineness of the such donations. The selection of donors shall be on random basis at the sole discretion of the AO , which short listed list of donors shall be supplied by the AO to the assessee for necessary compliance as per our above directions. If so required for ensuring compliance of Section 115BBC of 1961 Act and for establishing genuineness of the said donations of Rs. 2,42,26,508/-, the AO can enhance the number of persons to be produced by the assessee before him higher than minimum stipulated by us as above. Similarly, with respect to the denial of the exemption amount to the tune of Rs. 1,35,70,000/- for 15% of income being set aside for accumulation to be spent for charitable pu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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