9911796707
TMI Blog2025 (4) TMI 391X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee is a trust engaged in running of educational institution(s) in remote areas. For AY 2011-12, the assessee filed its return of income on 10.12.2012 disclosing surplus of Rs. 4,01,183/- which was claimed as exempt. In the statement of total income in Schedule F of the return, the assessee showed the entire amount of receipt as applied towards the charitable or religious purposes in India. The case was selected for scrutiny. Accordingly, notices u/s. 143(2) and 142(1) were issued and served upon the assessee which were responded by filing of the submissions / part submissions by the assessee from time to time. During the assessment proceedings, the Ld. Assessing Officer ("AO") found that the assessee trust has claimed exemption u/s.11 of the Income Tax Act, 1961 (the "Act") by filing Form No. 10B. But the trust is granted registration u/s.12A of the Act only w.e.f. 01.04.2012 which does not cover the AY 2011-12 under consideration. The Ld. AO proceeded to complete the assessment of the assessee trust as an AOP denying the assessee's claim of donation/contribution received from farmers as corpus/capital receipts for the reason that confirmations from the respective d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income for A.Y. 2011-12 on 10.12.2012 in Form No.ITR-7 showing surplus of Rs. 4,01,183/ which, however, was claimed as exempt as the objects were educational in nature. The trust claimed exemption u/s.11 and 12 of the Act in view of facts that applied for registration us, 12AA and it was presumed that such registration would be granted by the CIT-1, Kolhapur with retrospective effect after condoning the delay from the date of creation of the trust. Accordingly, the accounts were audited. The audit report in Form No IOB was filed alongwith the accounts and return claiming its income as exempt us. 11 of the Act. iii) The Assessing Officer while completing the assessment found that the trust had tame exemption u/s.11 of the Act and filed Form No.I0B but as the registration u/s.12A was granted to the trust w.e.f. 01.04.2012, the period covered from 01.04.2010 to 31.03.2011 i.e. the relevant assessment year should not be considered for qualifying exemption u/s., 11 and 12 of the Act. He therefore, proceeded to complete the assessment as an AOP on the income/receipt shown by the trust. The Assessing Officer denied the appellant's claim of donation/contribution received from farmer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ire receipts shown by the appellant of Rs. 24,82,619/- vii) The Assessing Officer was not justified and patiently erred in taxing the entire receipts for the following reasons:- The trust is running Higher Secondary School having VII th to Xth standards. The strength of the students studying in above classes is 86. The school is situated in a small village having 2000 to 2200 population with no Government facilities and banking facilities. a) The accounts were audited by the Auditor who confirmed that there were receipts in the form of donations from the donors/contributors and also there were expenses simultaneously which were supported by necessary bills and vouchers. Only the issue that, there was no confirmations from the donors/contributors, the receipt shown by the appellant was considered as receipts but for the reasons that the affidavits were filed by the teaching and non- teaching staff for the reasons recorded in the affidavit quoted above, it cannot be said that such expenditure was not incurred by the appellant-trust at all. b) The affidavits were given by the teaching and nonteaching staff being misguided and with the presumption that in case such affidavits a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the affidavits that no salary was given and hence there was no expenses, he should have considered the other statement in the affidavits given that no donations were received from any persons. This was a patent mistake committed by the Assessing Officer in the assessment order while taxing the receipts of the trust but not allowing the expenses. e) There was an educational institution which ran throughout the year. There were teaching and non-teaching staff who worked throughout the year. Payments were given to them by cash duly enclosed in the cash book. Expenses pertaining to running of the educational institution were also incurred out of the Income/funds of the trust in cash (As in that village there was no Bank). Therefore, without verification of cash book etc, the Assessing Officer would not have taken the view that no expenditure was incurred by the appellant-trust for running the educational institution throughout the year. The Assessing Officer did not raise the question as to how the said educational Institution was run at all. The facts that the objects of the trust were solely educational in nature has been written by the AO in the assessment order (para-4). When ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n u/s. 12AA granted by the Hon'ble CIT-1, Kolhapur, on 19/06/2013 wel. 01/04/2012. meaning there by the appellant could take all the benefit of sections 11 to 13 for and from the assessment year 2012-13 only. In other words, the appellant is not entitled to benefit of exemption u/s. 11 of the Act for AY 2011-12 i.e. this relevant assessment year under consideration. The AO, therefore, had rightly held that the appellant trust could not be considered for exemption u/s. 11 as claimed by it. As regards the status of the appellant trust, the same would be Association of Persons (AOP) for the purpose of assessment for this year and since the beneficiaries of the assessee are indeterminate and unknown, the surplus/income before allowing the benefit of deduction u/s. 11 of the Act. As to be taxed at the maximum marginal rate u/s. 164(2) of the Act. I, therefore, agree with the contention of the AO in this regard also. 5.3.1 Regarding appellants claim of voluntary donations credited to Balance Sheet as Corpus, I find that the appellant claimed initially that such donations were received from the villagers of the vicinity wherein the appellant and also the school run by it namely Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that the AO had legally taken the recourse in this regard. The appellant had filed two Affidavits, one from non-teaching staff and the other from the teaching staff as detailed above. From both the Affidavits which were given solemnly on oath by the persons who signed the Affidavit that neither any contributions were received from the villagers nor any such expenditure as debited on account of salary paid to them had been incurred by the appellant trust. Therefore, it is evident and explicit from such Affidavit that there were neither any transactions affected on account of "voluntary contributions", nor there were any transactions relating to "payment of salary" The appellant, however, to make it a show that income/contributions were received and so also salary was paid to the teaching and non-teaching staff, had made the entries in the books of accounts, thereby showing all such entries both for receiving the voluntary contributions from the villagers and paying the salary to non-teaching and teaching staff, in cash. The appellant could not furnish any vouchers or documents or evidences so as to ensure its claim of voluntary donations received from villagers and so also expens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf of any university or other educational institution referred to in sub-clause (iiiad) or sub-clause (vi) or any hospital or other institution referred 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 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 section (1) shall not apply to any anonymous donation received by- (a) any trust or institution created or established ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ten submission after stating the facts of the case of the appellant claimed the benefit of exemption of its income u/s 10(23C)(iiad) of the Act contending that the appellant existed solely for educational purposes and not for purposes of profit and its aggregate receipts had not exceeded the prescribed limit (i.e. Rs. 1,00,00,000/-) and therefore it was eligible for exemption u/s. 10(23C)(iiiad) of the Act. I find the contention of the appellant is devoid of merit for the reason (i) never before such claim was made by the appellant either in the return of income or before the AO and therefore such a fresh claim at this stage is not acceptable; (ii) the appellant could not adduce/produce any such evidences either in the form of copy of trust deed/memorandum of association or details regarding the objects for which it was created or any supporting documents that it was created solely for educational purposes as provided in section 10(23C)(iiiad) and there were no other objects which are charitable in nature within the provisions of section 2(15) of the Act; (iii) the appellant was registered by the CIT-1. Kolhapur as a public charitable trust u/s. 12AA of the Act, and (iv) no such fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5BBC applied. The careful perusal of the donations received would reveal that the receipts issued were in name of the donors, their address and were clearly mentioned in the books of account. In such circumstances as per law, cannot be called anonymous donations to attract S. 115BBC of the Act. The Ld. CIT(A) held against assessee without properly appreciating the provisions of law and concerned circular. The Ld. CIT's action is against the law. 4. On the facts and in the circumstances of the case and in law the A. O. made additions under S. 68 of the Act. The Ld. CIT(A) changed this decision of the A. O. and abruptly held the provisions of S. 115BBC attracted being anonymous donations. The Ld. CIT(A) was under bounden duty to issue show cause notice to the assessee trust and also should have called for Remand Report from the A. O. with a view to give opportunity in the matter. The Ld. CIT(A) breached the principles of natural justice. His decision has not legal sanctity. The appeal order is not sustainable. Both the orders be quashed and set aside granting relief to the assessee. 5. On the facts and in the circumstances of the case and in law and in the alternative, if it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellate stage, demonstrating that it was eligible for exemption under S. 10(230)(iliad). [Para 5.3.5, page 12 of the order of Commissioner (Appeals)] 3. Hon'ble ITAT Bench A, Pune on 24-11-2020, vide its order in ITA no. 620/PUN/2020 (AY 2011-12) dated 01/03/2023 dismissed the appeal on the ground that the appellant has failed to explain properly the delay of 193 days in filing of the appeal. 4. Aggrieved by the said order of the ITAT, the Appellant filed an appeal before Hon'ble High court of Judicature at Bombay, Civil Appellate Jurisdiction. The Hon'ble High court Mumbai, vide its Income Tax Appeal (L) No. 29393 of 2023 order dated 23-02-2024 condoned the delay in filing the appeal and impugned order date 01-03-2023 was quashed and set aside and reminded back to the ITAT. GROUNDS OF APPEAL (Before ITAT) G-1. The Learned Commissioner (Appeals) was not justified and patently erred in the applying provisions of Section 115BBC. G-1.1. The Learned Commissioner has considered the entire receipts as shown in the Income and Expenditure Account as anonymous donation. And erred in the applying section 115BBC. Provisions of Section115 BBC(3) are reproduced below ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision of the Learned Commissioner is solely based on the affidavits made by teaching/non-teaching staff and the facts behind submission of the affidavits have already been submitted in Para (vii)(b) (page 10) of submission dated 27-Feb-2023. 0-2. The Learned Commissioner denying the exemption under Section 10(23C)(iiiad) of the Income Tax Act, 1961 0-2.1. Claim for benefit of exemption of Section 10(23)(liiad) of Income Tax Act 1961, was rejected by the commissioner appeals for the following reasons: a. Not claimed exemption before AO and in the return of Income b. Not produced any such evidence either in the form of copy of Trust deed/ MOA or details regarding the objects for which it was created or any supporting documents that it was created solely for educational purpose, as provided in S. 10(23C)(iliad) and there were no other objects which are charitable in nature within the provisions of S. 2(15) of the Act. c. Appellant was registered by CIT -1 Kolhapur as a Public charitable Trust u/s 12AAof the Income Tax Act 1961. d. No such facts and figures and explanation were furnished during appellate stage, demonstrating that it was eligible for exemption under S. 10(2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s should (a) Draw their attention to any refunds or reliefs to which they appear to be clearly entitled, but which they have omitted to claim for some reason or other, (b) Freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs," The Appellant also relies on the following judicial pronouncements in this regard: * Thomas Kurian v. Assistant Commissioner of Income Tax [TS-5350-ITAT-2006(COCHIN)-O) AO being a quasi-judicial authority, once having noted in the assessment order that assessee had export turnover, was duty bound to ask the assessee as to why he had not claimed deduction under section 80HHC. The matter was remanded to the AO to decide Assessee's claim for deduction under section 80HHC. * Chicago Pneumatic India Ltd. v. Deputy Commissioner of Income Tax [TS-5164-ITAT-2007(MUMBAI)-O] It has been held that even though the assessee did not revise its claim under sections80HH and 80-1, in the revised return, the IT authorities were obliged to consider the revised figures placed before them during assessment. Thus, the reason quoted by the Learned Commissioner (Appeals) is wr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals). c. Appellant was registered by CIT-1 Kolhapur as a Public charitable Trust u/s 12AA of the Income Tax Act 1961. Even though Appellant was registered under S. 12AA, the registration was granted from 01.04.2012 and that is the basis applied for denying benefit of exemption under S. 11 of the Income Tax Act. Thus, for the relevant assessment year (2011-12), the Appellant had no exemption benefit available due to this registration and hence, this cannot be a valid reason for rejecting other benefits available to the Appellant viz. S. 10(230). G.-2.3. The provisions of S. 10(23C) (iiiad) are reproduced below for easy reference: "any income received by any person on behalf of (iiiad) 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;" The limit prescribed for the purpose of this Section and applicable for the relevant assessment year was Rs.1crore. The Appellant squarely fits in the criteria laid down in the Section and thus, is eligible for the benefit of ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im for exemption u/s.10(23C)(iiiad) of the Act which the Ld. CIT(A) rejected mainly for the reason that no such claim was earlier made before the Ld. AO and in the return of income filed by the assessee and also on account of lack of any supporting documents furnished by the assessee in support thereof. Before us, the Ld. AR submitted that the assessee has filed additional grounds of appeal along with additional evidences in respect of its alternate claim for exemption u/s.10(23C)(iiiad) of the Act which goes to the root of the matter and hence requested for admission of the same. He further submitted that given an opportunity, the assessee is in a position to substantiate its case before the lower authorities by furnishing the requisite supporting documentary evidences in support of its claim. He therefore made a request to set aside the matter to the file of the Ld. AO/ CIT(A) for adjudication afresh on merits in the light of these additional grounds/additional evidences filed by the assessee. We find some force in the above arguments of the Ld. AR. On Perusing the additional grounds/evidences filed by the assessee, we find that the same goes to the root of the matter and in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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