9911796707
TMI Blog1989 (3) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... e to these questions are that the Inspecting Assistant Commissioner (IAC) disallowed the claim of exemption under sec. 11 in respect of all the items on the ground that the income was not spent for charitable purpose and that the Trust property or income was used for the benefit of persons mentioned in sec. 13(3). The Commissioner confirmed it in respect of all except three items on the ground that conditions under section 11 were not satisfied and those u/s 13 were violated. 4. The investigation by the IAC which resulted in the assessment proceeded in three stages i.e. (1) examination of the return, which led to (2) a visit to the assessee's premises and property which further led to (3) a "detailed investigation". 5. While making the assessment the IAC noticed that the assessee had received large donations towards its corpus. The IAC remarked that "the department was accepting the version of the assessee at its face value since the beginning till last year". He has noted that during the year the family members of the Sarabhai group wanted to transfer antique pieces of the Calico Museum in the possession of the Calico Mills to the premises of the assessee and that some one h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year 1981-82 to have any credibility, capability, or intention to do charity in terms of section 11 of the Income-tax Act." In para 22, he has stated : " Be that as it may, on the basis of the facts brought on record I hold that the Sarabhai Foundation did not do any charity nor its Trustees had any intentions (as against the pretension) to do the same." 7. Therefore, we have to consider mainly the IAC's order for appreciation of the evidence. Before doing that, however, it is necessary to ascertain whether the assessee is a Public Charitable Trust. That depends only on the objects of the Trust. The IAC, in para 21 of the order, has set out the objects as per the Trust Deed, viz.-- (a) Relief of the poor (b) Education (c) Medical Relief, and (d) advancement and promotion of any other object of general public utility including promotion of science, art and literature. These objects satisfy the requirement of sec. 2(15) and, therefore, it has to be held that the assessee is a charitable trust. 8. The assessee's counsel made the following submissions : 1. There was an understanding with the department that the assessee was entitled to exemption unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to be arrived at. However, the earlier assessment orders, the registration under section 12A(a) and certificate under sec. 80G are very relevant. This Tribunal, Ahmedabad Bench 'B', vide its order in the case of Ambalal Sarabhai Trust No. 19 [IT Appeal Nos. 708, 1271 and 1739 (Ahd.) of 1983 dated 23-10-1984] has held that the above factors would operate as res judicata. Further the Delhi High Court in the case of CIT v. Shree Ram Memorial Foundation [1986] 158 ITR 3 has rejected the application under sec. 256(2) on the ground that the assessee had been recognised as a charity for several years. The above decisions support our view that the assessee is a public charitable trust. Moreover the Ford Foundation had given a substantial grant of $ 38,700 to the assessee under their letter dated 13th September, 1983 which is before the IAC's visit. It shows their recognition and appreciation of the assessee as a public charitable trust. 10. The learned Standing Counsel argued that in this connection it has to be seen whether the income had been spent for charitable purpose and if not then the trust would not be a charitable trust. We do not agree with him. As stated above, the quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally approached it and the quantum was so small that it need not have been disallowed. Regarding the Bhagat Memorial Trust it has been stated that it was not necessary that charitable institutions to which the Foundation gave donations must necessarily be enjoying the tax exemption status. 14. Regarding the donations to the individuals the IAC has not doubted that they were needy persons. Therefore, the disallowance of Rs. 689 is cancelled. Regarding the donation to the Bhagat Memorial Trust it was necessary that it should be a charitable trust. Therefore, on this point the matter is restored to the IAC to ascertain this fact and allow the payment if the trust is proved to be a charitable trust. 15. Another disallowance of this kind is an amount of Rs. 6,041 out of which Rs. 3,850 is by way of financial help to four individuals. These four persons were in the employment of the Sarabhai family as their personal servants. In our view this disallowance has been rightly made. It almost amounts to making personal charity at the cost of the Foundation. If the members of the Sarabhai family wanted to make such a charity they could have done it from their own resources but to make it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, 1985 there were hardly any persons from outside who had visited it. The assessee had tried to show that they had written to educational institutions to send their students to this garden but the IAC has dismissed this as an after thought because enquiries had been made regarding the access of the public to this garden. Regarding the assessee's claim that this garden was for the benefit of students, the IAC has observed that educational institutions were not consulted regarding their requirements in respect of the families of the plants according to the syllabus of the standards of teaching classes. He has noted that the persons who were consulted for this purpose were not "connected with the educational requirements of a Botanical student ". Regarding the non-accessibility of this garden to the public, the IAC has noted the evidence of one Ramdas, the gardener, who, according to him, had stated that no outsider was allowed to go in the garden and that Shri Gautam Sarabhai, one of the trustees, came to the garden for morning and evening walk. He has also recorded that the employees of the Sarabhai Foundation working in the garden admitted that since two years of joining the servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry next question, he has stated that he came there for overseeing the work of the gardeners. This statement is corroborated by the statement of Maganbhai Sumabhai who has stated the same thing. The IAC has relied upon the statement of Ramdas but he has not taken into account the statement of Maganbhai Sumabhai and has merely taken into account one answer of Ramdas without taking into account the next answer. Moreover these statements were recorded in December, 1984 and these two persons were working there only for the last two months and could not make any statement regarding the period relevant to the assessment year 1981-82 which is before us. 22. The learned Standing Counsel submitted that although the assessee had spent Rs. 83,470 on this Botanical garden during the relevant period all that we had was a bare submission by the assessee that they were making it ready for being opened to the Public. He submitted that there was nothing to show as to what in fact was being done. In this connection he invited our attention to the circular by the assessee to various educational institutions stating that those who wished to avail of the Botanical garden at Sarabhai Foundation on Sat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... project. The Standing Counsel has argued that there is no proof that these suggestions were carried out. But it is impossible to ascertain that because, in that case, we have to know what the situation was before the suggestions were made. It is sufficient that the assessee invited the suggestions from these experts and ultimately there is in fact a Botanical garden. Therefore, the process of bringing it into existence during the aforesaid period of 4 years has to be inferred. The IAC's observation that if students of botany were to be benefited, educational institutions and professors of botany would have been consulted has no substance. It is sufficient that ultimately a botanical garden is grown and the knowledge of botany is not necessarily confined to professors of botany. The IAC's observation that for benefiting the students the families of plants would have to be grown according to the syllabus is a narrow, bookish and absurd approach. The knowledge of botany need not be divided according to the syllabus of students. A person intending to grow a botanical garden may grow it in is own way and then people interested in the study of botany can visit the garden to their benefit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es available to students for study and research work. According to the assessee, as stated by the IAC this was important from the national point of view for preserving the national cultural heritage. The IAC has disallowed this expenditure on the ground that the assessee had neither advertised nor given a public show of these materials in the last eight years and that there were no membership and no rules for obtaining these records and that no educational institution had been informed regarding the availability of this material. He has noted that the person in charge of the library, who had joined the service from February 1984 had stated that nobody from outside had ever attended to avail of these facilities. He has also stated that the Managing Trustee, Smt. Gitaben had admitted that the cassettes had not been played before anybody except before the VIP guests and that they were specially good for Gujarati students of B.A. and M.A. (perhaps what he means is students of Gujarati). From this he has concluded that the recordings were not made with the intention to benefit the general public but for special classes of students of B.A. and M.A. and also that the cassettes and gramoph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat since considerable time and effort would be required for this activity and since the resources were at that time utilised for the enormous task of organising the Botanical garden and the museum, the activity regarding the recordings had not yet been systematically organised. 26. At the time of hearing before us a copy of the aforesaid leaflet accompanied by the form etc. was supplied to us. Therein we find the list of 48 authors and a blank form for placing an order. In the covering letter an introduction is given regarding the preparation of these cassettes and it also states that the cost of each cassette would be Rs. 60 and would be available within 6 months of the placing of the order. 27. The learned Standing Counsel submitted that the aforesaid facility was made available only from the 1st February, 1985 and that the reference library of recorded music could be availed of only on Saturdays and that too only for two hours in the morning and three hours in the afternoon. He pointed out that the number of persons who had availed of the facility of the lending library as stated at page 391 of paper book I was only twelve out of which one was the trustee Smt. Gitaben May ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in teaching should be associated with this kind of work. Prof. Niranjan Bhagat is not disqualified from guiding this kind of work merely because he is a poet. All that is necessary is that somebody who is knowledgeable in this field and having a sufficiently high standard of intellectual and educational attainments with an established reputation should be associated with it and that requirement has been fulfilled in this case. The IAC's approach is narrow and bookish. 29. The disallowance is also on the ground that the expenses were not properly vouched but the assessee has replied that these vouchers were never asked for and that they could be supplied at any time. This reply has not been contested by the Revenue. 30. It may be true that blind people may find it difficult to go to the Foundation premises and use this facility. But it is not as if they do not move about. They could use these facilities although with difficulty. The emphasis by the trustees was on the fact that it was no longer necessary to read in order to use what was communicated. In any case even if blind people were excluded the other persons did constitute members of the public. Moreover as pointed ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " meant only for the elite class of people and who have leisure time and who know English only ;" (c) that even after receiving the books for the last 10 years no one from outside had gone and made a reference ; and (d) that no public notice of the availability of this facility had been given. The IAC has observed that the books came in the possession of the Foundation long ago and if they were meant for public use then a library would have been established within a period of about one year. The learned Standing Counsel also put forward a similar argument that although the books were acquired long ago they were open to the public only on 16th April, 1985 and that organising the library should not have taken so long. He pointed out that the assessee had not engaged any qualified Librarian to finish the work of organising it and submitted that the reply of the Managing Trustee in that connection that the assessee had to decide the priorities showed that the trustees were treating the work as if it concerned their own property and not a public charitable trust. The assessee has replied that the IAC's observation that the library could be organised in one year's time is based on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment to one " Harrang Samaj ", which consisted of a group of persons organising music concerts. The IAC has disallowed it on the ground that the " Samaj " was not registered as a charitable institution under the IT Act. He has observed : " How a payment to a group of individuals claimed to be involved in promoting Indian classical music, both vocal and instrumental, can be said to be application of income for charitable purposes. The IT Act allows donation to any institution which is a charitable institution as per the IT Act and not to any other institution." The assessee replied that : " the claim of the assessee is under sec. 11 and not as a deduction under sec. 80G. It is submitted that a charitable institution may render assistance in the nature of a charity even to an individual who cannot have any registration or recognition under the IT Act and yet that would be an application of income under sec. 11." The learned Standing Counsel submitted first of all that the activities of the " Samaj " were not open to the public and secondly that even if that " Samaj " was doing charitable activities the donation to it would not confer the status of charitable trust on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1966 with a view to promote improved methods of agriculture and other ancillary activities and to develop it as a place for picnic for persons from educational and other institutions. The assessee had submitted that the late Dr. Vikram Sarabhai who was a trustee of the Foundation was to guide and direct the above scheme but unfortunately he expired in 1971 and Smt. Sarladevi Sarabhai, who was the Chairman and Managing Trustee of the Foundation was keeping indifferent health for a number of years and she also passed away in 1975. Further the well in the farm had dried up and there was an acute shortage of water and due to the growth of population around the farm there was considerable pilferage and trespass. For these reasons the development of the farm with the above objects could not be pursued. Further, making a new tube-well and providing a proper boundary wall for preventing pilferage and trespass involved heavy expenditure in the assessment years 1982-83 and 1983-84. The assessee had submitted that the farm had been entered as property of the Foundation in the Public Register maintained under the Bombay Public Trust Act, 1950 and since the Foundation was a registered public c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereafter he has estimated the income from various fruit trees i.e. lemon, mangoes, bananas, jamuns, jack fruit etc. by consulting the Talati and discussions with " various persons " from Hansol village including the sarpanch and his " personal knowledge ". He has concluded that since this would be the correct estimate of income and since that has not been shown, either the produce had been used by the family members of the trustees and their relatives or after the sale thereof the income had been transferred to them through one J. K. Gandhi. This later part of the conclusion is based on the statement of this Mr. Gandhi to the effect that he looked after the activities of the farm and the statement of one Nankuram who was selling the produce of the farm and who stated that the sale proceeds were handed over by him to Mr. Gandhi. The IAC has noted that Mr. Gandhi was not in the service of the Foundation but in the service of a sister concern and that he was working for the managing trustee who had asked him to do that work. This, according to him, showed that the members of the Sarabhai family wanted to retain their control over the income of the Foundation through their personal tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , since these two persons died one can very well under stand that there was no one else available for the purpose. Further, as the above heavy expenditure was incurred there would naturally be some shortage of funds which cannot be expected to be always available for this project because there were other projects also to be implemented. Therefore, if for a number of years the project is not implemented that does not mean that its starting with the acquisition of the farm was for the benefit of the trustees or their relatives. It is the gathering of the circumstances which made it difficult, if not impossible, to implement the project. It is a simple case of--man proposes ; God disposes. 44. Regarding the second questions the IAC's order is based on his disbelief that the trees on the farm would give such a low yield. Normally speaking if a farm is well taken care of and some one is actively taking interest in it, it could have yielded a good return. However, the very reasons indicated above, for which the project could not be implemented, are sufficient reasons for the yield being very low. How much that yield would be, in a given case is a question of fact. We cannot say that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly. But during second fortnight of September rainfall remained normal. Hence condition of crops improved. But due to uneven distribution of rainfall in Banaskanta district condition of sown khariff crop was reported poor. It also shows that there was unseasonal rainfall during the month of October and states that due to uneven distribution of rainfall in the State the growth of crops in the agricultural year 1979 cannot be said to be satisfactory. The above indicates that for the relevant period it cannot be assumed that the crop position for the farm was good. 45. That brings us to the actual estimate and the evidence in that regard. The first is the statement of the Talati of Hansol village dated 6-2-1985. He has stated, inter alia, as follows : " We have no record for the actual production of crops on the land. So we have no information on that point. According to the statement of Maganji Bapuji, aged about 62 years, the yield of one Kalami mango tree is about 10 to 12 maunds of mangoes and the yield from ordinary mango tree is approximately 50 maunds of mangoes on an average. One lemon tree yields produce of about Rs. 500 in 12 months of season." In his cross examinati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as Maganji Bapuji and the Sarpanch or Deputy Sarpanch with whom the Talati discussed this matter have not been examined. We have, therefore, no first-hand information regarding this matter. Further the IAC has also relied upon his personal knowledge. What the basis of the IAC for that personal knowledge is has not been stated by him. The learned Standing Counsel, on the basis of the available figures, submitted that according to the assessee every mango tree gave a gross return of only Rs. 3.75 and every lemon tree gave a return of only Rs. 2 and that since this was unbelievable, the estimate made by the Commissioner (Appeals) should be accepted. In our view although this kind of yield appears to be too low, what is necessary for an estimate is a reliable basis for estimate such as comparable instances or opinions of persons who have personal knowledge and who are independent outside witness subjected to cross examination. As indicated above there is no firm evidence regarding the number of fruit bearing trees in the period 1980-81. Therefore, it cannot be said that there is a reasonable basis for arriving at the estimate made by the IAC. It is true that he has given a reduction fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated that the mangoes are sold on contract to a person who gives the highest offer. In reply to question No. 11 he has stated that this system of sale by contract has been going on for the last five or six years. Regarding the above evidence of Nankuram he has denied that the sale proceeds are handed over to him. But he has stated that Nankuram hands over the sale proceeds to Anubhai who in turn hands them over to the cashier who gives a receipt for it. According to the IAC since Shri J. K. Gandhi was not an employee of the Foundation but was a trusted person of the managing trustee, the sale proceeds were taken away by the trustees. We are of the view that there is no justification for the conclusion reached by the IAC and confirmed by the Commissioner (Appeals). First of all regarding this allegation of misappropriation no question has been put to the managing trustee Smt. Giraben. Secondly, the fact that Shri J. K. Gandhi was not an employee of the Foundation will make no difference because if any misappropriation was to be done it could have been done also through an employee of the Foundation. Thirdly, if the trustees wanted to misappropriate the produce or the sale proceeds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court was pending. It was, therefore, intended to give an impression that the Calico museum was transferred to the Foundation for the public convenience and that some other items of general public utility were, also being shown to the public ; (iv) From the visitor's book it was seen that hardly anybody from the public had visited the gallery in the last 2 or 3 years since it had been opened. Although foreign guests and VIPs had visited it that did not mean that it was open to the public. On the same grounds the expenditure on Archives has also been disallowed. 50. The assessee has replied that the Court gallery was open to the public on 24-10-1983 by posters at public places, such as hotels, Gujarat Tourism office and IIM vide letter of that date, notice boards and letters to people interested and the Vallabh Sampraday Pustimarg gallery was open on 31-1-1984 by announcements in the Gujarat Samachar. Our attention was also drawn to the entries in the visitor's book bearing the dates prior to visit by the IAC. Now, the IAC has not doubted that the public announcements regarding the opening of these galleries were in fact made. Therefore, the first conclusion to be drawn is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P.L. Dave, Secretary, State Board of Teachers' Education, Raikhad, Ahmedabad and many others. They all appear to be ordinary people and not all of them have put dates but many of the entries which are subsequent thereto bear the dates which are prior to the IAC's visit. The following two entries would show that : N. H. Trivedi--28-4-1984 Mridula Bihari Kanaiyalal-- 26-4-1984 Therefore, we must say that the conclusion of the IAC that the galleries were not open to the public is wrong and against the evidence. 51. Regarding the allegation that the news item was published in order to show that the Calico museum was open to the public when the Gujarat High Court was seized with the matter, the assessee has replied that actually the announcement in the papers was made when the Gujarat High Court was not seized with the matter. The assessee's reply shows that it was the City Civil Court which was concerned with the matter and had granted the temporary stay. It is unnecessary to consider this reply because the fact that the said galleries were open to the public has been established by the assessee and an imputation of motives, even if correct, is totally irrelevant. 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITO regarding the purpose for which it was set apart so that it could be ascertained whether it had been spent for that purpose. The Commissioner (Appeals) has confirmed the disallowance on the ground that there was no evidence to show the purpose for which the amount had been received and for which it was set apart for future expenditure. The assessee has explained that the amount had first been received from Darshan Charity Trust on the condition that it would form part of the corpus. A copy of the letter dated 25th December, 1979 from that trust to the Foundation and a copy of the resolution of that trust in that connection are in the paper book before us. In that letter the Foundation has been informed that the donation of Rs. 50,000 is given as per the copy of the resolution, the material part of which is as follows : " It is proposed to donate a sum of Rs. 50,000 to Sarabhai Foundation, a Public Trust registered under the Bombay Public Trusts Act, 1950 with a condition that the amount so donated shall forth part of the corpus of the Foundation and be held by the Trustees of the said Foundation upon the same trusts and subject to the powers, provisions and stipulations con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any object of public utility. An amount of Rs. 13,047 for the purchase of air conditioners has also been disallowed on the ground that they were purchased from the sister concern and so could not be said to be in furtherance of the object of public utility. The managing trustee was questioned on this aspect and she explained that the Jhummars had been purchased for creating a certain atmosphere and environment in the museum particularly in relation to the display of articles regarding Vaishnav religion. Regarding the cushions the assessee has explained that they were used in the Foundation premises for different purposes including sitting arrangement on the verandah at the entry to facilitate the visitors to remove their shoes. In our view, if the museum expenses are allowed then this kind of ancillary expenditure has also to allowed. It has to be appreciated that this is a museum of valuable (or rather invaluable) articles from the historical and aesthetic point of view. Its equipment, furnishing etc. have to be looked at from a different point of view. What may generally be regarded as articles of luxury may not be such in a place like this. Therefore, in our view, this expenditu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the public about this Foundation and the availability of its facilities to the public ; (d) The whole look of the campus gave an impression that this was a private property and no members of public could enter it. He relied upon the decision of the Supreme Court in the case of Addl. CIT v. Surat Art Silk Cloth Mfrs. Association [1980] 121 ITR 1 ; (e) Even if the said facilities are open to the public they are only for a small section of the public and that too once in a week or for 15 to 20 minutes in a day. In this connection we will also mention that in the earlier part of the order the learned IAC has also recorded that Ramdas, the gardener had stated that no outsider was allowed to come to the garden. 62. Now, first of all the entry, both to the Foundation premises and to the private residences of the Sarabhai family, is through one common gate and in order to go to the Foundation one has to enter the common road. It has been clarified to us that the guards at the gate merely tried to ascertain whether a visitor wants to go to the Foundation or to the residence of the Sarabhai family. If the visitor wants to go to the Foundation the guards indicate to him the direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parate the visitors to the residence from the visitors to the Foundation. The fact that the road of the MAPL is to be used is hardly of any consequence. Under an agreement executed by Ambalal Sarabhai in 1959 the Foundation has the right of easement over the common roads of the campus including the main road and it is this right which enables the Foundation to let in the visitors by using this road. So the observations of the IAC that the visitor has to trespass the property of the MAPL and that there is any hindrance has no basis. 63. Regarding the sign board the assessee had filed in the paper book before the Commissioner (Appeals) photographs of the sign board indicating the activities of the Sarabhai Foundation (Pratishtan) at the counter of the Gujarat Tourism Corporation at the Air Port and other places. Before us a copy of a similar photograph has been filed. It is a hoarding mentioning the name Sarabhai Pratishtan and it has been stated that it was there since 1979. This assertion had not been denied by the Commissioner (Appeals) or by the Standing Counsel. Photographs of the subsequent boards which replaced the old one were also filed before the Commissioner (Appeals) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... over museums are built and maintained by the State also which shows that they are for public benefit. This particular museum is for preserving the cultural heritage of India and is of national importance. As for libraries, it is hardly necessary to point out that they are regarded as for public benefit. The fact that instead of books there may be cassettes should not make a difference because one is to be read and the other is to be heard but ultimately both are means for communication. 66. As stated above the IAC has made a number of disallowances, inter alia, on the basis of applicability of section 13(c) such as the expenditure on the farm and on other activities on the ground that they are for the personal amusement and entertainment of the trustees and their relatives. He has, however, made a disallowance in respect of a payment to a concern, MAPL only on the ground of applicability of section 13(1)(c) read with section 13(3). The assessee had made this payment for use of the road, drinking water and services of watchmen which were provided by the MAPL. Now, as stated above the road to the Sarabhai Residences and to the Foundation is common. The department's case is that al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdly, guard and security arrangements are certainly necessary for the Foundation in view of the priceless materials which they had. We cannot agree that they are necessary only for five hours in the day particularly in view of the valuable materials kept in Foundation. The IAC has mentioned the same names--Puji Ram, Bhikhaji, Raiji etc. as having been kept separately for the Foundation as those with the MAPL. Therefore, it cannot be said that the Foundation is keeping separate watchmen and so there was no necessity for paying the MAPL for their services. In our view it cannot be said that these services are meant only for the purpose of the residences inside just because the entry of the road are common. Therefore, this disallowance is unjustified and is cancelled. 69. The next disallowance is in respect of repairs and maintenance of buildings amounting to Rs. 1,31,351. The disallowance has been made on the ground that the cross examination of the valuer who submitted the valuation report for the repairs showed that the expenditure was highly exaggerated and not supported by proper vouchers. The assessee has replied that the IAC had not called for the vouchers and the valuer was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd reached certain conclusions, which led to his detailed investigation. The conclusions are that : (a) the accounts have been manipulated or not properly maintained ; (b) the facilities are not accessible to the public and are being used by the trustees. The second conclusion has been considered in relation to various disallowances and so there remains the first one. Nothing very much turns on it because the disallowances are mainly based on the second one but it has occasioned the 'detailed investigation'. We are dealing with it because it is of a serious nature and the assessee has made an acute grievance of it. In this connection, the evidence of one Rohitbhai, a mechanic has been relied upon by the IAC. According to him : (a) Rohit got Rs. 20 per day whereas the assessee debited Rs. 30 per day ; (b) Rohit got Rs. 112 for 10-12 days while the wage sheet shows Rs. 212 ; (c) Rohit was not signing any vouchers and two vouchers produced before the IAC were signed by Rohit just then. Now the evidence recorded is as follows :--(Questions and answers translated by us from Hindi) Q. At what rate of daily wages are you working here ? A. I am working on daily wages at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e employers say they will give more but I do not know. I got Rs. 112 and I do not know anything. Q. Apart from this did you get any other money in the last 15 days ? A. No. Shri Anil R. Shah was given opportunity to reexamine Shri Rohitbhai on any ambiguity or other part on which he wants to make clarification which he declined. Sd/- ITO, 6-12-1984 73. Now, immediately after answer to Q. 16 both the IAC and the ITO have recorded that this witness said Rs. 30 and not Rs. 20. Moreover in the wage sheets which have been produced before us Rs. 30 has been recorded. Regarding the signature on the wage sheets we have found that he has signed not in two places but in six. These signatures are the same as that on the statement. Therefore, even if two signatures might have been made on the day of the statement, the other four were not. These documents were impounded. Therefore, the signatures could not have been put afterwards. Further, referring to the signature on the 1st December, he has stated that it has been given recently and not now. The word recently fits because the statement is on the 6th and the signature on the 1st i.e., recent past. Moreover, Mr. Anil Shah was not pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C's letter dated 4-1-1985 that considerable number of details etc. were required to be sent and the assessee's reply dated 12-1-1985 is also in considerable detail. We have not tallied every detail but if replies to some queries were not given that is not surprising considering the short time within which this reply was sent, the amount of details which were asked for and the amount of details which were in fact supplied. The IAC has stated that even after repeated reminders stock register of articles meant for public use or office use was not supplied but the assessee's counsel has denied this. We find from the letter dated 4-1-1985 that all that has been asked for were details regarding dead stock. Even in the IAC's letter dated 19th January, 1985 the assessee was required only to give those details mentioned in the letter dated 4-1-1985. The assessee has supplied those details regarding dead stock. We, therefore, see no reason for this allegation also. 76. There are further allegations regarding discrepancies in the accounts. The basis for them, we find, is so untenable and the assessee's explanation so reasonable that we see no reason for making those allegations. In any case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p shows that these are expenses relating to the general expenditure of the Foundation and relate to the items in respect of which we have allowed the expenditure. Since we have held the Foundation to be a public charitable trust we cancel this disallowance also. 78. Towards the end of the IAC's order an addition of Rs. 5 lakhs has been made in respect of the Annual Letting Value of the property of the Sarabhai Foundation. Since we have held that the Foundation is a charitable trust there is no question of any A.L.V. in respect of this property. This addition is, therefore, cancelled. 79. We may now consider the general aspects of this case. As stated above the Commissioner (Appeals) has not discussed the evidence independently. Rather his order proceeds on many irrelevant considerations, misstatements of fact, misunderstanding of the legal position and shows lack of application of mind. He has also expressed himself at places in a language which, to say the least, is intemperate. All this reflects on his impartiality and affects the general validity of his order. Thus in para 3(vi) of his order he has stated that : " for considering whether a charity is being done for an obje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Sarabhai Group, during the last decade the conspicuous fall in its industrial ratings was only natural. And predictably on top of it the Sara bhai Group, due to the reforms and modifications in law in the last few years, had been caught in the vicious tailspin of smarter-than-thou-tax-avoidance-syndrome. But then the litigation and mixing up of its priorities have both been its own creation. " This is a classic in irrelevance and shows the way in which the Commissioner (Appeals)'s mind has been working. The following are examples of the intemperate language and also of irrelevance :-- " 20......In this regard the question would, therefore, arise whether a well-heeled tax-payer (like the appellant) can masquerade as a charitable entity merely on its ipse dixit without even attempting to do good to someone in any walk of life. " " 21...... Here the appellant Sarabhai Foundation is apparently the beneficiary of the expert legal advice given by a coterie of professional tax advisers who are paid by the Sarabhai family annual retainerships and fees in amounts running in six figures individually. Such has been moral fibre of the trustees ; and such was the ethos of the advice o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e made then it can be done by issue of a specific circular only by the CBDT. In the present case the view held by the ITAT in its decision dated 28-7-1980 does not refer to any of these authorities. " All this is again wrong. The Tribunal is well within its powers to interpret the statute and for that purpose it need not rely upon any decision of a court. It is a part of the judicial power which the Tribunal exercises. It is again wrong to say that liberal interpretation can be done only by the Board. The Board is not a judicial body and it has no powers to make interpretations of statutes. The legal position is that the lowest court has the power of interpretation of a statute and the Board has no such power. It is surprising that the Commissioner (Appeals) should not have followed the Tribunal's order without distinguishing it and that too on the above reason. 80. The Commissioner has confirmed the IAC's order with hardly any discussions but the IAC's order is highly defective in more ways than one. 81. First of all his general approach is illogical. He has alleged that the donation of lands and buildings to the Foundation were a part of the tax planning but he has overlook ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at about 6 P.M. and left after supervising has been ignored. Further although the same announcement in the Gujarat Samachar mentions that the Darbar Gallery was open altogether for 5 1/2 hours that part of it has been ignored but where that announcement mentions short intervals regarding the Vallabh Sampraday Pustimarg section, that has been taken into account. How could the IAC shut his eyes to this glaring announcement ? Further it is no small consideration that the assessee had applied for registration before the Charity Commissioner. By doing so the assessee was subjecting the administration of the property of the Foundation to the supervision of that Charity Commissioner which will show the bona fides of the assessee. This aspect of the matter has been paid little attention to by the IAC. Further as pointed out above the assessee vide his letter dated 12-1-1985 tried to supply the information called for by the IAC by his letter dated 4-1-1985. In spite of that the IAC has stated that no such details were furnished. The IAC has made allegations of such trifling nature as that one of the trustees was going for stroll in the garden of the Foundation which also we have found to b ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
