2022 (9) TMI 1558 - AT - Income Tax

Trust loses appeal as exemptions denied for late Form 10 filing and excess income accumulation

ITAT Jaipur dismissed the trust's appeal on all grounds. The tribunal confirmed CIT(A)'s order reducing DVO valuation by 20%, upheld additions for corpus ... Assessment of trust - Addition on the basis of valuation report received from the DVO - CIT(A) directed AO to reduce the valuation made by the DVO by 20% - HELD THAT:- Assessee trust has not advanced any arguments/submission controverting the order of the ld. CIT(A). In this situation, the Bench has no other alternative except to the confirm the action of the ld. CIT(A). Thus Ground No. 1 of the assessee is dismissed. Corpus donation - assessee has not produced any evidence to show that 50% of development was the donation received with the specific direction for corpus fund, therefore, the addition is hereby confirmed - HELD THAT:- As the assessee trust has not advanced any arguments/submission controverting the order of the ld. CIT(A). In this situation, the Bench has no other alternative except to the confirm the action of the ld. CIT(A). Thus Ground No. 3 of the assessee is dismissed. Addition for surplus for both funds of students - HELD THAT:- As the assessee trust has not advanced any arguments/submission controverting the order of the ld. CIT(A). In this situation, the Bench has no other alternative except to the confirm the action of the ld. CIT(A). Thus Ground No. 4 of the assessee is dismissed. Addition confirmed as non furnishing complete address of the person from whom corpus donation was claimed to have been received by the appellant - HELD THAT:- As assessee trust has not advanced any arguments/submission controverting the order of the ld. CIT(A).Thus Ground No. 5 of the assessee is dismissed. Disallowance of capital expenditure on account of Inverter - addition made by the AO in respect of the inverter claimed as application in form of purchase of inverter is also confirmed because the appellant has failed to furnish any documentary evidence to substantiate the claim - HELD THAT:- As assessee trust has not advanced any arguments/submission controverting the order of the ld. CIT(A). Thus Ground No. 6 of the assessee is dismissed. Exemption u/s 11 and 10(23C) denied - appellant had not submitted Form No. 10 as required u/s 11(2)(a) of the Act before the due date of filing of return of income - HELD THAT:- As appellant was required to apply Rs.1,15,60,989/- whereas the appellant had applied only Rs.1,08,63,975/-. The appellant had not submitted Form No. 10 as required u/s 11(2)(a) of the Act before the due date of filing of return of income. Thus, the accumulation of income was more than 15% of the gross receipts. As the appellant had failed to fulfill the condition laid down u/s 11 (2)(a), hence the action of the AO denying the benefit of Section 11(2) of the appellant is held to be fully justified and in accordance with the provisions of law. Further, the AO has also discussed the objects of the Trust - we agree with the view of the AO that the Trust was not existing solely for education purposes. Therefore, the exemption denied by the AO u/s 10(23c)(iiiad) is also held to be valid and in accordance with the provisions of law. As the assessee trust has not advanced any arguments/submission controverting the order of the ld. CIT(A). Thus Ground Nos. 7,8 &9 of the assessee are dismissed. Assessee appeal dismissed. Issues Involved:1. Disallowance of addition made on different accounts2. Disallowance of development fees as income3. Disallowance of surplus funds of students4. Disallowance of corpus donations5. Disallowance of capital expenditure on inverter6. Denial of exemption benefit under section 10(23C)7. Non-submission of Form 108. General grounds challenging the orderIssue 1: Disallowance of Addition Made on Different AccountsThe appellant contested the addition of Rs. 2580033 and tax imposition without considering the full facts. However, the Tribunal upheld the decision based on valuation reports and directed a reduction by 20%, confirming a revised valuation of Rs. 29,58,320. As the appellant failed to provide contrary arguments, the Tribunal dismissed this ground.Issue 2: Disallowance of Development Fees as IncomeThe appellant claimed that development fees were corpus donations and should not be treated as income. The Tribunal found no evidence supporting this claim and confirmed the addition of Rs. 8,81,362 as income, as the appellant failed to counter the decision.Issue 3: Disallowance of Surplus Funds of StudentsThe appellant argued against the addition of surplus funds of students, stating they were controlled by the institution for student welfare. However, as no substantial arguments were presented, the Tribunal upheld the addition of Rs. 2,15,235 as per the provisions of the law.Issue 4: Disallowance of Corpus DonationsThe appellant disputed the disallowance of corpus donations due to incomplete recipient information. The Tribunal confirmed the addition of Rs. 1,08,340 as the appellant failed to provide complete details, leading to dismissal of this ground.Issue 5: Disallowance of Capital Expenditure on InverterThe appellant contested the disallowance of capital expenditure on an inverter, claiming payment by cheque. However, as no documentary evidence was furnished, the Tribunal upheld the addition of Rs. 14,000 and dismissed this ground.Issue 6: Denial of Exemption Benefit under Section 10(23C)The appellant sought exemption under section 10(23C) (iiirad) instead of section 11, arguing the educational institution's non-profit nature. The Tribunal denied the exemption, citing the failure to meet conditions under section 11(2)(a) and upheld the AO's decision, dismissing this ground.Issue 7: Non-Submission of Form 10The appellant claimed that Form 10 was misplaced by the department, leading to the denial of benefits. The Tribunal found the appellant's failure to submit Form 10 timely and upheld the AO's decision, dismissing this ground.Issue 8: General Grounds Challenging the OrderThe Tribunal dismissed general grounds challenging the order, noting the lack of substantiating documents and rendering them infructuous.In conclusion, the Tribunal dismissed the appeal due to the appellant's failure to provide substantial arguments or evidence to counter the decisions made by the assessing authorities. The judgment highlights the importance of presenting comprehensive and supporting documentation in tax assessment appeals to substantiate claims effectively.