TaxTMI 
TaxTMI 
2014 (4) TMI 523
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.... 115 BBC read with section 68/69 of the Income-tax Act, 1961. Apart from this main issue, the assessee has contended that in respect of two amounts from Bharat Ekta Andolan and Nisadh Investments and Finance amounting to Rs. 20 lacs and Rs. 10 lacs respectively. The additions were made on protective basis. These are converted on substantive basis by the Learned CIT(Appea1s). According to the assessee, Learned CIT(Appeals) has erred in confirming these additions on substantive basis. Learned CIT(Appeals) further enhanced the income of the assessee by a sum of Rs.11 lacs which is a donation from three persons, namely, Veena Bhsatia Rs. 1 lac, Quitech India Pvt. Ltd., Allegiant Buil Mart Pvt. Ltd. Rs, 5 lacs each. Apart from these, assessee has challenged charging of interest under sec. 234B and 167B of the Act. 2. The brief facts of the case are that assessee is a registered society. It was registered on 20.8.2004 under the Societies Registration Act, 1860. It got registration under sec. 12AA of the Act on 25.1.2005. It is also enjoying exemption under sec. 80G vide order dated 10.3.2005. This exemption is available for the period from 10.09.2004 to 31.3.2008. All these certificates....
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....reply was received. He confronted the assessee as to why the donations should not be treated as anonymous donations and the amount received by the assessee should not be added as its income. 4. In response to the query of the Assessing Officer, assessee filed its reply on 21.12.2009. It raised two fold submissions. According to the assessee, it has submitted the list of donors along with their addresses and income-tax particulars. These are not anonymous donations. The assessee has filed confirmation. Alternatively, it was contended that assessee is a charitable institution, duly registered under sec. 12AA of the Act. The donations are to be treated either the income of the assessee under sec. 11 (b) or 12 of the Act. In other words, stand of the assessee is that if donations received by the assessee are corpus donation then, these receipts cannot be brought to tax even if the assessee has not applied these donations for its object because they will go to the corpus of the society. In case, it is considered that donations are not being specifically pointed out towards corpus then, as per section 12, the voluntary contribution received by a trust created wholly for charitable purpo....
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....rs of its income. The total additions as discussed in above paras amounting to Rs.1,96,85,000 is added as per provisions of Sec. 115BBC of the IT Act, treating it anonymous donations. Total Addition: 1,96,85,000/-" 6. Learned CIT(Appeals) has partly allowed the appeal of the assessee. 7. The learned counsel for the assessee while impugning the orders of Learned Revenue Authorities has submitted that assessee has given complete details of the donors. It has been maintaining a record of the identity indicating the name and address of the persons making such contribution and such other particulars as may be prescribed by the Act. While taking us through the findings of the Assessing Officer recorded in paragraph 11 (extracted supra), he pointed out that Assessing Officer has basically observed that donations are anonymous, therefore, as per sec. 115BBC of the Act, they cannot be deemed as income derived from the property held under a trust under sec. 12 of the Act, otherwise if the assessee is able to establish the identity of the donors then, section 115BBC would not be applicable. At the most, the donations would be treated as income received by the assessee an....
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....and assessee has maintained the details of donors as required under sec. 1I5BBC of the Act, it is to be considered that voluntary donations received by the assessee are its income. The moment it is held that these receipts are the income of the assessee then, its computation would be as per sec. 11 and 12 because it is enjoying the registration under sec. 12AA. He pointed out that the application of income by the assessee towards fulfillment of its objects is manifolds. The total income as per income and expenditure account was Rs.90,79,412 and the total expenditure was Rs.533,22,666. The total expenditure is more than five times the income earned during the year. Therefore, ultimately the assessed income of the assessee would be at nil. He further contended that this issue has come up before the different Benches of the ITAT on number of occasions. He placed on record copies of the ITAT's orders in the cases of Ideal Education & Welfare Vs. ADIT (ITA No. 1376/Del/2011); (b) Hansraj Smarak Society vs. ADIT (ITA No.882/DeI/2011) and ITA No. 123/Del/2011 and (c) ITO vs. MPJS Educational Trust (ITA No. 2592/De1/2012), (d) Shri Vivekanand Education & Welfare Society (ITA No. 3562/D....
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....assessee further submitted that the order of the ITAT in the case of Hansraj Smarak Society (supra) has been upheld by the Hon'ble Delhi High Court in ITA No. 534 of 2012. 10. Learned DR on the other hand relied upon the order of the Learned CIT(Appeals).She took us through the observations of the Learned First Appellate Authority available on page 78 of the impugned order. She pointed out that it appears that these amounts have been taken by the assessee at the time of admission from the student in the shape of voluntary donation otherwise these are forced contributions. She further contended that additions under sec. 68 & 69 of the Act, if any, made then it is an income from other sources and benefit of sec. 11 and 12 will not be available to the assessee on such additions on account of unexplained credit. 11. We have duly considered the rival contentions and gone through the record carefully. There is no dispute between the parties that assessee is a registered society under Society Registration Act. 1862. It is also enjoying registration under sec. 12AA of the Act and it is also enjoying exemption under sec. 80G of the Act. All these registrations are in tact during the a....
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....use (b) or clause (c) or clause (cc) or clause (d) of sub-section (3) of section 13, shall be deemed to be income of such trust or institution derived from property held under trust wholly for charitable or religious purposes during the previous year in which such services are so provided and shall be chargeable to income-tax notwithstanding the provisions of sub-section (1) of section 11. Explanation.-For the purposes of this sub-section, the expression "value" shall be the value of any benefit or facility granted or provided free of cost or at concessional rate to any person referred to in clause (a) or clause (b) or clause (c) or clause (cc) or clause (d) of sub-section (3) of section 13. (3) Notwithstanding anything contained in section 11, any amount of donation received by the trust or institution in terms of clause (d) of sub-section (2) of section 80G in respect of which accounts of income and expenditure have not been rendered to the authority prescribed under clause (v) of sub-section (SC) of that section, in the manner specified in that clause, or which has been utilised for purposes other than providing relief to the victims of ea....
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....r that the donors were not produced, does not necessarily lead to the inference that the assessee was trying to introduce unaccounted money by way of donation receipts and Section 68 has no application to the facts of the case as the assessee had in fact disclosed the donations as income. The Hon'ble Delhi High Curt approved the decision of the Tribunal that addition uls 68 was not correct and exemption u/s 11 cannot be denied. 8. Again, in the case of DIT(E) VS Motibagh Mutual Aid Education (supra), before Hon'ble High Court, the assessee received 'guptdaan' which was shown as unsecured loan by mistake. Some other donations were also there. The donations were utilized for construction of school building. It was held that when there is no deviation of funds there are minor contradictions or deviation in the accounts, this by itself cannot substantiate the allegation that the assessee exists for profit motive, therefore, exemption uls 10(22) of the Act cannot be denied to the assessee. It was held that the amount of 'guptdaan' is a receipt and not an outflow from the corpus of the assessee. Therefore, the question i....
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....sclosure of donations along with list of donors, amounts were paid through banking channels and due to this non-availability / non existence on their given addresses the amounts so received in donations were applied for charitable purposes. It is pertinent to mention over here that during the year, the assessee had received corpus donations of Rs.1,99,86,101/- and it had collected RS.3,51,76,220/- as per income and expenditure account, thus the total amount available with the assessee from these two accounts was Rs.5,51,62,321/- against which it had spent Rs.4,03,76,796/- on the fixed assets and Rs.3,09,80,493/- on recurring expenses. After depreciation of Rs.63,08,433/-, the total application of funds comes to Rs.6,50,48,856/-. Thus, when there is no dispute that the amount in question was applied for educational purposes, the fact that the donations remained unverifiable due to non availability of donors at the addresses given in their confirmations does not necessarily lead to the inference that the assessee was trying to introduce unaccounted money by way of donation receipts. We therefore respectfully following the decision of Hon'ble Delhi High Court in the case of Keshav....