2014 (9) TMI 497

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....o the business of the assessee company; that the receipts were received not by a trust created for the purposes of charity in nature, but by a company doing business and trading; and that no evidence had been filed by the assessee that the receipts had been actually spent on charity. 5. The learned CIT(A), while upholding the addition, observed that the assessee had remained unable to establish that the object of the company, as per its memorandum and articles of association, was also to carry out charity; that its objective was commercial and there was no reason to collect Dharmarth from its clients; and that, therefore, the Assessing Officer had rightly treated this receipt as a trade receipt. 6. Before us, the learned counsel for the assessee has contended that similar receipts were allowed in earlier years, which are as follows: S. No. Asstt. Year Amount Recd. Remarks 1. 2001-02 1834047/- Allowed in assessment u/s 143 (3) 2. 2002-03 1846517/- Allowed in assessment u/s 143(1) 3. 2003-04 1730473/- Allowed in assessment u/s 143(3) 4. 2005-05 1727683/- Allowed in assessment u/s 143(3) 5. 2005-06 1745350/- Allowed in assessment u/s 143(3) 6. 2006-07 1746....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.....Y. 2002-03, for which year, such assessment was framed under section 143(1) of the Act, the Department has never disputed such collection in GRs and gate passes and the fact that it was being passed on to a charitable trust. The objection of the authorities below in this regard, raised only for the first time, during the year 2009-10, is that the receipt is not by a charitable trust, but by the assessee company, which is doing business and trading. This, according to us, is not at all acceptable. Once the receipts are routed as such to a charitable trust by the assessee company and the nature of that trust has not been questioned, we hold that the receipts are Dharmarth receipts and nothing else. The consistent acceptance of such receipts by the Department itself, for as many as eight earlier assessment years, mandates the acceptance of such receipts of the assessee during the year under consideration also as Dharmarth receipts, when no change in facts has been pointed out by the authorities to have come about during the year under consideration. 11. That Dharmarth receipts are not taxable, has been laid down as law by the Hon'ble Supreme Court, way back in the year 1979, in ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....nd as per the Memorandum of Understanding executed on 18.02.2002 between the seller and the asessee, and that the purchase price was set at Rs. 18,00,000/-, payable in installments, such contention was not acceptable, since no evidence of tenancy rights had been produced by the assessee. The Assessing Officer observed that the assessee had tried to undervalue the property in the guise of tenanted property. The Assessing Officer further observed that the assessee had also shown other properties at less value, i.e., properties at Bangalore, Pathankot and New Delhi. It was also observed that it was unlikely and abnormal that a purchaser would take monthly installments in lieu of sale of property, starting in 2002 and ending in 2007; and that in fact, it was a colourable device, which had been adopted by the assessee. The Assessing Officer applied the provisions of Section 50C of the Act. 16. The learned CIT(A) upheld the addition. It was held, inter alia, that the commercial property, measuring 777.8 sq. metres, situated in Sector- 26, Chandigarh, could not be purchased for a meager amount of Rs. 18,00,000/-; that even a two bed room flat could not be acquired for such an amount; tha....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ts, the rent account was filed before the Assessing Officer, as per which, during the A.Y. 2000-01, rent of Rs. 36,000/- had been paid and was allowed; that such rent was paid up to A.Y. 2002-03, which was also duly allowed; that the A.O. had wrongly stated that that assessee had agreed to the stamp fee rate to be 3%; that nothing had been brought on record to prove the stamp rate to be 3%; that the property at Pathankot was not undervalued by the assessee, as was accepted by the learned CIT(A); that apropos the property at New Delhi, working of capital gain stood shown in the return filed prior to the passing of the assessment order; that the capital gain/loss was accepted by the Department in the assessment order for A.Y. 2010-11; that the said property was under the lien of the Bank and it was released in A.Y. 2010- 11; that the assessee company had itself shown the sale consideration at Rs. 5.5 crore for working out capital gain; that nothing has been brought on record to prove any payment over and above the claimed sum of Rs. 18 lacs, and that the provisions of Section 50C are not applicable to the case of a purchaser, i.e., the assessee company in the present case. 19. The b....