TaxTMI 
TaxTMI 
2017 (2) TMI 602
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....inafter called "the tribunal") read as under:- "Being aggrieved against order of the Commissioner of Income Tax (E), Mumbai, this appeal petition is being filed to consider the following grounds of appeal, which are independent and without prejudice to each other: 1. On the facts and circumstances of the case, the Commissioner of Income Tax (Exemptions) erred in passing an order under section 263 of the act. 2. On the facts and circumstances of the case, the Commissioner of Income Tax (Exemptions) erred in passing an order under section 263 of the act though provisions of S.263 are not applicable to the facts of the case and in law. 3. On the facts and circumstances of the case, the Commissioner of Income Tax (Exemptions) has wrongly held that order is erroneous and prejudice to the interest of the revenue though the Assessing Officer has applied his mind and passed order after considering the full facts available on records. The CIT(E) has no jurisdiction to pass an order on account of change of opinion. 4. On the facts and circumstances of the case, the Commissioner of Income Tax (Exemptions) erred in considering that the A O has held ....
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....dition precedent for availing the benefit of Sec 11 & 12 of the Act, unless or until the institution is registered u/s. 12A of the I.T. Act 1961. 4. Further, it is observed that the Trust has received interest income of Rs. 1,46,32,985/-. As against the above income, the Assessing Officer has allowed the expenses to the extent of income available. However, the Assessing Officer has also allowed expenditures which has no direct nexus to earn the Interest Income of Rs. 1,46,32,985/-. 5. I have examined the records as well as the order passed by the Assessing Officer as discussed above and I am of the opinion that the order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of the Revenue and therefore requires revision. 6. In view of the above facts, you are requested to explain as to why order u/ s 263 of the Act should not be passed enhancing or modifying the assessment or cancelling the assessment in your case. In this regard, you are requested to attend in person or through your Authorised Representative before the undersigned and file the written submissions and argue the matter on 19.01.2016 at 3.30 pm in my of....
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....y way of tied-up fund and only the interest earned out of the said funds is to be utilized for the purpose of objects of the Trust. After considering the above facts, the Assessing Officer has applied his mind and has clearly held and computed the income as per Computation of the income filed in the Return of Income. He has consciously not made any addition in respect of the amount received by way of the Corpus Fund during the year. The Assessing Officer having formed an opinion and applied his mind to the facts of the case, no revision of the said order can be made u/s.263 of the Act. Section 263 of the Act applies to the case where "any order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interests of the revenue". There is no error in passing the order by the Assessing Officer. The Assessing Officer has correctly passed the order. It may be stated that the similar case was before the Hon'ble Income Tax Appellate Tribunal Bangalore Bench in the. case of ITO v. Vokkalingera Sangha- ITA No.281 to 285/Bang/2014. Copy enclosed. The said case was decided on 14th August, 2015. In the said case, it has been clearly held ....
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....our Software - I.T.A. No. l007/Mds/2007 and CO. No. 34/Mds/2008 It was held in these cases as under:- 6. As regards the nature of income there is no dispute. The assessee did receive donation towards corpus funds. Whether such receipts could be construed to be income? The term 'income' is a dark cat in the bag of the income-tax code. There is no exhaustive definition of the word 'income'. All receipts of an assessee cannot be deemed to be income of the assessee for the purpose of income-tax. Only those receipts which bear the nature of income can be made exigible to tax. The definition of the word 'income' as given under section 2(24) is inclusive. It is not exhaustive. Donations towards corpus are not falling within the ambit of the definition of income. This is a capital receipt and not exigible to tax. The department did not doubt the nature or veracity of the receipt. 10. CO. No. 34(Mds)/2008:- In this cross objection the assessee objected the inclusion of Rs. 9,51,818/- received towards corpus fund. We for the reasons stated above decide this issue in favour of the assessee and against the Revenue. In view of this the other gr....
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....enditure, which has nexus to the earning of the income, since the income has no nexus with the expenditure incurred. The expenditure incurred is an application of fund. All the trusts have income either from the property or interest or dividend income (investment income). However, the scheme of the trust is to incur the expenditure for the object for which trust is created and accordingly the same is allowable as a deduction from the income. In view of the above facts, the assessing officer has rightly allowed the expenditure incurred for the object of the trust. We would once again draw your attention to the judgment of ITO v. Vokkalingera Sangha- ITA No.281 to 285/Bang/2014 in particular para no. 5.3.2 in the case of NinnalAgricultuaral Society 71 ITD 152. It was held that the assessee had not granted registration u/s.12A but it has been held in the said case that the purpose and the activity of the assessee was to engage in charitable activities. The Trust is registered under the Bombay Public Trust. Whatever amount has been spent on those programmes/projects/objects, it was spent in the usual course of carrying on its acclaimed objects. Therefore, there was no....
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.....O. has not done even after observing that the trust is not enjoying registration u/s 12A of the Act. The ld. CIT (E) observed that the A.O. while framing the assessment order u/s 143(3) of the Act has not formed any opinion of the issue which is now dealt with in by the learned CIT(E) u/s 263 of the Act. Thus, it was observed by the ld. CIT (E) that the A.O. was silent about the eligibility of exemption to the assessee u/s 11 of the Act. Hence, the said order is erroneous in so far as prejudicial to the interest of the Revenue as the A.O. allowed the claim of exemption even when the Trust was doing activities which were commercial in nature. The ld. CIT (E) held that the Hon'ble Supreme Court in the case of U.P. Forest Corporation v. Dy. CIT (2008) 297 ITR 1 (SC) held that registration u/s 12A of the Act is a condition precedent for availing the benefit of section 11 and 12 of the Act. In nutshell, the ld. CIT(E) relying on the Explanation 2 to section 263 of the Act which has been inserted by Finance Act 2015 w.e.f. 1st June, 2015 held that the assessment order dated 12.12.2013 passed by the A.O. u/s 143(3) of the Act in this case is erroneous so far as it prejudicial to the inte....
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....ted that fund of Rs. 1.90 crores was received from Bank of India with a specific direction to the trust that the same shall form part of the corpus funds and the same cannot be utilized by the assessee and only income derived thereon can be utilized for the benefit of the members of the assessee-trust. The ld. Counsel invited our attention to paper book page 29 whereby letter dated 19th September, 2011 was issued by AGM(IR) of Bank of India which is placed on record whereby Rs. 1.9 crores was given by Bank of India to the assessee towards corpus fund of the scheme . The assessee relied on the decision of the Mumbai-tribunal in the case of Chandraprabhu Jain Swetamber Mandir v. ACIT in ITA No. 230/Mum/2016 for the assessment year 2011-12 dated 12th August, 2016 in which one of us being Accountant Member is one of the signatory to the said order , and also the learned counsel for the assessee relied upon the decision of Bangalore Bench of the Tribunal in the case of ITO v. Vokkaligara Sangha in ITA No. 281 to 285/Bang/2014 vide orders dated 14th August, 2015. 6. The ld. D.R., on the other hand relied on the decision of Hon'ble Supreme Court in the case of U.P. Forest Corporation v....
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....can be granted to voluntary contributions received by the assessee-trust unless the assessee-trust holds registration u/s 12A of the Act. The corpus donation of Rs. 1.90 crores received by the assessee are voluntary donations . The assessment order of the AO is clearly erroneous as is against the provisions of Section 11(1)(d) r.w.s. 2(24(iia) of the Act as the assessee-trust does not hold registration u/s 12A of the Act and there is no estoppel against law. The perusal of the letter dated 19-09-2011 issued by AGM(IR) of the Bank of India stipulates merely that Rs. 1.90 crores are 'corpus donations' which are voluntary in nature without specifying the specific purposes for which these corpus donations are to be applied as these are not specific pass through donations which are to be applied for the specific purposes, rather as stated by the assessee these corpus donations are to be kept in-tact and income accrued thereon is to be utilized for meeting medical expenses of the employees and dependent spouses of Bank of India who are beneficiaries of these medical scheme. Thus , the assessment order dated 12-12-2013 passed by the AO u/s 143(3) of the Act is clearly erroneous so far as ....
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....he Act and hence it could be presumed that the assessee is not registered u/s 12A/12AA of the Act as the onus was on the assessee to bring on record the evidences to prove its contentions which it want court to believe and consequently to seek immunities and protections granted to a registered trust. The assessee has received corpus donations to the tune of Rs. 4,55,446/- during previous year relevant to the assessment year which are being given with specific directions by the donors to be applied towards specific purpose for which the respective funds were created . This is an admitted position between the parties and there is no dispute with respect to this proposition. The details of the corpus donations are as under : 1. Building fund - Rs. 50,000/- 2. Dev Dravya fund - Rs. 2,92,066/- 3. Gyan Fund - Rs. 41,541/- 4. Veya Vacha fund - Rs. 1,809/- 5. Akhand Deepak fund - Rs. 12,951/- 6. Dadawadi fund - Rs. 25,020/- 7. Jiv Daya fund - Rs. 18,063/- 8. Ayambil fund - Rs. 13,996/- Total - Rs. 4,55,446/- These above stated specific donations given by the donor....
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....2/Del/2010 in the case of ITO (Exemption) v Smt. Basanti Devi and Shri Chakhan Lal Garg Education Trust for the assessment year 2003-04, which in turn is now under challenge in the hon'ble Supreme Court. 3. The order of the Commissioner of Income-tax (Appeals)-1, Agra being erroneous in law and on facts be set aside and the order of the Assessing Officer be restored. 4. The appellant craves to amend the grounds of the appeal stated above and when need for doing so may arise." 3. The brief facts of the case are that the assessee-trust has shown donation of Rs. 68,50,000 from BBT, Mumbai. The Assessing Officer computed the assessment on total income of Rs. 68,70,000 rejecting the assessee's contention that donation received towards the corpus of the trust. The Commissioner of Income-tax (Appeals) deleted the addition of Rs. 68,50,000 out of the addition of Rs. 68,70,000 made by the Assessing Officer as under: "I have also examined the term corpus fund and corpus donation as it is being generally used with respect to a trust. A corpus fund denotes a permanent fund kept for the basic expenditures needed for the administration and survival of ....
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....ability of corpus donation has been examined in the light of section 12 read section 2(24)(iia) of the Income-tax Act and in this decision, it has been held as under : 'So far as section 2(24)(iia) is concerned, this section has to be read in the context of the introduction of the present section 12 it is significant that section 2(24)(iia) was inserted with effect from April 1, 1973 simultaneously with the present section 12, both of which were introduced from the said date by the Finance Act, 1972. Section 12 makes it clear by the words appearing in parenthesis that contributions made with a specific direction that they shall form part of the corpus of the trust or institution shall not be considered as income of the trust. The Board's Circular No. 108 dated March 20, 1973 is extracted at page 1277 of Volume I of Sampath Iyengar's Law of Income-tax, 9th edn. In which the inter-relation between section 12 and section 2(24) has been brought out. Gifts made with clear directions that they shall form part of the corpus of the religious endowment can never be considered as income. In the case of R. B. Shreeram Religious & Charitable Trust v. CIT [1988] 172 ITR 373....
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....n is not taxable under the Income-tax Act being in the nature of capital receipt and therefore, the addition of Rs. 68,50,000 made by the Assessing Officer towards the taxable income of the assessee is hereby deleted and accordingly, Ground No. 2 is allowed." 4. The learned Departmental representative relied upon the order of the Assessing Officer, whereas the learned authorised representative relied upon the order of the Commissioner of Income-tax (Appeals) and submitted that the Commissioner of Income-tax (Appeals) has followed the orders of the Income-tax Appellate Tribunal, Delhi Bench, which has been confirmed by the hon'ble Delhi High Court, thus, the issue is covered in favour of the assessee. 5. The learned authorised representative has submitted that the issue is covered by various orders of the Income-tax Appellate Tribunal in the cases of Shri Shankar Bhagwan Estate v. ITO [1997] 61 ITD 196 (Cal), Society for Integrated Development in Urban & Rural Areas v. Dy. CIT [2004] 90 ITD 493 (Hyd), Sri Dwarkadheesh Charitable Trust v. ITO [1975] 98 ITR 557 (All) and Dy. CIT v. Nasik Gymkhana [2001] 77 ITD 500 (Pune). 6. We have heard the learned rep....
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.... excluded from computation of Income. The ITAT , Bangalore in ITO v. Vokkaligara Sangha in a decision reported in (2015) 44CCH 0509(Bang. Trib.) whereby the Tribunal held that voluntary contributions received for a specific purposes cannot be regarded as income u/s 2(24)(iia) of the Act since they were capital receipts being corpus fund and tied up grants for specific purposes. In our considered view keeping in view our detailed discussions above and the case laws cited before us, these corpus donations of Rs. 4,55,446/- received by the assessee trust cannot be brought to tax despite the fact that the assessee-trust was not registered u/s 12A/12AA of the Act. We order accordingly. 10. In the result, assessee's appeal in ITA No 230/Mum/2016 for assessment year 2011-12 is allowed ." In the aforesaid order of the tribunal in Chandraprabhu Jain Swetambar Mandir(supra) and other judgment(s) relied upon by the assessee, the donations were pass-through donations with specific purposes for which the said voluntary donations can be utilized and the tax-payer has no choice but to spend these donations for specific purposes for which they were granted to the tax-....