TaxTMI 
TaxTMI 
2017 (12) TMI 118
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.... AOP denying exemption claimed u/s.11 and 12 of the Act, 1961, on the ground that the assessee trust was unable to produce the copy of Registration u/s.12AA granted by the Commissioner of Income-tax. For the assessment year 2011-12, the assessee filed return of income on 29.09.2011 declaring nil income after claiming exemption u/s.11 of the Income-tax Act. When the assessing officer (AO) noticed that there was no registration granted u/s 12AA and the exemption u/s 11 is not available the assessee claimed the exemption u/s 10(23BBA) of the Income-tax Act. The AO after examining the details rejected assessee's claim for exemption u/s.11 and section 10(23BBA) and determined the total income at Rs. 73,60,758/-. 3.1. The issue of claim for exemption u/s.11 was examined in detail for assessment year 2010-11. The AO has discussed the background of the assessee trust in the impugned order for assessment year 2010-11 as under : One T.S. Selva Ganesan, S/o Sri Shanumuga Mudaliar and Sri T.S.Rajeswaran, S/o Shri Shanumuga Mudaliar, have executed a private trust deed vide Registered Deed No.4633/1975 on 19.09.1975, with a desire of endowing the family temple of 'Sampath Vinayagar' fo....
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....o put up any other construction for prayer, meditation hall, lecture hall on spiritual, or religious and social matters, community centers and for the purpose to collect donations from any individuals, trusts, societies, firms, companies etc.. (5) The trust shall do any other public and charitable undertaking such as (a) make donations to poor students for payment of fees, purchase of Books, note books, uniforms, etc., and for educating the poor and needy for their upliftment and also to offer donations to such public charitable Trusts, temples, etc., for poor feeding and also to offer donations to such Public charitable trusts with similar objects. (b) To arrange for poor feeding and for making donations to any other trusts, temples, etc., for poor feeding and also to offer donations to such public charitable trusts with similar objects. (c) Likewise to allot funds for taking care of destitute and orphans and also invalid and in capacitated persons and to build orphanage and also to take care of old age people and for the purpose also to provide shelter, build nursing homes, hospitals, etc, to cater the needy and also to offer donations to such public charitable trusts with....
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....claim of exemption u/s 10(23BBA) it was observed that the assessee trust has not made such claim in any of the earlier years, from the time the management was taken over by the Endowments Department. The AO also observed that the provisions of section 10(23BBA) are not applicable to the assessee's case as it is not a body or authority established under any Act, and that the impugned assessment related to the income of the trust which is not exempt. The AO also noted that the Executive Officer appointed by the Endowments Department is only acting in the capacity of representative of Endowments Department and the founder trustee has challenged the proceedings of the Endowments Department before Honourable Andhra Pradesh High Court which was said to be pending. The AO considered the CBDT Circular No.258 dtd.14.06.1970 and also the decision in the case of M/s Jagannath Temple Managing Committee vs. CIT (299 ITR 56) and held that it is distinguishable on facts and not applicable to the facts of the assessee's case. After considering the CBDT circular and the decision relied upon by the assessee, the AO rejected the claim of exemption u/s. 11 and 10(23B8A). The AO after verifying the....
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....12AA and furnished all the details required by the CIT, thereafter, there was no communication from the CIT, hence it was understood that the assessee was granted registration u/s 12AA of the Act. There was no rejection letter or communication from the office of the Ld.CIT regarding Registration thus the Ld.AR argued that once the application is submitted and the clarifications are given, it is deemed that the registration is granted to the Trust and there is no reason to deny the exemption u/s 11 and 12 of I.T.Act. The Ld.AR further argued that the assessee has satisfied all the conditions for grant of Registration u/s 12A, hence requested to grant the Registration and allow exemption u/s 11 and 12 of the I.T.Act. 5.1. The second proposition submitted by the assessee is that the Trust is taken over by the endowments department and requested exemption u/s 10(23BBA) of the Act. 5.2. The third proposition made by the Ld.AR is that even if the status of the assessee Trust is determined as AOP, the corpus collections of the Trust cannot be treated as income. In this case, the assessee submitted that there was separate Hundi for collections of the corpus of the Trust and the collectio....
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....the proof of having registration nor furnished any evidence to show that the assessee has complied with the clarifications sought by the department for granting of registration. Therefore, the Ld.DR argued that the assessee trust was not granted the registration for its failure to submit the details and the AO has rightly denied the exemption claimed by the assessee u/s 11 and 12 of I.T.Act. 6.1. With regard to the second proposition of granting exemption u/s 10(23BBA), the Ld. DR argued that exemption u/s 10(23BBA) is allowed to the body or local authority established, constituted, appointed under Central / State Provincial Act. The assessee Trust is not established by any Central / State Provincial Act, therefore, the assessee is not entitled for the exemption u/s 10(23BBA), which is rightly denied by the AO and confirmed by the Ld.CIT(A) and there was no error. 6.2. With regard to the third proposition of corpus hundi collections, the Ld.DR submitted that all the voluntary collections including the corpus donations are taxable u/s 2(24)(iia) of the I.T.Act if the assessee does not enjoy the Registration u/s 12AA. Only tied up grants for specific purpose, donations do not come ....
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....ts Department, nor could clarify about the outcome of Its challenge before the Honourable Andhra Pradesh High Court. In this factual matrix, I find that the assessee has not satisfied any of the conditions prescribed in section 10(23BBA) of the Act and therefore, it is held that the AO is justified in denying claim for exemption of income u/s.10(2388A) of the Act and in assessing the assessee-trust in the status of AQP. 4.3. The authorized representative also contended that the Hundi collection represent corpus donations and therefore it should be excluded while determining the taxable Income, If any; and that with reference to the balance receipts the expenditure may be allowed. In this regard, the authorized representative flied a copy of the resolution of the trust dtdi2.01.1976 and as per which the Hundi collections shall not be utilized for day to day management of the trust and shall be utilized for development purpose and shall form part of corpus of the trust and the income arising out of the corpus only shall be utilized for temple maintenance/management. 5. Thus the issue to be resolved is whether the donations claimed to be corpus donations should be excluded for t....
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....ent corpus donation has no merit. 7. The authorized representative also relied on the decision of Honurable ITAT, Chandigarh Bench in the case of Srimahadevi Tirath Sarada Ma Seva Sarigam vs. ITO 133 U] (CbdB) U.O. Page 57, in that case the facts are very much different, wherein the trust has kept separate boxes for collection of donations meant of 'construction of building' and other general purposes. In such factual scenario, the Honourable Tribunal held that the assessee's contention that amount collected as donation with specific direction for spending on building construction cannot be rejected. The Honourable Tribunal observed that there is no method or mode prescribed by law for giving such directions and hence the same may be gathered from the facts and circumstances of the case. Besides, in that case, the trust had valid registration u/s.12A of the Act. But in the assessee's case the factual situation is totally different. There is no material on record, nor any evidence adduced by the assessee to show that the impugned hundi contribution were made with a specific direction. Hence the claim of the assessee is liable to be rejected. 8. Besides it is re....
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....e corpus donations will be included in their income and taxed. Thus every voluntary Contribution received by a trust, including corpus donation would constitute 'income' as per the definition of income u/s.2(24)(i a) of the Act. 8.2 In view of the above factual and legal position, I do not find merit in the authorized representative's argument and accordingly the pleas raised in this regard are rejected. The total income of the assessee determined by the AO for the subject assessment years in the status of AOP is upheld." 7.1. From the perusal of the order of the Ld.CIT(A) and the paper book filed by the assessee it is evident that the assessee was asked some clarifications vide letter HQRS.No.111/34/95-96 dated 23.08.1995 and directed the assessee to contact the ACIT, Circle-2, and furnish the necessary information. Though the assessee stated to have furnished the details as per enclosed letter in the paper book dated 03.10.1996, there is no evidence placed on record having furnished the cited letter along with clarifications sought by the Ld.CIT(A) for grant of registration. The correspondence pertained to 03.10.1996 and subsequently there was no follow up or cor....