TaxTMI 
TaxTMI 
2019 (1) TMI 647
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.... donation and in consequentially taxing the same on the basis of figure of Rs. 1,11,12,000/- against the figure of Rs. 48,12,000/-, more so, sec.56 (1) (vii) was applicable in A.Y.2015-16 only in case of recipients of property only being an individual or HUF. All assesses stood covered only w.e.f. 01.04.17 vide sec.56 (1) (x) of the Act. 2.1. That without prejudice, in the absence of any show cause notice and any opportunity of hearing and rebuttal, the apparent figure of Rs. 48,12,000/- cannot be taken at enhanced figure of Rs. 1,11,12,000/-. 3. That without prejudice, even on holding the property as a case of voluntary contribution of donation, the full value of property should be treated as application of funds equivalent to the value of property, therefore the application being more than 85% of the said amount, it cannot be subjected to tax. 3. The assessee society is registered u/s 12AA of the Income Tax Act, 1961 by the Commissioner of Income Tax, Dehradun vide order dated 29.09.2006. The society is also registered with the Registrar of the Society vide Registration No. 1104/2003-04 dated 30.01.2004 which was renewed. The return of income declaring Nil income was file....
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....s liability to nil in the individual ledger account of Smt. Sushila Devi which was evident from the ledger of Land & Building Account. Thus, the Assessing Officer concluded that the assessee had no liability of payment of sale consideration towards the seller as the cheques of Rs. 48,12,000/- which were issued by the Society in favour of the sellers on the date of execution of sale deed. The Assessing Officer treated the monetary value of the property being the circle rate of the property at Rs. 1,11,12,000/- as voluntary donation to the assessee society. 4. Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 5. By way of ground No.1, the assessee has disputed the treating of the transaction of purchases of land as voluntary contribution in the form of donation by the Assessing Officer. We find that learned CIT(A) has considered the same and rejected the assessee's claim with the following finding :- "18. I have considered this matter and I am inclined to agree with the findings of the AO. The sale was registered in September, 2014 and cheques dated 14.09.2015 were handed over to the seller. The ....
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.... to donate the property to the assessee trust but since the permission for donation was not received, she sold the property. Thus, the intention of the parties is clear. Though the sale deed was executed but the sale consideration which was supposed to be paid by post-dated cheques were never presented for encashment by the seller. The cheques were allowed to be lapsed and thereafter no claim is made by the seller from the assessee in respect of sale consideration. Thus, the intention of the parties is clear that it was only the donation of the plot which was given the form of sale deed because the permission of the gift was not received from the concerned authorities. 8. We have carefully considered the arguments of both the sides and perused the material placed before us. After considering the facts of the case and submissions of both the sides, we do not find any justification to interfere with the order of learned CIT(A). It is undisputed that the seller initially wanted to gift the said plot of land to the assessee trust. Since permission of gift was not received from the concerned government authorities, the sale deed was executed. The sale consideration is purportedly paid ....
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....ed trust under Section 12AA of the Income Tax Act, 1961. By adopting the circle rate of property, the Assessing Officer applied Section 56 of the Income Tax Act, 1961 to the assessee trust which is not at all applicable to the trust in the particular scenario when the section 56 (2)(vii) is applicable to individuals and HUF only. Besides section 56 (2)(x) will also be not applicable as the same is w.e.f. 01.04.2017 and the Assessment year before us is A.Y. 2015-16. In fact, Section 56(2)(x) of the Act is not applicable to the educational institutions. Therefore, the Assessing Officer wrongly invoked Section 56 of the Act and wrongly adopted circle rate of property in the present case. Thus, Ground No. 2 of the appeal is allowed. 12. As regards to Ground No. 3, the Ld. AR submitted that without prejudice, even in case of donation, whatever value of property is taken, it should be held as being applied in the same year. The Ld. AR submitted that the value in kind cannot be applied. The Assessing Officer adopted the value of alleged donation at Rs. 1,11,12,000/- as per circle rate and by holding the non application of donation amount to the extent of 85%, held Rs. 87,55,232/- as taxa....