TaxTMI 
TaxTMI 
2020 (9) TMI 874
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.... I.T.A.No.407/2011 pertains to the Assessment year 2005-06. Since, common substantial questions of law arise for consideration in these appeals, they were heard analogously and are being decided by this common judgment. The appeals were admitted by a bench of this Court vide order dated 17.09.2012 on the following substantial questions of law: (i) Whether the appellate authorities were correct in holding that the Assessing Officer had no locus standi to examine the activities of the assessee trust in order to find out whether they were carrying charitable activity as the assessee had already been granted exemption under Section 11 of the Act? (ii) Whether the Tribunal was correct in holding that the provisions for doubtful debts of Rs.....
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....producing any evidence. It was further held that the assessee distributed 'Prasada' to the visitors who belonged to middle class and the donations, which were collected were not expended for the purposes of which the Trust was incorporated. It was further held that sum of Rs. 13,26,099/- was paid to Jadu Works Private Limited, which was shown as a provision and the same cannot be treated as provision for bad and doubtful debts. Accordingly, the Assessing Officer completed the assessment and levied tax and penalty. The assessee thereupon filed an appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) by an order dated 19.01.2009 inter alia held that the activities carried on by the assessee w....
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....ust and the assessee has failed to discharge the same. It is also pointed out that the Tribunal has proceeded on erroneous assumption that the assessee has questioned the objects of the Trust. It is also argued that the Tribunal ought to have appreciated that purpose of making an advance to a party has to be made in the course of business and then only the assessee is entitled to write off the same as expenditure as provision for bad and doubtful debt. In the instant case, the assessee has failed to demonstrate that the amount paid to Jadu Works Private Limited was made in course of business. In support of his submissions, reliance has been placed on decision of the Supreme Court in 'VIJAYA BANK VS. COMMISSIONER OF INCOME-TAX AND ANOTHE....
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....n 31.03.2007 is per se without jurisdiction. 5. It is further submitted that assessee had given donation to another Trust having similar objects and in this regard, additional documents were filed before Commissioner of Income Tax (Appeals) and the remand report from the Assessing Officer was called for. However, in the remand report, Assessing Officer did not offer any comments to the additional documents produced by the assessee. It is also argued that even if benefit is given to a section of the society, the object of charity is fulfilled and depreciation has to be allowed to the assessee viz., a Charitable Trust also, as expenditure on acquisition of assets, which has to be computed in commercial manner even though, the Trust may not b....
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....e purpose, it is not necessary that the object should be to the benefit of whole of mankind or all the persons in particular country or state and it is sufficient, if the intention is to benefit a section of the public as distinguished from a specified individual is present. The aforesaid view was reiterated with approval in AHMEDABAD RANA CASTE ASSOCIATION supra. On the touchstone of aforesaid well settled legal position, even if the order of the Assessing Officer is seen, it can be deciphered from para 7 of the order that 'prasadam' has been distributed to the visitors. The Commissioner of Income Tax (Appeals) in paragraph 5.2 has held that the Assessing Officer has ignored the submission made by the assessee that the assessee pro....
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....gal principle, the second substantial question of law may be examined. It is pertinent to note that the Assessing Officer during the course of assessment did not ask for any document from the assessee for making the advance. The assessee before the Commissioner of Income Tax (Appeals) had filed an application under Rule 46A of the Income Tax Rules, 1962 on 25.02.2008. The aforesaid paper was forwarded to the Assessing Officer. The Assessing Officer submitted a remand report, however, the Assessing Officer did not offer any comment with regard to additional evidence adduced by the assessee before the Commissioner of Income Tax (Appeals). The purchase of immovable properties for the purposes of objects of the Trust is the application of incom....