TaxTMI 
TaxTMI 
2021 (2) TMI 469
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.... regard to ground No.1&2, the brief facts of the case are that the assessee is a society registered under Societies Act with objectives to promote social service and strive for the development of social welfare, to promote sports and drama activities, to promote knowledge among the members of the public by setting up of libraries and to promote unity in the community. The assessee filed application in Form No.10G seeking registration u/s 80G of the Act on 29.03.2019. On receipt of the application, the Ld.CIT(E) issued notice on 14.08.2019 calling for the details and the books of accounts etc., and in response to which the assessee complied with the notice and furnished the details. On verification of the details, the Ld.CIT(E) found the following defects : (a) The Ld.CIT(E) found that the assessee company has made the profit of Rs. 10,06,717/-, Rs. 18,77,065/- and Rs. 16,84,131/- during the Financial Year 2015-16 to 2017-18 respectively, which was ranging from 51% to 55%, hence, the Ld.CIT(E) viewed that the activity of the assessee is profit making activity, but not a genuine charitable activity. (b) Secondly the Ld.CIT(E) observed the violation of provisions of ....
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....,19,510/- and prior to the registration, proper care was not taken for accounting, since, the activity was very low key. It has further submitted that subsequent to grant of registration, the society is maintaining the regular books of accounts and there were no violations. It was also submitted that the van was purchased in the name of the society and used for the purpose of society. However, the Ld.CIT(E) was not convinced with the explanation of the assessee. (h) The assessee has received the interest free loans of Rs. 14,40,000/- and furnished the confirmations but unable to furnish the satisfactory explanation with regard to genuineness and credit worthiness of the creditors. Therefore, the Ld.CIT(E) viewed that the assessee failed to prove the identity, genuineness and credit worthiness for the so-called loans. The Ld.CIT(E) held that all the above defects do not inspire genuineness and the assessee is not eligible for approval u/s 80G of the Act. (i) The next contention of the CIT(E) is that the assessee was constructing old age home. As per the balance sheet, total expenditure up to 31.03.2018 was Rs. 74,30,566/- and most of the expenditure was observed to....
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....ceipt, the same cannot go against the assessee for granting approval u/s 80G of the Act. The Ld.AR further submitted that the society's registration number was also printed on the receipt. 6.4. With regard to deposit of donations in the bank and non-issue of receipts, the Ld.AR submitted that all the donations were duly accounted in the books of accounts. Some donations were deposited by the donors directly in the bank account without the knowledge of the organizers for which the receipts could not be issued. However, submitted that the donations were duly accounted in the books of accounts and hence there is no defect on the part of the organization. Merely because of the reason that some donors have deposited money in the bank account without the knowledge of the organisers for which receipts could not be issued, the society could not furnish the details society cannot be found to be faulted and there is no case for doubting the genuineness. 6.5. The next issue is with regard to Maruti car. With regard to Maruti van, the Ld.AR submitted that it was purchased on 12.05.2009 in the name of the society before grant of registration u/s 12AA to the society. At that time, the acti....
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....of land which is leased to the society for 15 years for the purpose of construction of old age home which works out Rs. 3.00 per square yard for month. The rent of Rs. 50,000/- per year on 1355 sq.yds of land in the vicinity of Visakhapatnam district appears to be reasonable and there is no reason to suspect the reasonableness of payment of rent. 8.2. With regard to payment of salary of Rs. 7500/- paid to Sri P.Prabhakar, who is working in the orphanage home for 24 x 7 cannot be said to be unreasonable by any stretch of imagination. The Ld.CIT(E) ought to have considered the minimum wages as per the act in the area as decided by the District Collector, working hours and compared the salary paid to Sri P.Prabhakar with the minimum wages to arrive at the reasonableness. 8.3. With regard to defects of donations, 'Loyola Sweet Home' is stated to be the name of orphanage home and on the receipt, registered number of the society was also duly printed and no defects were brought on record with regard to accounting of the receipts in the society's books, thus, there is no reason to suspect the genuineness of the activity of the society. 8.4. With regard to donations deposited in t....