TaxTMI 
TaxTMI 
TaxTMI 
2016 (4) TMI 1432
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....). It filed return of income on 22.09.2011 and income declared as NIL after claiming exemption u/s 11 of the Act. The case was selected for scrutiny and the taxable income was determined at Rs. 3,88,02,131/- after disallowing the portion of income i.e., Rs. 5,57,71,857/-, which was given by way of grants to the other NGOs terming them as in contravention to the objectives of the society. The objectives of the society are as below: I. To work with the people living below poverty line, women, dalits, adivasis and deprived sections towards a just and equitable society. II. To work towards clean and healthy environment as necessary condition for our survival as a people. III. To work towards an education relevant to our objectives and als....
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....bmissions, case laws and copies of contracts with the donors of the grants, has given the findings that the grants received from the donors are not to be taken into consideration for the purpose of computing the total income of the assessee u/s 11 as they are tied up grants. 4. Aggrieved with the above order, revenue is in appeal before us and raised the following grounds of appeal: 1. The order of the CIT(Appeals) is erroneous both on facts and in law. 2. The Ld. CIT(Appeals) erred in law in accepting the copies of various contracts filed by the assessee, which are in the nature of additional evidence produced by the assessee, during the course of appeal without giving an opportunity to the assessing officer to examine and verify the....
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....e does not have any control over the funds once it is granted the funds to other partner NGOs, which cannot be considered as application of income u/s 11. He further submitted that this issue has to be remitted back to the AO to verify the grants whether they are tied up grants and its proper application. With regard to adopting consistency on assessments, he submitted that the Income Tax Act does not recognize the res judicata and every assessment is independent. 7. Ld AR submitted that the facts and relevant agreements with the donors are already placed before AO and CIT(A) and all the grants received by the Assessee are in the nature of tied up grants and AO has described about the donors agreements in his report, therefore, it conveys ....
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....r not. 7.1 With regard to rule 46A, the Ld AR submitted before us that the informations were available with the AO by referring to AO's order that while passing the order, he had relied on the donors agreements, which we are reproducing for the sake of convenience: "3.1 .... ..... the society is also unable to substantiate that the assessee is having control over the funds transferred to the other NGOs and it shows that the transfers were blind in nature without any control which is in contravention to the agreements made with the donor agencies as no where it is mentioned that the society can partner with other NGOs to execute the projects and assessee also could not substantiate the same." From the above submission, we are of the ....
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....nnot be treated as the income of the society as per the ratio laid down in the case of Nirmal Agricultural Society (supra). For the sake of clarity, we reproduce the ratio laid down in the above decision: The grants received from BW were for specific purposes. The grants which are for specific purposes do not belong to the assessee-society. Such grants do not form corpus of the assessee or its income. Those grants are not donations to the assessee so as to bring them under the purview of s. 12. Voluntary contributions covered by s. 12 are those contributions freely available to the assessee without any stipulation which the assessee could utilise towards its objectives according to its own discretion and judgment. Tied-up grants for a spe....