TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 152
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....both the sides we find that the captioned appeals are for the AY 2010-11 and 2011-12 involving consideration of identical issues therefore are adjudicated together and wherever relevant facts or impugned orders of AY 2010-11 (ITA No. 333/Del/2021) shall be referred to. Though seven grounds of appeal have been raised, yet the disputed issues raised vide such grounds of appeal are only two namely: (a) a disallowance of Rs. 4,08,586/- by invoking Rule 8D(2)(ii) and 8D(2)(iii) of the Income Tax Rules; and (b) a disallowance of Rs. 27,11,047/- out of the foreign traveling expenses. 2.1 In respect of the aforesaid two appeals i.e. for the AYs 2010-11 and 2011-12, the appellant has also raised an additional ground of appeal for each of the two assessment years which is stated as under: For the AY 2010-11 "The sums received by the appellant from M/s Sad Bhawna Trust of Rs. 8,00,00,000/- and from CMV Education Society of Rs. 4,80,66,000/-, which sums had erroneously been included in the total income by the appellant, since did not represent an 'income' chargeable to tax, be excluded from the assessed total income, as the same had been included in the t....
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....eeded to adopt the figure of average investment by adopting opening investment at Rs. 7,19,34,283/- and closing investment at Rs. 9,15,00,213/-; whereas the assessee had not made any such investments for earning dividend income. Thus all investments had been made in respect of advances made to its associate companies and were in the course of carrying on the business and not for the purpose of earning any dividend, other than an investment of Rs. 14,18,507/- on which never any dividend had been earned. Infact, no dividend had ever been earned on such investment right from the inception till date. Thus assessee succeeds on this issue. 5. In respect of second issue, a disallowance of Rs. 27,11,047/- out of the foreign traveling expenses, it is submitted by ld. Sr. Counsel that the learned AO had made an 'arbitrary disallowance', despite the fact that the assessee had furnished the complete details of expenditure incurred by the directors on traveling to UK. As disallowance as has been made of 20%, itself shows that the learned AO has not disputed the expenditure had been incurred for the purpose of business. Appellant has incurred the expenses on foreign travel in the preceding as....
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....er and thus the receipt of the same was inchoate was not an income. The appellant during the aforesaid two assessment years had received the aforesaid conditional grants aggregating to Rs. 51,09,73,107/- (including service tax). The amount towards such service taxes which aggregated to Rs. 4,77,15,530/- was duly deposited by it to the credit of Central Government under the provisions of Service Tax Act. It had received said sum in the AY 2010-11 and 2011-12, though was in the nature of donation/contribution had offered the said sum as its income, under a misconception of law that said sums received represented an income chargeable to tax, despite the fact the said sums received were not in the nature of income chargeable to tax. 7.1 Ld. Sr. Counsel has submitted that since the grant received by it from the aforesaid two trust/society were conditional with respect to the utilization thereof and due to non-fulfillment of the conditions attached to the utilization of funds, aforesaid trust/society sought refund of funds of the amount advanced to the assessee, the assessee had no option but to refund the entire sum which aggregated to Rs. 51,09,73,107/- in the FY 2011-12 i.e. AY 201....
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.... AYs 2010-11 and 2011-12. 7.6 The ld. Sr. Counsel further submits that it is well settled rule of law that, all receipts are not income chargeable to tax and reliance for this proposition was placed on the following judgments: (i) Parimisetti Seetharamamma vs. CIT, 57 ITR 532 (SC) (ii) CIT vs. P.V. G. Raju, 101 ITR 465 (SC) 7.7 The ld. Sr. Counsel submits that under misconception of law, it had offered such receipts as income, is making a prayer by this application that, it be permitted to urge such a ground of appeal, which has been resulted on account of subsequent development in the case of M/s Commitment Morality Vision Education Society in ITA No. 3980 & 3981/Del/2017 as extracted above, where it has been held by the Tribunal that it was by way of collusion between M/s Commitment Morality Vision Education Society and assessee, the funds had been given to the group entities in the name of disbursement of scholarship etc. It is thus submitted that since the aforesaid amount had been advanced were without an eye on any material return, the said receipt is not an income chargeable to tax, as has been held by the Apex court in the case of Commissioner of Exp....
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.... about the genuineness of the activities promised or claimed to be carried out in each financial year to claim the exemption. Nowhere in its replies has the assessee Society shown evidence that the said company carried out any charitable activities during the year under consideration. Hence the assessee Society is held to have contravened the provisions relating to application of income by charitable societies and therefore the benefit of sec. 11 and 12 is denied to the assessee. The amount paid to FIITJEE Ltd is treated as its income being not utilized for the charitable purposes. Accordingly, the Society is assessed as an AOP and taxed as provided u/s provisions of sec 167B of the IT Act 1961. 6. As per Income & Expenditure statement filed along with Original Return of Income, contribution received have been shown at Rs. 23,59,65,731/-. Donations paid have been shown at Rs. 23,59,65,731/-. No other expenses have been debited on account of Charitable activities?" 9.4 Before us, the Ld. counsel has failed to explain as how the funds have been utilized for charitable purpose. In the instant case by way of collusion between the FIITJEE Group and the assessee, the fu....
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...., do not constitute income for the relevant year. The Memorandum of Understanding between the two trusts or societies expressly provide the obligations to be fulfilled. Failure of the assessee to fulfill the obligations would result in breach of obligation and if the amount is returned in subsequent years, then, it will not be a case that erroneously the receipts not representing income chargeable to tax were included in the total income. The obligation here was not utilization of any amount received as gift so to have become an endowment with the assessee to be used for fulfilling the obligation. But, the amounts received were to be utilized by the assessee at its discretion with no control of the two payers. As the complete discretion to use the funds vested with the assessee, the mere fact that the assessee was supposed to use the funds as per the MOU does not make the receipts fall in the category of inchoate receipts. The consideration in any contract may not be in cash, but, any obligation which is enforceable under law falls in the definition of consideration. The obligation here in the hands of the assessee was to use the funds for giving scholarships as per the MOU. This w....