TMI Blog2017 (8) TMI 918X X X X Extracts X X X X X X X X Extracts X X X X ..... that is how registration u/s. 12A of the Act was granted. In the instant year the assessee trust in the absence of corpus donation which is not an income applied such corpus donation to achieve the aims and objects of the trust. It is a case where it would be seen that what the AO had taxed was a capital receipt and otherwise too even if the same was held to be income then too the excess of receipts was than 15% of receipts and in the absence of there being any income such excess is outside the scope of total income. As observed that assessee trust has carried out extensive research on topics ranging from India’s educational systems, India’s scientific achievements, Indian Philosophy, India music and dances and travel in India with a view to develop programme content for lectures and workshops, TV programmes on digital video tapes as well as for publishing content through print platform like journals etc. Numerous workshops and lectures were organized all over India, yet went on to hold it is not engaged in any charitable acitivity, which is contrary to the judgement of the Hon’ble Supreme Court of India in the case of Sole Trustee Loka Shiksha Trust vs. CIT [1975 (8) TMI 1 - SU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .O. to have with him relevant material to 'have a reason to believe that the income of the assessee had escaped assessment and as such relevant material was a sine-qua-non for assuming jurisdiction uls 147 of the Income Tax Act. 5. That the learned CIT(A) has further failed to appreciate that the assessee is a charitable institution and the findings that the assessee is not entitled to an exemption u/s 11 of the Act was not justified. The conclusion that the assessee had failed to explain the charitable activities has been arrived by disregarding the evidence on record and the findings for the A. Y s. 2002-03 and 2003-04 i.e. immediately preceding years. 6. That the learned CIT(A) has failed to appreciate that the assessee trust undisputedly has utilized ₹ 1,52,17,236/- ;whereas the gross receipts were also of ₹ 1,42,00,062/- and as such evidently there was no escapement of any income and in any case and without prejudice CIT(A) ought to have held that there has no income liable to be assessed, the assessment made of ₹ 16,77,870/- was thus entirely erroneous both on facts and in law and the income which had been reduced only by ₹ 3,74,010/-. 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zed in the course of its normal activity nor has provided any particulars of the sources of cash receipts forming a major chunk of its incomings. In view of the above, AO also observed that, not only does the activity as such assume an unverifiable character but, the lack of evidence on the sources of the cash receipts / donations raises questions on the nature of account s maintained by the assessee. Therefore, the AO held that assessee has failed to justify the observance of basic tenets of section 2(15) governing the claim of exemption, the benefits of section 11 12 were held not be allowable to the assessee during the period under consideration and accordingly the assessee was treated as an AOP and the excess of income over expenditure, therefore, ₹ 13,03,859/- was treated as taxable income and depreciation claim of ₹ 3,67,409/- was disallowed because the assessee had already claimed benefit of application of fund in rest of the assets declared as WDV at the time of acquisition of assets and AO also not allowed the claim of expenditure of ₹ 6,601/- being donation paid being treated as an AOP and completed the assessment at ₹ 16,77,869/- vide order date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not need any interference on my part and requested that the Appeal of the assessee may be dismissed. 7. I have heard both the parties and perused the relevant records specially the order of the Ld. CIT(A) and the case laws relied upon the ld. Counsel of the assessee as well as the Paper Book filed by the assessee. I find that the assessee is a charitable institution being a Trust. The assessee Trust came into existence under a Deed Of Trust executed on 06.11.2002 (Pg. 4 -13 of PB) and thereafter a supplementary Deed was executed on 27.03.2003 (Pg. 14 - 16 of the PB). For the sake of convenience, I am reproducing the objects of the Trust which read as under:- As per the Trust Deed the objects of the Trust are: (see Pg. 5) The trust is created for carrying out all the following objects of the Public Charity and for the benefits of all Indians without any discrimination of caste, colour, creed, sect, sex, age and/or other natural or manmade differences: b) To promote and carry out directly or indirectly research into scientific, cultural and spiritual heritage of India. c) To promote and carry out directly or indirectly research oriented study of Indian history ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e excess of income over expenditure which aggregated to ₹ 13,03,859/- which was far less than 15% of its gross receipts which was otherwise is a capital receipt. In doing so he has failed to appreciate that the assessee is a trust and the receipt is by way of corpus donation, which corpus donation is not income. It is well settled the amount of corpus donation is not an income, as has been held in 98 ITR 557 (All.) Shree Dwarkadheesh Charitable Trust vs. CIT. In view thereof the excess of receipt which is not an income could not have been brought to tax under any circumstances. The mere fact that the entire capital receipt has not been utilized which is not in the nature of income unutilized sum cannot be held as income. 7.2 I further find that assessee had received a corpus donation of ₹ 1,41,93,101/- out of aggregate receipt of Rs. I,42,00,062/-. In fact it was from such receipts, the assessee had applied such corpus donation to achieve its objects, when it was only incurred expenses and no income has been earned. Thus it is in the first instance submitted the restricted is not taxable. It is a matter of record the assessee has no source of income other than of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution, its income is to be computed u/s II of the Act, the AO went wrong in bringing to tax such excess of receipt over expenditure. In the instant case it is an undisputed fact the gross receipts which includes corpus donation, could not have been assessed to tax which was less than 15% (being specified percentage) which aggregates to ₹ 21,30,009/-; whereas in the instant case it is admittedly only of ₹ 13,03,859/-, in excess or receipts over expenditure as such the aforesaid sum could not have been held in any case in the case of a charitable institution as income liable for an assessment. The Supreme Court in its judgment in the case of S. RM. M. CT. M. Tiruppani Trust vs. CIT reported in 230 ITR 636 at page 641 has held as under: Before we consider this submission, we would like to make it clear that the department has not addressed to us any argument on the question, whether ₹ 8 lakhs constitute the income of the assessee for the assess ment year 1970-71 or not. Before the Tribunal, elaborate arguments had been advanced on this issue, and the two members of the Tribunal differed, necessitating a reference to a Third Member. The High Court did not accep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly in respect of any additional accumulated income beyond 25 per cent that, if the assessee wants exemption of this additional accumulated income also, the assessee is required to invest the additional accumulated income in the manner laid down in section II(2) after following the procedure laid down therein. 7.4 I note that at the relevant time the specified percentage was 25% or ₹ 10,000/- whichever is higher. However by the Finance Act 2002 w.e.f. 01.04.2003 it is only in excess of 15% which could be taxed, which in the instant case is only of ₹ 13,03,859/- and that too not out or any income but form the corpus donation which is not an income. In view of the above, I am of the considered view that assessee has received and reflected in the books the corpus donations, which has not been disputed by the AO as corpus donation to the trust, it being not the income and in any excess of receipts over expenditure which is less than 15% of receipt cannot any stretch be brought to tax. It is also not a case where there was any income from any source and hence the AO has erred in failing to appreciate that in any case it being a trust, the excess of income over expendi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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