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2012 (5) TMI 11 - AT - Income TaxThe disallowance of expenditure on salary was on the premises that the assessee had employed staff in excess of the norms of the Dental Council - assessee has explained that some doctors had left and in their place other doctors were employed, so that the norms could not be strictly complied with, and which rather by itself shows the exigency of the situation - Held that:- assessee has not been able to lead satisfactory evidence with regard to its claim for expenditure, having been called upon to file the full names and addresses as well as proof of filing the return of income by the relevant doctors - strength of 72 doctors against 100 students, as is stated to obtain for the current year, is disproportionately high, and the AO in stating so is only drawing support from the guidelines of the Dental Council of India in this regard, and not basing his disallowance thereon, as projected by the ld. AR before us - Decided against the assessee by way of remand to AO. Advertisement and hotel expense - assessee explained that the heavy expenditure in the month of March, 2005 was for purchase of heavy quantity of sweetmeats, namkin, dry fruits, cents, etc., which it had to in view of the inspection of the college on March 10 & 11, 2005 for starting of the classes of the Third Year - Held that: the incurring of the said expenditure for the object/s of the trust is not explained, much less proved. Where is the question of commercial expediency while incurring expenditure in extending common courtesy to the officials on an official visit, and in computing the income of a charitable trust, as the assessee, which itself pleads for the non-application for the provisions of Chapter IV-D of the Act in the computation of its income, an argument with which we have expressed our agreement. The said disallowance is thus upheld. Regarding cash donation - Held that:- a clear contradiction in the findings by the assessing authority and the first appellate authority. - The AO states that the identity has not been established - ld. CIT(A) admitted the assessee's plea - where the identity is not disclosed, the presumption would be that the same flows from the beneficiary of the assessee's activity, i.e., the students, or their parents or close relatives. The same could not be termed as a voluntary contribution subject to sec. 11(1)(d), and neither would the ingredients of sec. 68 be satisfied in such a case. Whether given under a general direction to form a part of the corpus, or as toward, say, a building fund, the furnishing and proving the identity of the donor is the first pre-requisite, which remains unsatisfied in the instant case. If, on the other hand, the identity is confirmed, and the donor confirms the same to be toward a particular fund or corpus, in our view, the onus to prove that it is not 'voluntary', and given, or made to be given, for and toward a consideration, so that it is income would only be on the Revenue. Also, where given for a `building fund', and utilized for that purpose, the same would only amount to an application of funds for the objects of the trust, where the building is owned by the trust and used, or to be used, for its purposes. In view of the foregoing, we remand the matter back to the file of the AO to allow an opportunity to the assessee to present its case - Appeal is partly allowed
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