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2015 (8) TMI 881 - AT - Income TaxAddition u/s 68 - whether donations cannot be included for the purpose of application of funds as required u/s 11? - CIT(A) deleted additions - Held that:- The assessee received donation of ₹ 75 lakh which were added by the AO to the returned income of the assessee u/s 68 of the Act and the said addition has also been upheld by the first appellate authority while passing the impugned order and with the conclusion as reproduced hereinabove. Turning to the issue of requirement of section 11 of the Act, we note that the Director of Income-tax (exemption) Vs Raunaq Education Foundation [2007 (4) TMI 61 - HIGH COURT, DELHI] explicitly held that to obtain the benefit of the exemption u/s 11 of the Act, the assessee is required to show that the donations were voluntary. Their lordships further held that the fact that the complete list of donors was not filed or that the donors were not produced, does not necessarily lead to the inference that the assessee was trying to introduce unaccounted money by way of donation receipts. It was also held by Hon’ble Jurisdictional High Court that it is not in dispute that the objects and activities of the assessee were charitable in nature and it was duly registered u/s 12A of the Act, then in the situation of full disclosure of income by the assessee and also application of the donations for charitable purposes entitles the assessee to obtain benefit of exemption u/s 11 of the Act. In the present case, the assessee had not only disclosed the donations but also submitted names, confirmations along with PAN No., address of the donors before the AO during the assessment proceedings. However, the AO and the CIT(A) concluded that the creditworthiness of the donation could not be established, therefore, the impugned amount was added u/s 68 of the Act. At the same time, it cannot be ignored that the assessee is enjoying registration u/s 12A of the Act and the AO has not brought out any fact to controvert that the objects of the assessee charitable trust are charitable in nature and the assessee applied more than 85% of its income including impugned donations towards charitable purposes during the financial period under consideration. In this situation, the CIT(A) was right in following the ratio laid down in the case of DIT(E) vs Keshav Social and Charitable Foundation (2005 (2) TMI 84 - DELHI High Court) and we are unable to see any ambiguity, perversity or any other valid reason to interfere with the same, accordingly ground of the revenue being devoid of merits is dismissed. - Decided in favour of assessee.
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