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2020 (1) TMI 153 - AT - Income TaxExemption u/s 11 and 12 - assessee has transferred the lands to the members of the Society, hence, the assessee has clearly violated the provisions of section 13(1)(c) - HELD THAT:- In the instant case, during the previous year, relevant to the A.Y. 2007-08, the assessee had transferred the lands to G.Jojappa, Y.Bala Reddy, M.Marreddy and others for a consideration less than the market consideration or for no consideration. The transfer of lands was mainly done due to the impression that Govt. of Andhra Pradesh was intending to bring a legislation, prohibiting the Christian churches to transfer the land without the approval of Govt.of Andhra Pradesh. At the same time, the Society was intending to start Engineering College for which the Society was searching the funds. For procurement of funds for engineering college the society planned to sell it’s lands. Due to the impression given by the Govt. of Andhra Pradesh that the churches would be barred from selling the immovable properties, the Society had transferred the lands to the members of the Society to preempt the legislation, so that it can procure the funds without any difficulty. Though the Society had transferred the lands to the members of the Society, the lands were in possession of the Society and the Society did not receive any amount from the purchasers of the land which was evidenced from the order as well as the appellate order. As seen from the orders of the lower authorities, the purchasers were not in a position to make the payment even for stamp duty charges, hence the Society had to incur the stamp duty charges for registering the properties in the names of the purchasers. The assets continued to be held by the Society. It is apparent from the orders of the lower authorities and from the facts that though the lands were transferred in the name of G.Jojappa and others, they were holding the lands as custodians, but not as the owners. Subsequently, the lands were gifted back to the Society or the sale proceeds of the lands were directly deposited in the Society’s account. The assets were removed from the Balance Sheet only in 2011-12 when the assets were sold. Till such time, the assets were continued to be held by the assessee society. From the above facts, we understand the contention of the Ld.AR that in the instant case, substance over form prevails is correct. Apart from the above, though the lands were sold in 2011-12, the department did not tax the capital gains in the hands of the transferors. In fact, the AO had accepted the contention of Y.Raghunadha Rao, one of the purchasers that no investment need to be taxed in his hands and the AO also had accepted the fact that the transaction was arrangement to hold the properties of the society in the hands of the purchasers as the custodian. On consideration of the entire issue, it appears that there is no diversion of income or violation of section 13(1) and no benefit was derived by the members of the society. Anonymous Donations receipts - HELD THAT:- In the instant case, the assessee had received anonymous donations without any specific purpose. There is no specific direction as far as the sum of ₹ 2,10,52,000/- is concerned. Therefore, as rightly held by the Ld.CIT(A), the donations received by the assessee society are covered by sub section 2 of section115BBC of the Act. Further, the Ld.CIT(A) has given a finding that there was no misappropriation of funds by the members of the Society. The assessee has sold the lands, received the consideration over and above the registered document, which was deposited in the bank account without any diversion or misappropriation of funds. Similarly, the assessee had received anonymous amounts from various intending buyers. Since the priests did not support the contention, the amount was treated as anonymous donations. The said amount was deposited in the bank and the AO did not give any finding that the funds were misappropriated. Since sub section 2 of section115 BBC allows religious and charitable institution to receive anonymous donations, the case of the assessee is squarely covered by sub section 2 of section 115BBC of the Act and we do not find any infirmity in the order of the Ld.CIT(A) and the same is upheld. Accordingly, appeal of the revenue is dismissed.
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