TMI Blog2016 (7) TMI 535X X X X Extracts X X X X X X X X Extracts X X X X ..... d u/s 12A of the Act. It is undisputed fact that the AO had not examined the issue from this angle. Furthermore, the AO, having rejected the contention of the assessee-trust that the amount of ₹ 25 lakhs was received from International Construction Ltd., as loan, had failed to bring to tax. Thus, there is a clear contradiction in the order of assessment and non-application of mind on the material aspect of the issues raised by the show cause notice u/s 263. Therefore, the ratio laid down in the case of Malabar Industrial Co.Ltd. Vs. CIT (2000 (2) TMI 10 - SUPREME Court ) is clearly applicable wherein it was held that non-application of mind on the issue, renders the assessment order erroneous and prejudicial to the interests of re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the entire donation amount that was received by the Appellant Trust. 4. The Commissioner of Income Tax Davangere failed to appreciate that the donation received by the Appellant trust was in the form of corpus donation which is capital receipt in nature and the same was not liable to tax. 5. The Commissioner of Income Tax Davengere failed to appreciate that the income of the Appellant Trust was exempted from tax under section 10(23c)(iiiac) of the Act and consequently the section 263 order passed by the CIT was perverse. 6. The Commissioner of Income Tax Davangere lacks jurisdiction as the order passed by the assessing officer was in accordance with law and there was no error nor was the order prejudicial to the interest of the rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act. In response to the said show cause notice, the assessee-trust replied vide its letter dated 23/4/2013 that out of the total donations received of ₹ 70,58,900/-, an amount of ₹ 20 lakhs was received as loan from International Construction Ltd., thus leaving a balance of ₹ 45,58,900/- and out of this, an amount of ₹ 42,47,000/- was brought to tax by the AO. It was contended that since the assessee-trust was assessed in the status of AOP, the corpus donation does not form part of the income of the trust as per sec.2(24)(iia) of the Act. 4.1 After considering the above submissions of the assesseetrust, the CIT called upon the assessee-trust to substantiate that amount of ₹ 20 lakhs was received as loa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. However, the learned Assessing Officer has accepted loan amount of ₹ 25,00,000/- received from International Construction Ltd after satisfying himself regarding the genuineness of this transaction. The xerox copy of Receipt No.247 dated 13.04.2009 issued to Subhash Projects is enclosed. Considering the above, we request you to kindly drop the proceedings and oblige. 4.2 After considering the above explanation filed by the assessee-trust, the CIT observed that when the trust was not recognized under the provisions of sec.12A of the Act for the assessment year 2010-11, donations received by the assesseetrust towards corpus fund are clearly taxable by the clear provisions of sec.11(1)(d) of the Act. It was furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication of mind and therefore, he prayed that exercise of power by the CIT u/s 263 was not justified. Learned counsel for the assessee further contended that issues raised in show cause notice were examined by the AO and submitted that the very fact that out of total donations of ₹ 70,50,900/- an amount of ₹ 41,47,000/- was brought to tax goes to show that the AO had applied his mind. Therefore, an issue on which AO applied his mind cannot be subject matter of revision u/s 263. 6.1 On the other hand, ld.CIT(DR) supported the order of the CIT and prayed that the CIT s order should be upheld as the AO had not applied his mind to the relevant provisions of the Act. 7. We heard rival submissions and perused material on record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n it was held that non-application of mind on the issue, renders the assessment order erroneous and prejudicial to the interests of revenue. Furthermore, the Hon ble jurisdictional High Court in the case of CIT vs. Info sys Technologies Ltd. (341 ITR 290) has clearly laid down that by exercising power u/s 263, if the order is set aside, there was no prejudice caused to the assessee. Hence, order u/s 263 is maintainable. Respectfully following the decisions, we hold that the order of the CIT dated 30/07/2013 is valid in law and CIT is justified in exercising revision power u/s 263 of the Act. 8. In the result, the appeal filed by the assessee is dismissed. Order pronounced in the open court on 05th July, 2016 - - TaxTMI - TMIT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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