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2016 (7) TMI 535 - ITAT BANGALORE

2016 (7) TMI 535 - ITAT BANGALORE - TMI - Revision u/s 263 - corpus donations received by the assessee-trust were not examined in view of the provisions of Act as the trust was not registered under the provisions of sec.12A - Held that:- Provisions of sec.12 clearly lay down that any voluntary contributions made to a trust shall be treated as the income of the property held under trust which is exempt u/s 11(1) of the Act. Further the provisions of sec.11(1)(a) of the Act, income in the form of .....

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ntradiction 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 revenue. Furthermore, in the case of CIT vs. Infosys Technologies Ltd. (2012 (2 .....

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INTURI RAMA RAO, ACCOUNTANT MEMBER For The Appellant : Shri A.R.Vivek, Advocate. For The Respondent : Shri Sanjay Kumar, CIT(DR). ORDER Per INTURI RAMA RAO, AM : This is an appeal filed by the assessee directed against the order of the Commissioner of Income-tax [CIT], Davangere passed u/s 263 of the Income-tax Act, 1961 [hereinafter referred to as 'the Act' for short] dated 30/07/2013 for the assessment year 2010-11. 2. The assessee raised the following grounds of appeal: 1. The order p .....

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preciate 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 assessin .....

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f the appellant. 9. The Appellant crave leave of this court to add, amend such grounds as it deems fit and proper in the interest of justice and equity. 3. Briefly, facts of the case are that the assessee is a trust formed for the purpose of imparting education to the general public. It was established in the year 2008. Return of income for the assessment year 2010-11 was filed on 21/09/2011 declaring loss of ₹ 66,26,070/-. The assessee-trust had claimed exemption of income u/s 10(23C) of .....

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on to the extent of ₹ 45,58,900/- as the assessee-trust was not granted registration u/s 12A of 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 .....

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ver, assessee-trust filed a letter dated 6/7/2013 on 9/7/2013 in the office of the CIT which is extracted below: "As per the original statement of accounts submitted, the total corpus donations received was ₹ 70,58,900/-. This donation received i ncl ude s l o a n amount al so t re a te d a s d onat i on r e ce i v e d f r om International construction Ltd. As a proof of this transaction, we have produced before Assessing Officer copy of letter served by lender demanding repayment of .....

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.68 of the Act as cash credit. The Assessing Officer has not given any exemption as per Sec.12(1) of the Act in respect of donation treated as corpus donation. When ₹ 41,47,0001- is brought to tax u1s.68, out of the total corpus - donation of ₹ 45,58,9001-, the same issue cannot be subject matter of /Revision on change of opinion. However, the learned Assessing Officer has accepted loan amount of ₹ 25,00,000/- received from International Construction Ltd after satisfying himsel .....

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able by the clear provisions of sec.11(1)(d) of the Act. It was further stated that under the specific provisions of sec.12 of the Act, the provisions of sec.11 are applicable only if the trust is granted registration u/s 12A. The CIT was of the opinion that though the AO brought the donations amount of ₹ 41,47,000/- to tax on the ground that credit worthiness of the doner was not established, but on the ground that donations were not exempt from tax, as the necessary registration u/s 12A .....

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l to the interests of revenue. Therefore, the CIT set aside the assessment to be redone by the AO in the light of the observations made in the order u/s 263. It was specifically mentioned that while passing consequential order, the AO had to afford reasonable opportunity of being heard to the assessee. 5. Being aggrieved by this order of the CIT, assessee-trust is in appeal before us in the present appeal. 6. Learned counsel for assessee contended that the order passed u/s 263 exercising power o .....

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ed 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. The only issue in this appeal to be adjudicated is whether the CIT was justified in assuming jurisdiction u/s 263. From a bare reading of the impugned order passed by the CIT it is clear that .....

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