TMI Blog2017 (12) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of the Ld.CIT(A) and dismiss the appeal of the assessee on this ground. Granting of exemption u/s 10(23BBA) - Held that:- The assessee stated that the temple trust was taken over by the endowments department and requested for granting exemption u/s 10(23BBA), but the assessee did not place any evidence to show that the temple trust was constituted by any of the central /state provincial act as required under section 10(23BBA) of the act. Therefore we do not find any infirmity in the order of the Ld.CIT(A) and the same is upheld. Corpus funds required to be excluded even if the assessee trust is treated as AOP from the purview of the income - Held that:- The resolution passed by the trust is for application of it’s receipts in the manner in which the collection required to be utilized but not the mandate of donors as rightly observed by the Ld.CIT(A). Further the hundi collections are voluntary contributions which cannot be excluded from the definition of income u/s 2(24)(iia) of the Act. The specific purpose donations are excluded by the amendment made in the Finance Act, 1987 w.e.f. 1.4.1989. Therefore, all the voluntary contributions received by the assessee are taxabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tail for assessment year 2010-11. The AO has discussed the background of the assessee trust in the impugned order for assessment year 2010-11 as under : One T.S. Selva Ganesan, S/o Sri Shanumuga Mudaliar and Sri T.S.Rajeswaran, S/o Shri Shanumuga Mudaliar, have executed a private trust deed vide Registered Deed No.4633/1975 on 19.09.1975, with a desire of endowing the family temple of Sampath Vinayagar' for the purposes of maintaining and conducting the daily puja according to Hindu Savita Agama, of deity Sampath Vinayagar as a Private Family Temple. For this purpose the founder trustees have devolved 39 sq.yds of land in T.S.No1035 in Block No.46 WaItair Ward, Visakhapatnam together with temple, which is a part of the Building bearing Door No.10-1-12. The objects of the trust are : (i) to conduct daily puja; (ii) to permit worship to be carried out in the temple by the family members of the founder trustees, their relatives and descendants and (iii) to conduct festivals on Vinayaka Chathurthl and auspicious days and to do all other things necessary and conductive for attainment of the above objects. 3.2. As per the proceedings of the Commissioner of Endowments, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng and also to offer donations to such public charitable trusts with similar objects. (c) Likewise to allot funds for taking care of destitute and orphans and also invalid and in capacitated persons and to build orphanage and also to take care of old age people and for the purpose also to provide shelter, build nursing homes, hospitals, etc, to cater the needy and also to offer donations to such public charitable trusts with similar objects. (6) The funds of the trust whether received as donations from the public or which may be accumulated from year to year after supplying the funds for purpose of the trust shall be invested strictly in accordance with the provisions of section 11(5) r.w. section 13(1)(d) of the Income-tax Act, 1961; (7) There shall be no discrimination based on caste, creed, sex or colour and all people shall be entitled to participate in and benefit from the activities of the Trust (8) The trust shall not carry on any activity with the intention of making profit. (9) The trust shall not carry on any activity outside India. (10) The trustees shall not be entitled to any benefit by way of profit, interest, dividend etc., except by reimbursement o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be pending. The AO considered the CBDT Circular No.258 dtd.14.06.1970 and also the decision in the case of M/s Jagannath Temple Managing Committee vs. CIT (299 ITR 56) and held that it is distinguishable on facts and not applicable to the facts of the assessee's case. After considering the CBDT circular and the decision relied upon by the assessee, the AO rejected the claim of exemption u/s. 11 and 10(23B8A). The AO after verifying the account of Receipts Payments account determined the total income as follows for the A.Ys.2008-09 to 2012-13 as under: Assessment Year 2008-09: Total receipts as per Receipts And payments account Rs l,17,14,097/- Less Payments ₹ 70,68,459/- Total taxable income ₹ 46,45,638 or ₹ 46,45,640/- Assessment Year 2009-10: Total receipts as per Receipts Rs l,48,68,469/- And payments account Less Payments &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd payable Rs.56,47,704/- Or ₹ 56,47,700/- The AO denied the exemption u/s 11, 12 and 10(23BBA) for all the A.Ys.2008-09 to 2012-13 and recomputed the income as above. 4. Aggrieved by the order of the AO, the assessee went on appeal before the CIT(A) and the Ld.CIT(A) dismissed the appeal of the assessee upholding the status of the assessee as AOP determined by the AO and the denial of exemption u/s 11 and 12 was confirmed. 5. Aggrieved by the order of the CIT(A), the assessee filed appeal before this Tribunal. During the appeal hearing, the Ld.AR argued that the assessee has filed the necessary documents/papers for granting the registration u/s 12AA and furnished all the details required by the CIT, thereafter, there was no communication from the CIT, hence it was understood that the assessee was granted registration u/s 12AA of the Act. There was no rejection letter or communication from the office of the Ld.CIT regarding Registration thus the Ld.AR argued that once the application is submitted and the clarifications are given, it is deemed that the registration is granted to the Trust and there is no reason to deny the exemption u/s 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istration u/s 12AA of the Act. In the absence of assessee s failure to establish that the clarification sought by the department was furnished, it is inferred that registration was not granted for want of information. The assessment order for the assessment year 2006-07 is made available in the paper book does not show any indication of the assessee having granted the exemption u/s 11 or granting registration u/s 12AA of the I.T.Act. It is also obligation on the part of the assessee to furnish the information and to make the follow up with the authorities concerned to ascertain the status of the application made for registration u/s 12AA of I.T.Act. In this case, the assessee has neither produced the proof of having registration nor furnished any evidence to show that the assessee has complied with the clarifications sought by the department for granting of registration. Therefore, the Ld.DR argued that the assessee trust was not granted the registration for its failure to submit the details and the AO has rightly denied the exemption claimed by the assessee u/s 11 and 12 of I.T.Act. 6.1. With regard to the second proposition of granting exemption u/s 10(23BBA), the Ld. DR argue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion in the earlier years based on its representation and without verification does not of itself vest the assessee, of the status of a charitable trust. The case laws relied on by the assessee are distinguishable on facts and law, Therefore, I am of the view that the AO is justified in denying exemption u/s 11 12 of the Income-tax Act for the subject years for want of registration v/s.12A of the Act, 4.2. From the perusal Of the submissions made It is evident that the assessee is a private charitable trust, whose affairs are partly managed by the Andhra Pradesh Endowment Department.The assessee could not furnish any information as to its status in regard to the management of the affairs by the Endowments Department, nor could clarify about the outcome of Its challenge before the Honourable Andhra Pradesh High Court. In this factual matrix, I find that the assessee has not satisfied any of the conditions prescribed in section 10(23BBA) of the Act and therefore, it is held that the AO is justified in denying claim for exemption of income u/s.10(2388A) of the Act and in assessing the assessee-trust in the status of AQP. 4.3. The authorized representative also contended t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not change the characteristics of the impugned receipts which are merely voluntary contributions made by the public at large without any direction whatsoever. To constitute corpus donation, the direction of the donor that the contribution was made by him towards corpus is an important pre-requisite, which was not fulfilled in the assessee's case. The intention of the donee or the treatment accorded to the contribution by the recipient is of no relevance, As the pre-requisite condition is not fulfilled in the assessee's case, the impugned hundi collections would not take the character of 'corpus donation'. Therefore the contention of the authorized representative that these receipts by way of hundi collection represent corpus donation has no merit. 7. The authorized representative also relied on the decision of Honurable ITAT, Chandigarh Bench in the case of Srimahadevi Tirath Sarada Ma Seva Sarigam vs. ITO 133 U] (CbdB) U.O. Page 57, in that case the facts are very much different, wherein the trust has kept separate boxes for collection of donations meant of 'construction of building' and other general purposes. In such factual scenario, the Honourable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the trust or institution was deleted from the definition of income with effect from 01.04.1989 by the Direct tax Laws (Amendment) Act, 1987. The effect of these amendments is that any voluntary contribution received by a trust would form part of its income, even ifit is contribution made towards corpus with effect from 01.04.1989. However, donation made with a specific direction to the corpus will be exempt from tax in view of provisions contained in Sec.11(1)(d) and Sec.12 and when the conditions stipulated therein are satisfied. However, in those cases where the trusts or the institutions lose the exemption under section 11, either by not complying with the conditions laid down in section 12A or by falling within the mischief of section 13, the corpus donations will be included in their income and taxed. Thus every voluntary Contribution received by a trust, including corpus donation would constitute 'income' as per the definition of income u/s.2(24)(i a) of the Act. 8.2 In view of the above factual and legal position, I do not find merit in the authorized representative's argument and accordingly the pleas raised in this regard are rejected. The total inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trust was taken over by the endowments department and requested for granting exemption u/s 10(23BBA), but the assessee did not place any evidence to show that the temple trust was constituted by any of the central /state provincial act as required under section 10(23BBA) of the act. Therefore we do not find any infirmity in the order of the Ld.CIT(A) and the same is upheld. 7.3. The third proposition of the assessee was that the corpus funds required to be excluded even if the assessee trust is treated as AOP from the purview of the income. This issue has been discussed in detail by the Ld.CIT(A) in his order. The assessee has not placed any evidence to show that the Hundi collections were meant for corpus trust and are tied up grants which were received for the specific purpose. Mere resolution of the trust and placing Hundi is not sufficient to hold that the donations are received for the corpus. There must be an evidence from the donor to establish that the donations are received for specific capital purpose. The assessee has not placed any evidence of directions of the donors for it s utilisation. The resolution passed by the trust is for application of it s receipts in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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