Income Tax Appellate Tribunal - Bangalore
Shiv Shakti Trust, Bangalore vs Assessee on 27 February, 2009
Page 1 of 5 1 ITA No.267/Bang/2009
IN THE INOME TAX APPELLATE TRIBUNAL,
BANGALORE BENCH 'B'
BEFORE DR. O K NARAYANAN, VICE PRESIDENT AND
SMT. P MADHAVI DEVI, J.M.
ITA No.267/Bang/2009
M/s Shiv Shakti Trust,
No.92, Kedia Arcade,
Bangalore-21. -Appellant
Vs
The Director of Income-tax (Exemptions),
Bangalore. - Respondent
Appellant by : Shri A Shankar, C.A.
Respondent by : Shri Harsha Prakash, CIT-II
ORDER
PER P MADHAVI DEVI :
This is an appeal filed by the assessee-trust against the order of the DIT (Exemptions), Bangalore dated 27.02.2009 in rejecting the assessee's application seeking recognition u/s 80G of the I T Act.
2. Brief facts of the case are that the assessee trust came into existence by way of a trust deed dated 14.3.2007. It filed its application in Form No.10G seeking recognition u/s 80G of the I T Act on 1/8/2008. The DIT(Exemptions), on finding certain deficiencies in the application filed by the assessee trust, called for the details and the assessee furnished the said details. On Page 2 of 5 2 ITA No.267/Bang/2009 examination of these details, the DIT(Exemptions) found that the Managing and Founder Trustee Sri Chellaram N Kripalani, an NRI had donated an amount of Rs.18 lakhs directly to the trust. The DIT(Exemptions) asked the assessee to show cause as to whether the assessee has complied with the provisions of FCRA 1976. In response to the same, the assessee filed its letter dated 25.2.2009 stating that the donations received from Chellaram N Kripanali are out of dividends received from Indian companies and deposited into an account in India and therefore, the same is not covered under FCRA 1976. However, the DIT(Exemptions) observed that the assessee has received Rs.62.20 lakhs from Sharada Estates (P) Ltd. and Rs.18 lakhs from Chellaram N Kripalani and this Rs.18 lakhs is out of dividend from Mangal Tech Park (P) Ltd. and Mangal Tirth Estates (P) Ltd. He also observed that the amounts received by the trust are applied by giving donations to Bhagwan Mahavir Jain Hospital, Narayan Hrudayalaya, Friends Tribal Society of India, which is also recognized u/s 80G of the I T Act and to certain other donations.
3. After considering the same, he observed that the assessee is in receipt of donations from a foreign source i.e. Sri Chellaram N Kripalani, who is an NRI and a citizen of Singapore and therefore, the donations made by him are foreign contributions within the meaning of FCRA 1976 and the assessee has not complied with the provisions of the said Act. Thus holding that the assessee has violated the provisions of FCRA 1976, he held that the assessee Page 3 of 5 3 ITA No.267/Bang/2009 is not eligible to exemption u/s 11 of the I T Act. Thus, the assessee's application u/s 80G(5)(vi) of the I T Act was rejected.
4. Aggrieved, the assessee is in appeal before us.
5. The leaned counsel for the assessee reiterated the submissions made before the DIT(Exemptions) that the donor Sri Chellaram N Kripalani is the founder of the trust and has donated the funds out of the dividends declared by the Indian companies in India and are credited to the account of Sri Chellaram N Kripalani in a bank in India. Thus, according to him, these donations are not from foreign source and are not covered by FCRA Act. Further to the finding of the DIT (Exemptions) that the Bhagwan Mahavir Jain Hospital, Bangalore and Sri Bhagawan Mahaveer Jain Educational and Cultural Trust are under the same management and therefore, the donations by Sharada Estates Private Limited is nothing but diversion of funds, the learned counsel for the assessee submitted that both the Institutions are in the management of different trustees and the question of diversion of funds does not arise.
6. The learned DR, on the other hand, supported the orders of the authorities below.
7. Having heard both the parties and having considered the rival contentions, we find that the assessee's contention is that the donations received from Sri Chellaram N Kripalani are from Page 4 of 5 4 ITA No.267/Bang/2009 dividends declared by Indian Companies deposited into a bank account in India and thus are not foreign contributions under FCRA 1976. What is covered under FCRA Act are the foreign contributions made by any foreign source of any currency whether Indian or foreign. Clause (e) of section (2) of FCRA 1976 defines foreign source to include (x) a citizen of a foreign country. Thus, what is necessary is that the contribution may be in any currency, but it must not be from a foreign source which includes a foreign citizen. The case of the revenue is that the donor is a citizen of Singapore and therefore, the provisions of FCRA 1976 are attracted and the assessee has to necessarily comply with the conditions laid down thereunder. According to the assessee, the donor is an NRI and therefore, the provisions of FCRA 1976 are not applicable. This fact needs proper verification. Further, for the purpose of granting registration u/s 80G of the I T Act, the DIT(Exemptions) is required to examine whether the assessee is carrying on any activities of charitable purpose as laid down in sub- section 5 of section 80G of I T Act. As the assessee has demonstrated before us that the assessee has not violated any of the conditions laid down in sub-section 5 of section 80G, we deem it fit and proper to hold that the assessee is eligible for registration u/s 80G of the Act and the DIT(Exemptions) cannot deny the same without properly examining the issue. The DIT(Exemptions) ought to have verified the details in proper perspective before rejecting the said application. In view of the same, we deem it fit and proper to remit the matter to the file of DIT (Exemptions) to verify the Page 5 of 5 5 ITA No.267/Bang/2009 fact as to whether the donor is an NRI or a foreign citizen and also if the violation of FCRA 1976 would make the assessee ineligible for the registration u/s 80G of the Act. Hence, the assessee's appeal is allowed for statistical purposes.
8. In the result, the assessee's appeal is allowed. The order pronounced on Monday, the 14th day of March, 2011 at Bangalore.
Sd/- Sd/-
(DR. O K NARAYANAN) (P MADHAVI DEVI)
VICE PRESIDENT JUDICIAL MEMBER
Copy to : 1) The Assessee (2) The Revenue (3) The CIT(A) concerned. (4) The CIT concerned. (5) The DR (6) Guard File. MSP/10.3. By Order Asst. Registrar, ITAT, Bangalore.