Income Tax Appellate Tribunal - Amritsar
Makhan Singh Mukh Sewadar,, Amritsar. vs Assessee on 8 January, 2014
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH; AMRITSAR.
BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER
AND SH. B.P.JAIN, ACCOUNTANT MEMBER
I.T.A. No.440(Asr)/2012
Assessment year:2009-10
PAN :BBFPS2614A
Sh. Makhan Singh Mukh Sewadar, vs. The Income Tax Officer,
Dera Sant Amir Singh, Ward 2(1),
Bazar Sattowala, Amritsar.
Katra Karam Singh,
Amritsar.
(Appellant) (Respondent)
Appellant by:Sh.Padam Bahl, CA
Respondent by:Sh. Mahavir Singh, DR
Date of hearing: 08/01/2014
Date of pronouncement:28/01/2014
ORDER
PER BENCH ;
This appeal of the assessee arises from the order of the CIT(A), Amritsar, dated 18.10.2012 for the assessment year 2009-10. The assessee has raised following grounds of appeal:
"1 That Worthy CIT(A), Amritsar has grossly erred in confirming the action of Income Tax Officer, Ward 2(1), Amritsar in not appreciating that the assessee had dual status, one being his 2 ITA No.440(Asr)/2012 Professional Status as a Religious Preacher/Katha Vachak and other as a Caretaker/Mukh Sewadar of "Dera Sant Amir Singh Ji" a Taksal under the aegis of Guru Gobind Singh Ji.
2. That both the ld. CIT(A) and ITO Ward 2(1) have grossly erred in treating the "Voluntary Contributions" made by the general public/devotees to "Dera Sant Amir Singh" as "Professional Income" of the assessee and in making addition of Rs.1,21,62,318/-.
3. That both the ld. CIT(A) and ITO Ward 2(1) have failed to appreciate that "Voluntary Contributions" collected and deposited in Saving Accounts maintained with Citi Bank, HDFC Bank, Punjab & Sind Bank, State Bank of India were towards a specific project to donate a "Gold Chatter" to Gurudwara Shri Hazur Sahib" and to carry out other Charitable and Religious Activities involving free Langars, Marriages of Poor People, Religious Processions and Karsewa etc.
4. That both the ld. CIT(A) and ITO Ward 2(1) have grossly erred in conducting that benefit of set off of utilizations towards charitable/religious activities can only be given to trusts registered u/s 12AA of the Income Tax Act, 1961.
5. That both the ld. CIT(A) and ITO Ward 2(1) have failed to appreciate that even capital expenditure incurred for religious and charitable activities is allowable as application of income towards the objects of the Dera.
6. That both the ld. CIT(A) and ITO Ward 2(1) have grossly erred in disallowing expenses of RS.7,42,848/- u/s 40(a)(ia) of the Income Tax Act, 1961 on the ground that income of assessee was "Business Income & no TDS had been deducted.
7. That Worthy CIT(A) has grossly erred in confirming the action of the ITO, Ward 2(1), Amritsar in charging interest u/s 234A, 234B & 234C of the Income Tax Act, 1961."3 ITA No.440(Asr)/2012
2. The brief facts as arising in para 4 of CIT(A)'s order are reproduced for the sake of convenience as under:
"Return declaring income of Rs.2,10,870/- filed on 31.3.10 was processed u/s 143(1) . Later on, the case was selected for scrutiny under CASS. After issuing initial statutory notice u/s on 28.8.10 the same was followed by notices u/s 139C(1)/139(D)(C) of the Act and in response to it, the assessee categorically filed copy of his income & expenditure a/c & other documents but stated that no bank account is maintained by him in his own name. In response to subsequent notices u/s 142(1)/142(2), the AO considered assessee's reply dt. 15.6.11 with declaration, by incorporating the same in his asstt. order. Assessee's representative was confronted with SB A/c with HDFC Bank, Golden Temple, Amritsar, in which huge cash was deposited and was asked to explain the source of such cash deposits and in response thereto, the assessee replied vide his letter dt. 29.7.11 stating therein that the assessee is a Sewadar of old historic dera and is engaged in charitable and religious activities which care being carried with the help of funds/donations collected from general public and are deposited in the bank account. Vide supplementary reply dated 25.6.2011 it was stated that the bank account of Sant Baba Makhan Singh as Sewadar of Dera Sant Amir Singh Ji are maintained with City Bank, HDFC Bank, P & S Bank and SBI. During the year under consideration, he had undertaken a project to donate gold chhattar to Gurdwara Shri Hazur Sahib. Consequently the AO issued a detailed questionnaire along with notice u/s 142(1) dt. 12.10.2011 fixing the case for 24.1p.11, which stand incorporated in the AO's asstt. order itself and the assessee's reply filed in response thereto stands incorporated in the AO's asstt. order itself. It was followed by supplementary explanation dt. 3.11.2011 besides reiterating his earlier stand, added that in the light of confirmation letters from the donors, the fact that the donations received were duly deposited into the banks confirmation of the jeweler, M/s. Salig Ram Kishan Chand for making of gold, contended that the primary onus stands discharged by him and thus the onus now stands shifted on the Deptt. to prove the contrary with evidence. When specifically asked to explain as to why appellant's income may not be computed in accordance with provisions of section 28 to 43, the appellant's counsel filed supplementary submissions dt. 17.11.11 contending 4 ITA No.440(Asr)/2012 therein that since the appellant is not engaged in any business and also by placing reliance on the case of law of the Hon'ble Supreme Court in the case of CST vs. Sai Publication Fund, urged that since the Department could not be able to establish that any business activities care carried out by the appellant with profit motive and since the funds collected have been utilized for the purposes for which these are collected the benefit of set of total utilization/application of funds against the collection has to be allowed to the appellant. The appellant's explanation did not find favoaur with the AO. Thereafter, the appellant was confronted with the nomination made in the bank account opening form vide notice dt. 17.11.11 and in reply dt. 6.7.11 the counsel of the appellant explicitly expressed his unawareness to the above fact. It has all along been the stand of the appellant that since the funds of the so-called Dera are being utilized at his sweet will and since after death of the self styled Sewadar, Mr. Makahn Singh, the funds of the Dera are likely to be shifted to his blood relation, Son ( as is apparent and evident from the bank opening form nomination, already confronted to the appellant). It was pointed out to the appellant during the asstt. proceedings, the appellant Dera has not been registered u/s 12AA with the appropriate authority so as to qualify to claim benefits u/s 11. Further, as regards the so called corpus the same has not been fully substantiated. No certificate u/s 80G(5) produced so as to establish its donations eligible for deduction u/s 80G. Nor it is the appellant's case that the appellant has spent 85% of the corpus funds and as such qualify for deduction u/s 11 etc. The collection of the Dera exceeded the limit prescribed u/s 44AB but the accounts are neither got audited nor supported by any audit report. Even various confirmations furnished before the AO are stereo-type ones indicating cash donataions ranging from Rs.100, Rs.2000, Rs.3100, Rs.5000, Rs.5100, Rs.10,000/-, Rs.11,000, Rs.15,000, Rs.21,000. Further, it is not the appellant's case that its annua The appellant's plea that he is a preacher performing katha/kirtan darbar/religious celebrations and funds were collected from time to time by pursuing the public, participants, audience to make donations/contributions did not find favour with the AO as he was of the confirmed view that it constitutes income from business profession or vocation as defined in section2 (36) of the Act by rebutting the case laws relied by the appellant's counsel like CST v. Sai Public Fund (2002) 4 SCC 57 (SC) and Director of Income Tax (Exemption) vs. Institute of Chartered Accountants of India (2011) 5 ITA No.440(Asr)/2012 202 Taxman 138 (Delhi H/Court) as inapplicable being distinguishable on facts and placing heavy reliance on the decision of Hon'ble Supreme Court in the case of Krishna Menon (P) v. CIT (1959) 35 ITR 48 (SC, the AO rejected the appellant's contentions and proceeded t assessee the appellant's income under the head 'Income from profit/gains. While doing this, the AO had made following additions/disallowances; (1) Rs.13,35,658/- treating the same as capital expenditure not eligible for treating as revenue expenditure u/s 28 to 40 subj. to allowance to dep. u/s 32 thereon.
ii) For non-production of TDS u/s 194C on expenditure of Rs.742848/-(comprising of Rs.264000 as advertisement, Rs.264000 advertisement PTC channel and Rs.211000 as job charges paid) added back u/s 40a(ia).
iii) Rs.511046 as insurance including Rs.331575 paid to Birla Sun Life, Rs.42895/- paid to LIC for purchase of personal insurance policies and in respect of the balance for want of relevant details, added back being not pertaining to the appellant's business or profession/vocation, subject to allowance of deduction u/s 80-C as per law.
iv) Donation of Rs.1,39,85,512/- representing donation of Gold Chattar weighing 12 K 670 gms to Sri Hazur Sahib supported by a certificate/receipt No.7302 dt. 2/11/2008 from Takhat Sachkhand Sri Hazur Abchainagar Sahib, Nanded, Maharashtra enjoying deduction u/s 80G, treating the same being not allowable expenditure on account of charity subject to deduction u/s 80G.
v) Disallowances of Rs.7091/-, Rs.77597/- and Rs.16,990/- on a/c of telephone, vehicle expenses and traveling expenses wherein the personal element on the part of the appellant cannot be ruled out.
Taking into account the above additions/disallowances, the net assessable business income of Rs.1,23,73,192/- has been determined as against the returned income of Rs.2,10,874/-. Aggrieved by the AO's above actions including various additions/disallowance, the appellant has preferred the appeal under consideration."
6 ITA No.440(Asr)/20123. Before the Ld. CIT(A), the assessee filed the submissions, which were sent to the AO and the remand report was taken which in turn was given to the assessee for comments. The Ld. CIT(A) after considering the remand report of the AO and the comments of the assessee confirmed the action of the AO and the relevant findings for the sake of convenience are reproduced as under:
"7. I have carefully considered the appellant's written submissions, rebuttals to AO's remand report and have gone into AO's assessment order under appeal as well as comments given in the remand report of the present AO. The present appeal is hereby disposed by giving ground of appeal wise adjudication as under:
8. Grounds of appeal No. 1 to 12 except ground of appeal No.10 being inter-connected, co-related with each other are taken up together for the sake of convenience. The first and primary question to be decided as to whether the 100 year's old institution under the name & style of "Dera Sant Amir Singh" managed by a Mukh Sewadar/Caretaker can be treated as regarded as purely charitable or religious trust. This office is only concerned with the relevant provisions of Section allowing the benefit of exemption for the purely charitable/religious trusts. It is a matter of record that neither any trust deed, specifying its constitution, members, constituents Gurudwaras, co-sponsored & affiliated with parent trust, different aims and objects, ways & means and utilization of its corpus funds and annual donations/contributions received from time to time. It is undenying and admitted facts on record.
(1) That no regular trust deed has been produced either before AO or before the undersigned, falling and covered under the definition of sec. 2(24)(iia) of the Act. Vide ground of appeal No.4, the appellant has himself admitted to be an unregistered institution. (2) That admitted the institution though 100 years old is not registered as registered society or registered as charitable/religious trust u/s 12AA with the CIT concerned.7 ITA No.440(Asr)/2012
(3) That the above institution also does not hold any qualifying certificate u/s 10(23C)(vi) about performing exclusively religious, charitable, educational, sports, woman welfare trust, children welfare trust, charity to poor, need handicapped, orphans , pingalwara, Gaushala etc. (4) It is also a well established fact that is accounts are admittedly never got audited and as to whether expenditure upto 85% of its income have been spent towards its specified aims and objects of larger public utility of charity or religious in order to qualify for the claimed exemption u/s 11.
(5) In order to qualify its receipt of various donations/collections/contributions, no certificate from the prescribed authority u/s 80G(5) is forthcoming.
(6) Entire collections of the Dera are solely managed and controlled by one Mukh Sewadar according to his own will and wish, and even the collection certificates/confirmations are stereo-typed without bearing any authentification, complete particulars like PAN etc. Even no attempt was made to produce any of the so-called donors categorically confirming the donations by indicating the source thereof, capacity, creditworthiness and genuineness of the transaction.
(7) Even the various bank accounts are in the sole name of Mukh Sewadar, Makhan Singh without indicating any alternative bank holder or co-bank account holder in the event of any adverse eventuality and even the nominations are executed in favour of his own son by Mr. Makhan Singh leading to the clear indication and safe presumption that due to any unforeseen unpleasant mis-hap with the Mukh Sewadar, the credit bank balances are likely to be not going in the books of the Dera but in the individual hands of Mukh Sewadar's son, legal successor.
8. During the appellant proceedings, the ld. counsel failed to substantiate the claim that the Dera was virtually functioning for the betterment of poor, needy, in general and that Dera is carrying out various charitable & religious activities like religious processions, karsewa etc. by utilizing the donations contributed by general public/sangat at large, which are its specified aims and objectives laid down in any articles of association etc. It is not the case that the Dera is affiliated with respectable & Hon'ble SGPC; Sri Harminder Sahib, Sri Takhat Hazur Sahib, Sri Hem Kund Sahib and son on.
8 ITA No.440(Asr)/20128 Even the AO has established the fact that the funds of the Dera are man times have been diverted for meeting the personal ends of Mukh Sewadar as evident from numerous personal withdrawals. The Ld. AR except furnishing the pedictree history of the Dera has failed to furnish any order of any IT authority whereby the Dera has ever been allowed exemption under the Act.
9) Even as held by the AO, bank withdrawals also represented appellants investment in purchasing his personal life insurance policies and towards purchase of gas connections/cylinders etc and this case is not free from diversion of the so called trust's funds for meeting out appellant's personal ends and purposes.
It is observed that the AO has already given due weightage to the donation of Gold Chattar to 'Sri Takhat Hazur Sahib, Nanded thereby allowing and granting the due deduction u/s 80G(though not claimed).
8. Since the basic requirements and ingredients for establishing the Dera Trust for purely charitable/religious purposes and for the poor or needy objects and without bringing on record any exemption certificate having been issued by the appropriate Income Tax Authority, I am of the considered opinion that the AO was well within his jurisdiction rights to deny exemption claimed sought towards the so-called charitable and religious purposes/objectives. Showing utmost regard to the case law relied upon by the Ld. AR that the Hon'ble Allahabad High Court in the case of CT vs. Sant Baba Mohan Singh, reported at 118 ITR 1015 (All.) but in my opinion, the same is of little help to the appellant as the same is distinguishable and at variance than the peculiar facts & circumstances of the instant case, discussed supra. I find that the AO has passed the well-reasoned asstt. order by allowing reasonable opportunities of being heard (forthcoming from perusal of the AO's order) by taking into consideration various submissions and contentions raised before him, by assessing the appellant's income under the head 'income from business/profession' by accurately computing the appellant's business income by firstly adjusting the loss claim, allowing depreciation on its assets, allowing deduction u/s 80G of the Act and also making the following additions:
a) Rs.13,35,658/- on a/c of capital expenditure
b) Rs.7,42,848/- U/s 40(a)(ia) for non ded. of TDS u/s 194C 9 ITA No.440(Asr)/2012
c) Rs.1,39,85,512/- Donations not forming business exp.
d) Rs.5,11,046/- Insurance Besides, the AO's above action, the above additions have been found to be made on sound footing requiring no interference therein and thus deserve to be confirmed legally as well as on merits. In the totality of facts & circumstances, discussed supra, all the above mentioned additions amounting to Rs.13,35,656/-, Rs.7,42,848/-, Rs.1,39,85,512/-, stand fully confirmed. Accordingly grounds of appeal No. 1 to 12 (except gr. of appeal No.10) are hereby rejected.
8.1.1. It would be quite pertinent to hold that while computing the appellant's taxable income, the AO's action adding back declared in the receipt payment account amounting to Rs.37,09,090/- is also liable to be confirmed, since the appellant's entire income is taxable, therefore, the question of allowing set off of declared loss of Rs.37,09,090/- as claimed by the appellant becomes irrelevant and question in this regard does not arise and as such the ground of appeal No.2 is hereby rejected accordingly.
8.2. However, as far as disallowance made @ 1/5th of certain heads of expenses for undenying personal element involved therein, it would be in the fitness of things, in all fairness and in order to meet the ends of justice, it would suffice by restricting the rate of disallowance from 20% to 1/6th as the deduction made by the AO @ 1/th seems to be somewhat on the higher side. In this way, the appellant would be entitled to a relief as worked out below No. Exp.Head Exp.claimed 1/5th Restricted Relief disallow @ 1/6th allowed
1. Telephone 35463 7092 5910 1182
2. Veh. Exps. 387985 77597 64664 12933
3. Travelling 84953 16990 14159 2831 Total relied 16946 allowed This disposes of ground of appeal No.10 partly in favour of the appellant.
10 ITA No.440(Asr)/20128.3. Further, it is seen that since the assessment has been made in the individual status of the appellant, however, the AO ought to have suo moto allowed deduction u/s 80C as has been admittedly acceded by him vide para 12 of his impugned asstt. order, which appears to have omitted to be allowed perhaps inadvertently under mistaken belief/omission. Now the AO is directed to allow deduction allowable as per the provisions of section 80-C under Chapter VI of the Act suo moto at his own level without waiting any specific request from the appellant. Accordingly, subject to the above rider, ground of appeal No. 1 to 12 are disposed partly in favour of the appellant.
9. As regards ground of appeal No.13 pertaining to the appellant's grievance over charging of interest u/s 234A, 234B and 234C of the IT Act, 1961, the same being consequential in nature, in my opinion, the same does not require any comments.
10. In the result, the appeal is partly allowed."
4. The Ld. counsel for the assessee, Mr. Padam Bahl, CA submitted the written submissions and argued on the same lines, which for the sake of convenience are reproduced as under:
"It is submitted that the ITO Ward 2(1) , Amritsar had made an addition of Rs.1,21,67,653/- in this case by treating the Bank deposits in the account of the assessee as his income from Profession & Vocation. The same has been confirmed by the worthy CIT(A), Amritsar.
It is submitted that the AO and the Ld. CIT(A) had failed to appreciate that the dual capacity of the assessee, one as a Preacher and the other as "Mukh Sewadar" of "Dera Sant Amir Singh Taksal".
It is submitted that the assessee is the Mukh Sewadar/Caretaker of an old Historic Dera of about 100 years old. The Dera namely "Dera Sant Amir Singh Taksal" ji is being managed under the spiritual guidance of "Mukh Sewadar Sant Makahan Singh Ji."
11 ITA No.440(Asr)/2012It is submitted that the "Dera Sant Amir Singh Ji" is more than 100 years old Dera and inherits its significance from Guru Gobind Singh Ji, the tenth Guru. The history of the "Dera' as down loaded from the internet is enclosed for your kind perusal (pages 3 & 4 of PB) & it originated from Sh. Mani Singh Ji Taksal.
This Dera is carrying out various charitable and religious activities such as religious processions and karsewa etc. by utilizing the donations contributed by general public/sangat at large.
The donations received by "Sant Makhan Singh Mukh Sewadar" are also deposited in Bank Accounts. Although these Bank Accounts are in the name of Sant Makhan Singh but the same are in fact bank accounts of "Dera Sant Amir Singh". This fact is also mentioned in the Bank Account itself. The assessee, Sant Makhan Singh is merely operating the Bank account to undertake and perform the duties of the Dera as a Caretaker. This is evident from the Copies of Bank Accounts filed in the paper book at (pages 6 to 34).
It is submitted that the AO and the ld. CIT(A) have not appreciated about the dual status of the assessee. One as a preacher and other as Mukh Sewadar/caretaker of "Dera Sant Amir Singh" . The assessee has filed his income tax return separately as a preacher i.e. for income earned from Kirtan Darbars, Kathas etc. Your kind attention is invited to the decision of Allahabad High Court in Mahant Indresh Charan Dass vs. State of Uttar Pradesh 81 ITR 435 (All.) where it was held that property held by the Chief of the udasi sect was held under the legal obligation wholly for religious and charitable purposes.
Your kind attention is also invited to the decision of Delhi High Court in the case of CIT vs. Baba Avtar Singh reported in 83 ITR 738 (Delhi) where it was held that where offerings were made at the feet of religious head and he claimed that he had no interest in the same and these belonged to the Institution, the same cannot be treated as income of the assessee.
Your kind attention is also invited to the decision of Allahabad High Court in the case of CIT vs. Sant Baba Mohan Singh reported at 118 12 ITA No.440(Asr)/2012 ITR 1015(All) where it was held that where income from Gurudwara and attached shops was spent on religious and charitable purposes and Gurudwara was managed by a Manager a Shebait, it was held that the income was exempt as all property was Gurudwara property held by manager under a legal obligation. No normal deed is necessary for creating a religious or charitable Trust.
Your kind attention is also invited to the decision in the case of Vidyavaruthi Thirtha vs. Baluswani Ayyar AIR 1922 PC 123 where it was held that Property of the Math does not vest in the Mahant, he is only the manager and custodian thereof.
The donations received by Sh. Makhan Singh as Mukh Sewadar/Caretaker of "Dera Sant Amir Singh Ji" have been separately deposited in separate Bank Accounts and the same have been utilized only towards Karsewa and other religious/charitable activities of the Dera.
It is submitted that these donations from Sangat/General Public could not be treated as income from business, vocation and profession of the assessee, particularly when it was specifically pointed out to the AO that these donations were "Corpus Donations" in nature. In fact during that period of "project of donating a Gold Chhattar to Gurdwara Hazur Sahib" was being undertaken by the assessee in his capacity as Mukh Sewadar of the Dera. The assessee in his capacity as Mukh Sewadar of the Dera also carried out several religious and charitable activities such as religious processions, free langar, marriages of poor people and karsewa etc. It will be appreciated that the entire money withdrawn from the Bank Accounts under consideration was utilized for the objects enumerated above. This is evident from the Receipts and Payments A/c filed by the assessee before the A.O. A copy of the same is also attached at page 1 & 2 paper book.
The AO had recorded the statement of M/s. Salig Ram Kishan Chand Katra Mohar Singh, Amritsar u/s 131 of the Act who had charged labour for making the gold chatter. The assessee had also filed a certificate from Takhat Sachkhand Sri Hazur Abchalangar Sahib, Nanded, Maharashtra" in which it was confirmed that the assessee 13 ITA No.440(Asr)/2012 had donated one big Chabba of Gold approx. weight 12K 670 Gms. Vide Receipt No.7302 dated 02.11.2008 ( page 35 of the paper book). The value of this gold chatter was Rs.1,39,85,812/-. The donee trust was registered u/s 80G of the Act. The Bank Account shows payments made to HDFC Bank for purchase of Gold from HDFC Bank and payments made to Jeweller firms. The details of amount spent on gold chatter are enclosed to the written submission.
The above evidence clearly shows that the assessee in his capacity of Mukh Sewadar of Dera had made appeal to the Sangat to make donations for the above noted "Project of donating gold chatter at Shir Hazur Sahib, Nanded". This fact is corroborated by various Advertisements issued by the assessee as "Mukh Sewadar" to the Sangat in this regard. A sum of Rs.2,67,848/- was claimed as Advertisement Expenses paid to PTC Channel. A sum of Rs.2,64,000/- was also spent as Advertisement.
It is further submitted that the assessee had also filed several certificates given by the donors certifying that they had given donations to the assessee as "Mukh Sewadar" of the Dera for the aforesaid project. The copies of the donor's certificates to this effect appear at pages 36 & 42 to 140.
The AO and CIT(A) have rejected the dual capacity of the assessee on the ground that the benefit of set off of total utilizations/applications against the collections cannot be allowed because the said principle is applicable only in case of religious and charitable trusts/societies, which have been created under the relevant laws and registered with the appropriate authority u/s 12AA of the Act.
The AO and CIT(A) have refused to allow the set off of utilization/application against the receipts on the ground that Dera was not registered as trust and also that it was not registered u/s 12AA of the Act.
It is submitted that these findings of the AO & CIT(A) are legally untenable. The provisions of Sec. 2(24) (iia) read as under:
"voluntary contributions received by a trust created wholly or partly for charitable or religious purposes or by an institution established 14 ITA No.440(Asr)/2012 wholly or partly for such purposes ( or by an association or institution referred to in clause (21) or clause (23) or by a fund or trust or institution referred to in sub-clause (iv) or sub clause (v) (or by a fund or trust or institution referred to in sub-clause (iiiad) or sub-clause (vi) or by any hospital or other institution referred to in sub-clause (iiiae) or sub-clause (via) or clause (23c) or sec. 10( or by an electoral trust).
Explanation - for the purposes of this sub-clause "trust" includes any other legal obligation.
Your honour will kindly observed that the explanation to Sec. 2(24)Iiia) clearly provides that "trust" includes any other legal obligation. It is, therefore, submitted that where a legal obligation is cast on a person he becomes a trustee. The case of the assessee being "Mukh Sewadar" or "Dera Sant Amrit Singh Ji" was a position where he was under a "legal obligation". Such a "legal obligation"
need not be in writing. It is to be inferred from the conduct of the parties.
It is submitted that the conduct of the assessee clearly establishes beyond any doubt that he had been collecting "Corpus Donations"
towards the fulfillment of the "Project for Donation of Gold Chattar at Hazur Sahib" which in itself was a "legal obligation".
It is further submitted that the donations were received by the assessee for a "specific project" & with a "specific direction" to use the same for the "Project for donation of gold chatter at Hazur Sahib".
It is, therefore, submitted that the assessee was a "Deemed trust"
being under a "legal obligation" to utilize the "Corpus Donations"
towards the "specific object".
Your kind attention is also invited to the decision of Hyderabad Tribunal in the case of Society for integrated Development in Urban & Rural Area (SIDUR) vs. Dy. CIT reported at 90 ITD 493 (Hyd- Trib.) A copy of the decision is enclosed.
The Tribunal held "though by virtue of section 2(24)(iia) voluntary contributions are income, to our mind this by itself does not entitle the 15 ITA No.440(Asr)/2012 tax gatherer to ignore all other well settled principles of taxation and general law and levy tax on gross receipts without considering the claim for deductions. Principles such as capital versus revenue, doctrine of overriding title form versus substance, interpretation of deeming provisions etc., have to be applied wherever necessary. Only the surplus or profit can be brought to tax and the same has to be computed in the manner laid down in the Act applying the normal principles of accountancy and taxation laws".
The Tribunal quoted the principle of voluntary contribution taxability has provided in the law and practice of Income Tax 8th Edition by Kanga and Palkhivala, which is given below:-
All contributions made with a specific direction that they shall form part of the Corpus of the trust are capital receipts in the hands of the trust. They are not income either under the general law or u/s 2(24)(iia) rightly construed (See u/s 2(24)(iia), "Voluntary contributions received by charity").
Section 2(24)(iia) deems revenue contributions to be income of the trust. It thereby prevents the trust from claiming exemption under general law on the ground that such contributions stand on the same footing as gifts and are therefore not taxable.
Section 12 goes one step further and deems such revenue contribution to be income derived from property held under trust. It thereby makes applicable to such contributions all the conditions and restrictions under sections 11 and 13 for claiming exemptions.
Section 11(1)(d) specifically grants exemption to capital contributions to make the fact of non-taxability clear beyond doubt. But it proceeds on the erroneous assumption that such contributions are of income nature - "income in the form of voluntary contributions". This assumption should be disregarded".
Your kind attention is also invited to the decision of Calcutta High Court in the case of Director of Income Tax vs. Girdhari Lal Shownarain Tantia Trust 199 ITR 215 (Cal.) where it was held that Income Computed u/s 11 must be in accordance with the real Income concept and not under the Income Tax Act.16 ITA No.440(Asr)/2012
The following decisions relied upon in the submissions earlier are reiterated again:
1) Mahant Indersh Charan Dass vs. State of U.P. 81 ITR 435 (All.)
2) CIT vs. Baba Avtar Singh 83 ITR 738 (Del.)
3) CIT vs. Baba Mohan Singh 118 ITR 1015 (All) In other words, it is the net income which has to be computed and considered.
It is therefore, submitted that the assessee has to be treated as a trust being a legal obligation though unregistered u/s 12AA of the Act. However, even for trusts where exemption u/s 11 to 13 is not allowed, the entire application of Income has to be allowed as a deduction. The corpus donations which are in the nature of 'tied up' funds cannot be treated as income. This principle has been accepted by the Hyderabad Bench of ITAT in the decision relied upon above.
Your kind attention is also invited to the decision of Rajasthan High Court in the case of Sukhdeo Charity Estate 149 ITR 470 (Raj) where it was held that a "Project grant" could not be treated as "Voluntary Contribution".
It is therefore submitted that since the assessee was also a deemed trust being a legal obligation it had to be treated as an unregistered trust and the entire receipts cannot be taken as income. The "corpus receipts/donations" made with a specific direction have to be excluded from the "Income".
It is further submitted that total utilization/application made under the "legal obligation towards the purposes/objects for which donations were given have to be allowed as a deduction. The decision of Hyderabad Tribunal referred to above is relied upon to claim the set off as Income applied.
It is further submitted that the doctrine of over riding title is also fully applicable to the facts of this case. The funds contributed by the donors were saddled with legal obligation and had to be utilized by the assessee as a Mukh Sewadar towards purposes for which these were contributed.
17 ITA No.440(Asr)/2012Your kind attention is invited to the decision of Supreme Court in the case of CIT vs. Travancore Sugars & Chemicals Ltd. reported at 88 ITR 1(SC) where it was held that where income stood diverted by paramount titles, the same could not be taxed and expense had to be allowed as revenue expenditure.
Your kind attention is invited to the decision of Gujarat High Court in the case of Rajkot Distt. Gopalak Co-operative Milk Producers Union Ltd. reported at 204 ITR 590 (Guj) where it was held that "the true test in deciding whether income has been diverted by overriding title is to see whether the amount sought to be deducted in truth, never reached the assessee as his income."
As such, the donations received by the assessee as "Mukh Sewadar of Dera Sant Amit Singh Ji" could not be treated as personal collections of the assessee on account of carrying out of "Profession or vocation" as these were saddled with a "legal obligation" and he was bound to spend these for Project of Gold Chhatar.
It is further submitted that no distinction is to be made between revenue expenditure and capital expenditure while dealing with the Income applied by a trust (legal obligation) towards its objects. As such the expenditure incurred by the assessee as Mukh Sewadar of the Dera towards Capital expenditure amounting to Rs.13,35,658/- on Car A/c , TV & Generator etc. has to be allowed as Income applied.
These Assets were used for augmenting collections for the project and for use of Sangat at the Dera.
Your kind attention is invited to the following decisions where capital expenditure incurred by a trust towards its purposes was allowed as "Income applied".
1. Satya Vijay Patel Hindu Dharamshala Trust vs. CIT 86 ITR 683 (Guj.)
2. CIT vs. Geroge Forana Church 170 ITR 62 (Ker.)
3. CT. M Tiruppani Trust vs. CIT 230 ITR 636 (SC) 18 ITA No.440(Asr)/2012 It is, therefore, submitted that the sum of Rs.13,35,658/- is also amount applied/utilized towards the purposes of the trust/legal obligation & the same is allowable as a deduction against the receipts.
It is further submitted that since the assessee was a deemed trust/legal obligation the religious activities carried out by him could not be termed as a "business & profession". He was under no obligation to get its accounts audited u/s 44AB of the Act. Again, the provisions of sec. 40(a)(ia) were also not applicable to the assessee and the expenses incurred on Advertisement at Rs.2,67,848/- and Rs.2,64,000/- & expenses incurred on job charges at Rs.2,10,000/- could not be disallowed, because this is the first year in which Accounts could be said to subject of Audit. The disallowance could not made u/s 40a(ia).
It is submitted that since he was carrying out religious/charitable activities under a legal obligation , the provisions of Sec. 28 to 43 were not applicable to the assessee.
It is therefore submitted that the expenditure incurred on capital assets, expenditure on which TDS was not deducted and donation of gold chatter at Shri Hazur Sahib were also to be treated as "amount utilized/applied"
towards donations/receipts under a legal obligation and only the net receipts, if any, could be treated as Income.
The worthy CIT(A) has not dealt with any of the legal cases relied upon by the assessee by stating that the same are distinguishable.
The AO and CIT(A) have completely misdirected themselves in rejecting the dual status of the assessee and in refusing to treat the assessee being "Mukh Sewadar" of "Dera" as a Trust/legal obligation (unregistered) and to allow the deduction for all the expenses utilized/applied for religious/charitable purposes against the corpus receipts/donations and oblige."
5. The Ld. counsel for the assessee, Mr. Padam Bahl, CA filed a copy of the certificate dated 31.12.2013 issued by Shri Gurbachan Singh, Jathedar 19 ITA No.440(Asr)/2012 of Sri Akal Takhat Sahib, Amritsar for admission of additional evidence, which reads as under:
"English Translation of Certificate No.3551 dated 31.12.2013 issued by Sh. Gurbachan Singh, Jathedar Sri Akal Takhat Sahib, Amritsar.
It is certified that Dera Sant Amir Singh Ji, Bazar Sattowala, Katra Karam Singh, Amritsar is a Sampradai Taksal of Shaheed Bhai Mani Singh Ji started by the dasam Guru Gobind Singh Ji. It was started for providing teachings of Sri Guru Granth Sahib and is more than 100 years old.
It is lighted by Guru Granth Sahib Ji & teachings of Guru Granth Sahib are taught here. Thousands of students have been taught here the true meaning of Guru Granth's Sahib bani and they have served the Sikh Panth and are still serving.
Panth Rattan Bhai Sahib, Bhai Veer Singh Ji was also a student of this taksal. Sikhs & Shrimoni Gurudswara Prabhandak Committee are proud of this place. Presently, this place is being managed by Sant Makhan Singh Ji.
Sd/-
Gurbachan Singh Jathedar, Sri Akal Takhat Sahib, Amritsar."
6. In this regard, the ld. counsel for the assessee submitted as under:
"Enclosed please find herewith a Certificate No.3551 dated 31.12.2013 issued by Sh. Gurbachan Singh, Jathedar Sri Akal Takhat Sahib, Sri Amritsar, Punjab India alongwith a copy of English translation.
The above certificate has been issued by Jathedar Sri Akal Takhat Sahib on the request of the assessee to confirm that Dera Sant Amir Singh Ji is a GURUDWARA" because Prakash of "Sri Guru Granth Sahib Ji" is there at the Dera. The certificate is self explanatory.20 ITA No.440(Asr)/2012
Your honour will kindly appreciate that this certificate establishes an important fact which goes to the root of this case. This particular fact has been omitted to be considered at all as it never came on record. However, the fact remains that Dera Sant Amir Singh was always a Gurudwara because of the Prakash of Guru Granth Sahib Ji there all the time.
Your honour are requested to kindly admit this certificate as additional evidence as it goes to the root of this case while adjudicating the appeal. Your kind attention is also invited to the decision of Hon'ble Supreme Court in the case of Shrimoni Gurudwara Prabandhak Committee vs. Som Nath Dass & Others where the Hon'ble Supreme Court has held that "the Shri Guru Granth Sahib is the central object of worship in all gurudwaras and have further held Sri Guru Granth Sahib to be a juristic persons". While deciding this issue the Supreme Court reversed the findings of Punjab & Haryana High Court . A copy of the judgment dated 29.03.2000 is enclosed.
It is therefore submitted that in view of the certificate filed above and the decision of Hon'ble Supreme Court read together the status of Dera Sant Amir Singh Ji becomes that of a juristic person independent of the individual status of Mukh Sewadar Sant Makhan Singh Ji. The assessee has been repeatedly making this submission before the ITO and worthy CIT(Appeals) regarding the dual capacity in which the assessee has been working.
It is therefore, submitted that the donation made by the Sangat for the purpose of providing Gold Chattar at Gurudwara Nander Sahib were not made to assessee in his personal capacity but to Dera Sant Amir Singh Ji as a juristic person independent of the said Makhan Singh Ji.
Your kind attention is also invited to the following decisions (copy enclosed).
i) CIT vs. Ramdeo Samadhi 160 IT 179 (Raj)
ii) CIT vs. Gopala Naicker Bangaru 344 ITR 297 (Mad.) 21 ITA No.440(Asr)/2012 It was held in these cases that donations were not made to the individual but to the juristic person and these supports the case of the assessee.
It is further submitted that the bank account have to be operated by the Mukh Sewadar. The observation of the AO that the nomination of the Bank Accounts was in the name of son of Sant Makhan Singh does not make any difference because the nominee does not become the legal owner.
Your honours are requested to kindly admit the additional evidence and decide the appeal after considering the above submissions and oblige."
7. The Ld. counsel for the assessee, Mr. Padam Bahl, in fact, argued that the written submissions laced on record by considered and be taken as his arguments for deciding the grounds of appeal of the assessee.
8. The Ld. JCIT (DR), Mr. Mahavir Singh, on the other hand, relied upon the orders of both the authorities below and written submissions which are reproduced hereunder:
"It is considered imperative to delineate the factual matrix of the case before making counter submissions on the assessee's written submission filed before the Hon'ble Bench on 16.07.2013. The factual matrix is like that the assessee has confronted during the course of assessment proceedings with the saving bank account of the assessee with HDFC Bank, Golden Temple, Amritsar where huge cash had been deposited and the assessee was asked to explain the source of deposit of the same.The assessee declined the ownership of any personal saving bank account in his name. The assessee declined the ownership of any personal saving bank account in his name. It was stated that the assessee is a religious preacher and Head Sewadar of old historic dera and is engaged in charitable and religious activities.22 ITA No.440(Asr)/2012
Such activities are being carried out with the help of funds/donations collected from general public and are deposited in the bank account. The assessee had further informed that the bank accounts as Mukh Sewadar of Dera Sant Amir Singh Ji are maintained with City Bank, Punjab & Sind Bank and State Bank of India and that during the year under consideration he had undertaken a project to donate the Gold Chhatter to Gurdwara Shri Hazur Sahib. It was thus claimed that the deposits in the said accounts were donations received by Dera Sant Amir Singh and the deposits were not his personal income. In proof of this fact, the assessee furnished a certificate from one S. Daljit Singh Randhawa who has confirmed in his certificate that the loaned amounts to Dera Sant Amrit Singh and those amount are deposited in the said bank account which being to Dera and which are under question. The assessee also filed a receipt from Gurudwara Hazur Sahib in token of having made donation of Gold Chhatter. As regards the income declared by him in his return of income, it was stated by him that the said income has been earned by him from Katha at various Kirtan darbars/religious celebrations. The AO, however, trashed the contention of the assessee on taking cognizance of the following vital facts:
i) All the bank accounts are in the name of S. Makhan Singh as individual having PAN BEFPS2614A.
ii) That the assessee purchased a vehicle 'Scorpio' for Rs.932958/- in his name out of Gross Receipts.
iii) The assessee purchased individual insurance policies 1) LIC of India for Rs.42,895/- ii) Birla Sunlife Rs.331575/-
iv) There are numerous self withdrawals from the bank accoauants.
v) In the account opening form with City Bank, the assessee had nominated his own son Sh. Amandeep Singh which showed the account was a personal account of the assessee.
As regards the assessee's claim that the donations received by him were donations meant for the Dera, the AO has recorded that the assessee had not sought any registration u/s 12AA and has not even created any trust or society for the said purpose.
The Ld. CIT(A) has largely upheld the order of the AO.
23 ITA No.440(Asr)/2012The assessee has filed written submissions before the Hon'ble Bench on 16.07.2013 in which he has relied upon various judgmens but with regard to facts, he has only stated that:
a) The assessee has dual capacity ; one as a preacher and the other as Mukh Sewadar of Dera Sant Amir Singh.
b) The Dera is carrying out various charitable and religious activities such as religious processions and karsewa etc. by utilizing the donations contributed by general public/sangat at large.
c) The banks accounts in the name of Sant Makhan Singh, Mukh Sewadar are in fact bank accounts of Dera Sant Amir Singh.
d) The assessee is only performing the role of a caretaker of the said Dera.
e) The assessee has filed his personal income tax return separately wherein he has declared his personal income from Katha as a preacher.
f) The donations received were 'corpus donations'. The assessee as Mukh Sewadar of the Dera also carried out several religious and charitable activities such as religious processions, fee langar, marriages of poor people and karsewa etc.
g) The entire money withdrawn from the bank accounts under consideration was uitilized for the objects enumerated above. This is evident from the Receipts and Payments A/c filed by the assessee before the AO.
h) The assessee had donated Gold Chhattar to Takhat Sachkhand Sri Hazur Abchalngar Sahib, Nanded, Maharashtra and furnished a receipt in token of having made the donations.
i) The assessee had made appeal to the Sangat to make donations for donation of Gold Chhattar. A sum of Rs.2,67,848/- was paid to PTC Channel for advertisement and Rs.2,64,000 on other advertisement.
j) Donations confirmation had been filed to the effect that the donations to the assessee were as Mukh Sewadar of the Dera for the aforesaid project.
k) The donations received have not necessarily to be by a trust as definition of trust includes any other legal obligation as per section 2(24)(iia) of the Act.24 ITA No.440(Asr)/2012
l) The assessee was a deemed trust/legal obligation the religious activities carried out by him could not be termed as a business & profession and he was under no obligation to get its accounts audited u/s 44AB of the Act.
m) Since he was carrying out religious/charitable activities under a legal obligation, the provisions of section 28 to 43 were not applicable to the assessee.
In this regard, it is submitted that the written submissions, the assessee has no where controverted any of the factual findings recorded by the AO which clearly prove that the deposits in the bank accounts represented assessee's own income from his profession of preacher.
In such a situation, it is clear, it is clear that all the contentions of the assessee remain unsubstantiated.
Nonetheless, all the contention raised by the assessee as enumerated from (a) to (n) above are discussed and shown as totally untenable as no evidence in support thereof has been filed.
(a) The assessee claims dual capacity one as a preacher and other as a Mukh Sewadar of Dera Sant Amir Singh and claims that though there was no formal trust but he had been running the affairs of the said Dera as a legal obligation as defined u/s 2(24)(iia) of the Act. In this regard, it is submitted that for the assessee to assume the role of a Mukh Sewa Dar, it is a legal imperative that the Dera which is claimed to be 100 years old, its Mukh Sewadar must be appointed (Gaddi Nashin) by the Sangat (Followers of the Dera). The assessee has produced no such document of his being appointed as Gaddi Nasin/Mukh Sewadar of the said Dera. Therefore, all his claim of dual capacity remains wholly unsubstantiated.
b) The assessee's claim that the Dera is carrying out various charitable and religious activities is not relevant to his personal case.
25 ITA No.440(Asr)/2012c) The assessee's has failed to prove with evidence his claim that the bank accounts in his name were in fact bank accounts of Dera Sant Amir Singh. Such accounts are opened on the basis of document of Gaddi Nashin and in the event of demise of the Gaddi Nashin, the mantle of operating such account, falls on the incoming Gaddi Nashin. No such document has been furnished to the Bank at the time of opening of the bank accounts. The bank accounts clearly show that the same have been opened in the personal name of the assessee.The assessee's has not said even a syllabale as to why the nominee in the bank account is his own son and not any subsequent Gaddi Nashin of the said Dera. Therefore, this demolishes the whole theory of dual capacity of the assessee.
d) It is self serving claim of the assessee that he is performing the role of a caretaker of the said Dera. The assessee has brought on record no document of his being appointed as Caretaker of the said Dera. Therefore, this self serving claim cannot be accepted.
e) The income assessed by the AO is assessee's personal income earned from the profession of preacher.
f) Since the assessee's contention that it was acting as caretaker of Dera Sant Amir Singh Ji is absolutely without any evidence and as such the assessee's claim that the donations received were 'corpus donations' is completely irrelevant and no cognizance of the same can be taken.
g), h),(i) & (k) Carrying of charitable activities by any individual is application of income. So it is not relevant as to whether the assessee has engaged himself in any such activity or not. In the written submissions, it has been admitted that no trust, fund, institution as contemplated in section 2(24)(iia) is in existence but has claimed that as per the Explanation to said section trust includes any other 'legal obligation'. The assessee's claim of their being a legal obligation is that he had been receiving corpus donations for gold chhattar to be offered at Hazur Sahib in Nanded, Maharashtra.
26 ITA No.440(Asr)/2012It may be mentioned that the assessee in a desperate bid to save himself from the levy of tax is taking conflicting stands. One the one hand, he says that he is the Head Sewadar (Gaddi Nashin) of 100 years old Dera Sant Amir Singh and the donations were made by the Sangat to the Dera. On the other hand, he is claiming that he is the 'deemed trust' under a legal obligation. He has proved none of these claims. As regards the firm claim of being Head Sewadar of the said Dera, he has (i) bright no evidence on record that he is the Head Sewadar of the said Dera (ii) no evidence has been brought on record that he was appointed as Head Sewadar by the Sangar. He has only submitted a copy of Taksal lineage but that is only a self serving Sewadar and there is no mention in he accounting form of bank a/cs that the said accounts have been opened qua the Mukh Sewadar of Dera Sant Amir Sigh on the authority of any resolution of the Sangat appointing him as Mukh Sewadar. The accounts have been opened in his personal name and only the address has been given of Dera Sant Amir Singh. (iii) has not controverted the finding of the AO as enumerated at page 1 at para (i) to (v). Further, as regards the second claim, the assessee cannot treat himself as DEEMED TRUST for the same very reasons as discussed above at page 1 at para (i) to(v) above. This clearly proves that all the deposits in his bank accounts were his personal earnings and donation of gold chhattar was in the form of donation by the assessee.
(1) & (m) The assessee has brought nothing on record to prove that there had been cast any legal obligation upon him u/s 2(24)(iia) of the Act. Nonetheless, it is no consequence as income of any Legal obligation for the purposes of charging section 14 has been included in the income. Any exemption even under legal obligation has to pass the rest of section 12AA of the Act.
It is further submitted that none of the judgments relied upon by the assessee is applicable to the facts of the case which are discussed hereunder:
Matant Inderash Charan Dass vs. State of UP 81 ITR 435 27 ITA No.440(Asr)/2012 In this case, the management of the endowment had devolved upon the Mahant in the tradition from Guru to Chela and no accession to the Gaddi the Mahant severed his relations and connections with the family. The Mahant was elected by Sikh Chiefs in Panchayat from among the Chelas of the last Guru. The property belonged to the institution and the Mahant was merely its administrator.
In the case of the assessee, no such devolving of Gaddi has been claimed. No evidence has been brought on record that he had been appointed as a Mahant/Mukh Sewadar and further the assessee had been using the alleged property as his own property.In fact, donations were made to the Mukh Sewadar in the exercise of his vocation and are assable in his own hands as per the judgments relied upon by the AO in his order at page 4 of the assessment order.
CIT vs. Baba Avtar Singh 83 ITR 738 (Del) In this case, donations were made to Nirankari Mandal and the receipts for the offerings were issued by the said Mandal but in the case of the assessee no such claim has been made much less substantiating the same. Therefore, this judgment is not relevant to the facts of the case.
Sant Baba Mohan Singh 118 ITR 1015 In this case, all income had been spent for religious and charitable purposes and the income was of Gurudwara and the attached shops. But this is not so in the case of the assessee as he had made the several withdrawals for the personal purposes as established by the AO in his assessment order. Therefore, this decision is not applicable.
Society for Integrated Development in Urban and Rural Areas vs. DCIT 90 ITD 493 (Hyd).
This judgment is in fact in favour of the revenue. The department has not taxed gross receipts. It has allowed the deduction to the assessee which the assessee has claimed like 28 ITA No.440(Asr)/2012 advertisement expense and expense on account of telephone, vehicle and traveling expenses and other expense. Thus, this judgment is also not applicable.
Sukhdeo Charity Estate vs. CIT 149 ITR 1 (SC) Since the assessee has treated all donations as having been made to him as preacher and no receipt of Dera Sant Amir Singh has been issued, therefore, the donations received cannot be said to have been made for any specific purpose. The assessee using the donations for personal purpose clearly indicates the conduct of the assessee that he had been treating the same as his own income and not the income of the Dera or under any legal obligation as in that event the assessee would not have made several withdrawals for his own use and for buying capital goods for his own comforts and buying insurance policy on his own life and for other facts as discussed above.
CIT vs. Travancore Sugar and Chemicals Ltd. 88 ITR 1 (SC) This judgment is also not applicable for the reasons as enumerated above. The conduct of the assessee shows that he brooked no legal obligation on the donations received.
Rajkot District Gopalak Co-operative Milk Producers Unions vs. CIT 204 ITR 590 (Guj).
Since the assessee has by his conduct brooked no legal obligations as such this judgment is also not applicable.
In view of the above submissions, it is clear that there is no merit in the assessee's appeal and the same may kindly be rejected.
It is further submitted that the assessee has withdrawn grounds No.1,4,6,7 11 & 12 which clearly shows that the assessee admits that the issues raised in these grounds are the ones which he cannot prove before the Hon'ble Bench and 29 ITA No.440(Asr)/2012 which impacts the whole subject matter of appeal. Therefore, the assessee has clearly no merit in his case."
9. We have heard the rival contentions and perused the facts of the case.
There is no dispute to the fact that the assessee has not produced any Trust-
Deed before any of the authorities below or even before us and the assessee has admitted before the authorities below that it is an unregistered institution. Though, it is 100 years old but not even registered as Registered Society or not registered as charitable or religious trust under section 12AA of the Income Tax Act, 1961. There is no certificate under section 10(23C)(iv) before any of the authorities below or even before us. The accounts have been admitted, not to have been audited under any law. No 80G(5) approval from the prescribed authority has been taken and has not been placed on record.
9.1. We concur with the findings of the ld. CIT(A) that the entire collections of Dera are solely managed and controlled by one Mukh Sewadar according to his own will and wish and even the collection certificates are stereo-typed without bearing any authentication, complete particulars like PAN etc. No attempt has been made to produce any of the so-called donors confirming the donations. The pertinent point which is on record before both the authorities below and as pointed out by the Ld. DR 30 ITA No.440(Asr)/2012 that various bank accounts are in the sole name of Mukh Sewadar, Mr, Makhan Singh, without indicating any adverse eventuality and even the nominations are executed in favour of his own son by Mr. Makhan Singh leading to the clear indication and safe presumption that due to any unforeseen unpleasant mishap with the assessee, the credit balance balances will go to assessee's own son being legal successor and not to the DERA.
Nothing has been brought on record and nothing has been proved before any of the authorities below or even before us that the Dera so claimed as Trust i.e. Charitable Trust is functioning for the charitable purpose and no activities as prescribed under section 2(15) of the Act are being carried on by the assessee, has been placed on record. The Dera or Trust as claimed is not affiliated to any charitable institution.
9.2. It is pertinent to mention, as mentioned in the orders of the authorities below that the funds of the Dera are being diverted for meeting out the personal expenses of Mukh Sewadar as is evident from the numerous personal withdrawals. The furnishing of pedictree history of the Dera has failed to furnish any order of the Income Tax Authority whereby the Dera has ever been allowed exemption under the Income Tax Act, 1961. The purchasing of LIC, gas connection, cylinders etc. clearly indicate that the funds of the so-claimed trust are being diverted for meeting out the personal 31 ITA No.440(Asr)/2012 expenses of the assessee. The AO time and again has given sufficient opportunities of being heard to the assessee and therefore, there cannot be any case of the assessee for not providing any opportunity. The Ld. CIT(A) has therefore, rightly confirmed various disallowances made by the A.O. amounting to Rs.13,35,658/- on account of capital expenditure, Rs.7,42,848/- under section 40(a)(ia) for no deduction of TDS u/s 194C and Rs.1,39,85,512/- being donations not forming part of business expenses.
9.3. We also confirm the action of the AO in not allowing set off of declared loss of Rs.37,09,090/- accordingly. The Ld. CIT(A) is further justified and has passed a reasonable order due to undenying personal element, who has rightly restricted the disallowance to 1/6th as claimed by the assessee on account of telephone, vehicle and traveling expenses. The AO has rightly been directed to allow deduction under section 80C under Chapter VI of the Act.
9.4. As regards the arguments made and the written submissions of the assessee keeping into consideration the arguments made by the Ld. DR and written submissions submitted by the Ld. DR, we are convinced with the arguments made by the Ld. DR that the assessee has not produced any document being appointed as 'Mukh Sewadar' of the said Dera and therefore, the claim of the assessee in dual capacity remained wholly 32 ITA No.440(Asr)/2012 unsubstantiated. As mentioned hereinabove, no charitable activity has been substantiated by the assessee and there is no registration u/s 12AA, u/s 10 and u/s 80G or any other provisions of the Act. It has not been substantiated before any of the authorities below or even before us that these bank accounts in the name of the assessee were, in fact, the bank accounts of Dera Sant Amir Singh Ji or these were opened on the basis of some documents of Gaddi Nashin. The Bank accounts clearly show that the same have been opened in the personal name of the assessee. Moreover, the ld. counsel for the assessee throughout the arguments has not made any submission as to why the son of the assessee has been appointed as the nominee in the Bank account opened in the name of the assessee. Simply arguing that the Bank account is being operated to undertake and perform the duty of the Dera as Care-taker will not suffice and cannot prove the dual status of the assessee, as claimed. Accordingly, the decisions relied upon by the ld. counsel for the assessee, cannot be made applicable in the present facts and circumstances of the case. Also, the document of being appointed as Care-taker is self serving document and cannot help the assessee. As regards the donations, as claimed to have been received as corpus donations can not help the assessee in the absence of any evidence, in particular, the assessee is not registered under any of the provisions of the Income Tax Act,1961. When the assessee 33 ITA No.440(Asr)/2012 is not registered under section 12AA of the Act then even if the corpus donations cannot be allowed as deduction and cannot take shelter of Section 11(1)(d) in view of amendment by the Direct Tax Laws (Amendment) Act, 1989 w.e.f. 1.4.1989. Therefore, definitely, the said donations claimed to be corpus donations have to be included in the income of the assessee. As regards the explanation to section 2(24)(iia) regarding 'deemed trust' under a legal obligation , the assessee has not proved any of its claim. For example, he has not brought any evidence that he is the Head Sewadar of the said Dera. Submission of the copy of Taksal lineage is a self-serving document.
There is no mention in the accounting form of bank account that the said accounts have been opened qua the Mukh Sewadar of Dera Sant Amir Singh Ji on the resolution of the Sangat appointing him as Mukh Sewadar. The accounts have been opened in his personal name and only the address has been given of Dera Sant Amir Singh Ji, cannot help the assessee to claim as a Charitable Trust. Accordingly, the assessee cannot claim the same as deemed trust. What is the legal obligation on the assessee, has not been proved. The Ld. DR has rightly distinguished the decisions of various courts of law relied upon by the ld. counsel for the assessee, as reproduced hereinabove. Accordingly, the additional evidence submitted by the ld.
34 ITA No.440(Asr)/2012counsel for the assessee for admission has no relevance and for the reasons mentioned hereinabove, we reject the same and the same is not admitted.
9.5. In the facts and circumstances of the case, we find no infirmity in the order of the ld. CIT(A), who has rightly confirmed the action of the A.O. The order passed by the Ld. CIT(A) is reasoned one and accordingly all the grounds raised by the assessee in the appeal are dismissed.
10. In the result, the appeal filed by the assessee in ITA No.440(Asr)/2012 is dismissed.
Order pronounced in the open court on 28th January, 2014.
Sd/- Sd/-
(H.S. SIDHU) (B.P. JAIN)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 28th January, 2014
/SKR/
Copy of the order forwarded to:
1. The Assessee:Sh.Makhan Singh, Dera Sant Amir Singh Ji, Amritsar.
2. The ITO Ward 2(1), Asr.
3. The CIT(A), Asr.
4. The CIT, Asr.
5. The SR DR, ITAT, Amritsar.
True copy By order (Assistant Registrar) Income Tax Appellate Tribunal, Amritsar Bench: Amritsar