Income Tax Appellate Tribunal - Delhi
Seagram One Rupee Fund,, New Delhi vs Assessee
IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH 'G': NEW DELHI)
BEFORE SHRI J. S. REDDY, ACCOUNTANT MEMBER
And
SHRI C.M GARG, JUDICIAL MEMBER
ITA No.1082/DEL/ 2010
(Assessment Year: 2006-07)
Segram One Rupee Fund, Vs. ITO (E)
104, Ashoka Estate, Trust Ward 1,
Barakhamba Road
New Delhi. Pin : 110001 New Delhi. Pin:
PAN: AAATS1986M
(APPELLANT) (RESPONDENT)
ITA No.1795/DEL/ 2010
(Assessment Year: 2006-07)
ITO (E) Vs. Segram One Rupee Fund,
Trust Ward 1, 104, Ashok Estate
New Delhi. Pin : Barakhamba Road
New Delhi.
Pin:- 110001
PAN: AAATS1986M
(APPELLANT) (RESPONDENT)
ASSESSEE BY :Shri Salil Agrawal,Adv.
REVENUE BY :Shri G. S. Virk, Sr.DR.
ORDER
PER C. M. GARG, JUDICIAL MEMBER:
These appeals, one from the assessee and another from the revenue, have been filed against the order of the Commissioner of Income Tax 2 ITA No.1082/DEL/2010 & ITA No.1795/DEL/2010 (Appeals)-XX1 New Delhi vide dated 27/01/2010 in Appeal No-119/2008- 09 for the assessment year 2006-07.
2. Grounds in ITA No- 1082/Del/2010 of the assessee.
"1. That order dated 27th January, 2010 passed by the Commissioner of Income Tax (Appeal-XX1), New Delhi is being challenged on following amongst other grounds which may be taken without prejudice to each other for the purpose of this appeal.
2. That the Learned Commissioner of Income Tax (A) has grossly erred is not appreciating the true and correct facts of the case before passing the impugned order.
3. That the Learned Commissioner of Income Tax (A) has grossly erred in confirming the change in status made by the Learned Assessing Officer from that a Charitable Trust instead to that of an AOP.
4. That the Learned Commissioner of Income Tax (A) has grossly erred is not appreciating that the appellant is a registered under Section 12 of the Income Tax Act effective 25 November 1994 as a charitable trust and continues to be a charitable trust till date.
5. That the Learned Commissioner of Income Tax (A) has grossly erred in confirming that the appellant had not undertaken any Charitable Activity notwithstanding the facts and circumstances of the appellant. The Learned Commissioner of Income Tax (A) has totally ignored the fact and the documents produced relating to charitable activities undertaken by the appellant during the year under consideration.3 ITA No.1082/DEL/2010 & ITA No.1795/DEL/2010
6. That the Learned Commissioner of Income Tax (A) has grossly erred in confirming that the appellant had not undertaken any Charitable Activity notwithstanding the fact that the sole purpose of the appellant is to undertake Chartable Activities and the appellant had in-fact undertaken only Charitable Activities during the year under consideration.
7. That the Learned Commissioner of Income Tax (A) has grossly erred in concluding that merely because that the donee's to whom the appellant had made donations were not registered under Section 12A of the Income Tax Act and/or enjoyed 80G benefits, (the contribution towards the construction of the school at Nasik, donation to Khushii and Kalyanam Karoti, Meerut) would not amount to be a Charitable Activity by the appellant during the year under consideration.
8. That the Learned Commissioner of Income Tax (A) has grossly erred in not appreciating that even otherwise as per the Trust Deed of the appellant, the appellant was entitled to undertake the aforementioned charitable activities. This fact has been totally overlooked and ignored by the Learned Commissioner of Income Tax (A) and has led him to come to an erroneous conclusion that appellant was not undertaking any Charitable Activity during the year under consideration.
9. That the Learned Commissioner of Income Tax (A) has grossly erred in not appreciating the entire evidence and facts placed before him by the appellant during the appellants proceeding which were duly admitted by him as per provisions of Rule 46A of the Income Tax Rules, 1962.
10. That the Learned Commissioner of Income Tax (A) has grossly erred in not appreciating the fact that as per the Provisions of Section 11 of the Income Tax Act there is no requirement of the Donee to be registered under Section 12A of the Income Tax Act.
11. That the Learned Commissioner of Income Tax (A) has grossly erred in not appreciating the fact that as per the Provisions of Section 11 of the Income Tax Act there is no 4 ITA No.1082/DEL/2010 & ITA No.1795/DEL/2010 requirement of the Donee to be registered under Section 80G of the Income Tax Act. Further during the course of proceedings before the Learned Commissioner of Income Tax (A), proof that Khushii (an organization to which the Trust had made donation)was exempted from tax under Section 80G of the Income Tax Act had also filed by the Appellant which was completely ignored and an adverse inference was drawn.
12. That the Learned Commissioner of Income Tax (A) has grossly erred in not appreciating that fact that contribution of Rs.10,000/- by the Trust to Khushii was for collection of funds through musical entertainment program for charitable purposes evidence of which was duly filed during the course of proceedings.
13. That the Learned Commissioner of Income Tax (A) has grossly erred by ignoring the object clause of the Trust Deed. This was exhibited by the Appellant by filling a copy of the same during appellant proceedings.
14. That the Learned Commissioner of Income Tax (A) has grossly erred in not appreciating and ignoring, the fact that the appellant had filed various resolutions along with FORM No-10, before Assessing Officer, enabling it to carry forward the utilized amount of its income to be utilized for specified purposes as provisions of the Income Tax Act, 1961, during the year under consideration.
15. That the Learned Commissioner of Income Tax (A) has grossly erred in confirming the charge of interest under Section 234 (B) which also has been incorrectly computed.
16. That the appellant craves leave to modify, add, alter, and delete any of the above grounds."
3. Grounds in ITA No- 1795/Del/2010 of the Revenue:-
"1. On the facts & in the circumstances of the case, the Ld. CIT (A) has erred in ignoring the facts that Registration u/s 5 ITA No.1082/DEL/2010 & ITA No.1795/DEL/2010 12A of the Act is granted by DIT (E)on certain terms and conditions which have to be met by the Assessees. Registration u/s 12A does not automatically guarantee exemption from income tax u/s 11 of the Act. One of the conditions governing the grant of Registration u/s 12A is that the entity should prove before the Assessing Officer that it is involved in activities which are charitable in nature. The Registration granted u/s 12 A casts an onus upon the Assessee to prove, during ass4essment proceedings, that provisions of Section 2(15) and Section 11 are satisfied by it and also that there is no contravention of provisions of Section 13 of the Act. Once it is discovered that no charitable activities are being undertaken, then, the conditions prescribed in the Registration Certificate are violated and, hence, the Assessing officer is entitled to hold the view that exemption u/s11 is deniable because the Assessee was not doing any charitable activities. The assessee is bound to prove that donations given were to charitable entities which have objectives which are similar to the objectives of the Assessee. In the absence of proof in this regard the donations given were to charitable entities which have objectives which are similar to be objectives of the Assessee. In the absence of proof in this regard the donations made, even if any, cannot be said to have been applied for charitable purposes. Therefore, the Ld. CIT (A) has erred in allowing the benefit of Section 11 to the Assessee.
2. On the facts & in the circumstances of the case, the Ld. CIT (A) has erred in admitting additional evidence under Rule 46 A of the Income Tax Rules, 1962 particularly when there was a clear history of non-regular attendance during assessment proceedings which were clearly brought on record by the AO and also not disputed by the Assessee.
3. On the facts & in the circumstances of the case, the Ld. CIT (A) has erred in holding that amount of Rs. 50,00,000/- received from Seagrams India Pvt. Ltd., was corpus donation and not general receipt when the same was given without any specific directions as to how it is to be utilized and within what time frame. A substantial question of law Charitable Activity 6 ITA No.1082/DEL/2010 & ITA No.1795/DEL/2010 arises as to whether a donation can be termed as corpus donation or not, specifically, in the absence of any specific direction for utilization of the same including the manner and time from for such utilization.
4. The appellant craves leave for reserving the fright to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal."
4. Briefly stated the facts giving rise to these appeals are that the assessee filed a return accompanied with audit report Form No-10 B, Income Expenditure Accounts, and Balance sheet etc. on 31/10/2006 declaring ' Nil' income.
5. Subsequently, the case was selected for scrutiny as per CBDT Guidelines and a notice under Section 143(2) of the Income Tax Act 1961 (for brevity the Act) was served on the assessee. The Assessing Officer noted that despite of several opportunities to the assessee none-attended the proceedings nor any adjournment letter was filed on behalf of the assessee. The Assessing Officer finalized the assessment under Section 144 of the Act. The Assessing Officer held that the assessee received corpus donation of Rs.50, 00,000/- as shown in the balance-sheet but no evidence was filed during the assessment proceedings to prove that the amount so received was a corpus donation and the Assessing Officer treated the same donation as general receipt. The Assessing Officer also observed that the assessee has 7 ITA No.1082/DEL/2010 & ITA No.1795/DEL/2010 claimed charitable expenses amounting to Rs.2,59,763/- but no evidence has been filed regarding charitable activities therefore, the benefits of Provisions under Section 11& 12 of the Act are not allowable to the assessee. The Assessing Officer completed the assessment at total taxable income of Rs.77, 39,285/-.
6. Being aggrieved by the above assessment order, the assessee filed an appeal before the CIT (A)-XX1 New Delhi which was partly allowed by the impugned order. The CIT (A) held that the said amount of donation of Rs. 50,00,000/- was donated to the corpus of appellant trust and the Assessing Officer Assessing Officer wrongly treated the same as general receipt. The CIT (A) deleted the addition of Rs.50, 00,000/- made by the AO pertaining to the corpus donation. On the other hand, CIT (A) up held the action of AO in taxing the income of the appellant trust as association of persons (AOP). The relevant observations and findings of CIT (A) are being re-produced as under:-
"8. Ground No. 5 to 8 is in respect of the AO's treatment of interest receipt as income, by denying him the benefit of exemption u/s, 11 &12 of the IT Act, and treating him as AOP, as according to him, during the previous year, the Appellant did not carry out any charitable activity. In the Assessment order, the Assessing Officer has held that the assessee has made donations of Rs.60,000/- and Rs.1,99,763/-. In the remand report, the Assessing Officer's comments are only that the said amount has been donated by the assessee to donees who do not have 80 G exemption. The appellant in his 8 ITA No.1082/DEL/2010 & ITA No.1795/DEL/2010 submissions dated 19/01/2010 has contended that the amount so has been donated by the appellant for charitable purpose and the break up of the amount is as under:-
Rs. 10,000/- to Khushii Rs. 50,000/- to Kalyanam Karoti, Meerut Rs. 1,99,763/- towards construction of school at Nasik.
8.1 The appellant has also contended that the Assessing Officer has not disputed the fact of the expenditure being incurred for charitable purpose and the only objection is that the donees do not have exemption under Section 80G.
On examination of the evidences furnished by the appellant in respect of all the three expenses/donations, I find that there is no evidence to indicate that the above persons/institutions are registered u/s 12 A of the IT Act. The AO has also pointed out that no evidence has been furnished as to whether the donees are enjoying 80 G benefits or not. Contribution towards construction of school at Nasik by itself would not qualify as charitable activity as there are no evidence to show that whether the school is for a charitable purpose or a commercial enterprise. Contribution of Rs. 10,000/- to Khushii appears to have been made for a musical entertainment programme and this by itself cannot be considered as charitable activity. There is nothing to show that Kalyanam Karoti, Meerut, to whom a donation of Rs. 50,000/- was made is registered u/s. 12 A of the IT Act or has 80G certificate to clearly establish the donation as application of fund for charitable purposes. The appellant has not brought anything on record to show whether the Appellant Trust/Fund's objects permit such kind of donation, or whether the donations have been made for activities, which are as per the vowed objects & activities of the Appellant Trust. Therefore, I am inclined to agree with the AO that the Appellant trust did not carry out any charitable activities during the previous year and hence, the benefit of exemption u/s. 11 & 12 are not allowable. Therefore, the action of the AO in taxing the income of the appellant trust as AOP is upheld." 9 ITA No.1082/DEL/2010 & ITA No.1795/DEL/2010
7. Being aggrieved by the above findings of CIT (A), the assessee has filed ITA No- 1082/ Delhi/2010, on the grounds as mentioned herein above . The revenue has also filed ITA No- 1795/Delhi/2010 on the ground as re- produced hereinabove.
8. We have heard rival arguments of both the parties and careful perused the records in the light of findings and observations in the assessment order as well as in the impugned order of the CIT (A). At the outset of the arguments the Learned Counsel of the assessee submitted that the assessee went to press only Ground No-3, 5 and 8 and remaining grounds may kindly be treated as not pressed.
9. Hence, Ground Nos.-1, 2, 4, 6, 7, 9 to 16 are dismissed as not pressed by the assessee.
GROUND NO-3
10. Apropos Ground No-3 the counsel of the assessee submitted that once the assessee charitable trust has been granted registration under Section 12A of the Act by following procedure for registration under Section 12AA of the Act then the Assessing Officer has no right to change the status of the assessee from charitable trust to association of persons (AOP) until and unless an order is passed in writing by the appropriate authority cancelling 10 ITA No.1082/DEL/2010 & ITA No.1795/DEL/2010 the registration of such trust and institution. He further submitted that the CIT (A) upheld the action of the AO in this regard on the mis interpretation of the statutory provisions of the Act. Replying to the above submissions the departmental representative submitted that it was the duty of the assessee during the assessment proceedings to show that the assessee trust carried out charitable activities during the year under consideration as per charitable objects of the trust but the assessee could not substantiate the fact that the trust carried out charitable activities during the year under consideration. Therefore, the Assessing Officer rightly assessed the income of the assessee as an AOP instead of a charitable trust.
11. On careful considerations of the above submissions we observed that as per statutory scheme of the act the income of trust and institutions from contributions shall be assessed as per Provisions of Section 11, 12, 13 of the Act. Further, the conditions for applicability of Section 11 and 12 are mentioned in Section 12 A of the Act and procedure for registration is prescribed under Section 12AA of the Act. Section 12AA(3) of the Act provides that:-
"Whether a trust or an institution has been granted registration under clause (b) of sub-section (1) [ or has obtained registration at any time under section 12 A [as it stood before its amendment by the Finance (No.2) Act, 1996 (33 of 1996]]and subsequently the Commissioner is satisfied that the activities of such trust or institution are not genuine or are not 11 ITA No.1082/DEL/2010 & ITA No.1795/DEL/2010 being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution:"
12. As per above Provisions Section 12AA(3) of the Act, if a trust or institution has been granted a registration under Clause(b) of sub Section(1) of Section 12AA of the Act or has obtained registration at any time under Section 12A of the Act ( as it stood before its amendment by Finance (No.2) Act, 1996) and subsequently, if the registration granting authority i.e. the Commissioner is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of trust or institution, then the Commissioner shall pass an order in writing cancelling the registration of such trust or institution after affording a reasonable opportunity of being heard to that institution or trust. In the case in hand, we are unable to see any proceedings of cancellation of registration granted to the assessee, by the competent authority. Therefore, we are inclined to hold that the authorities below has grossly erred in changing the status of the assessee from that of a charitable trust to an association of person (AOP) without following a due process of law as stipulated under Section 12AA(3) of the Act. At the same time we also observed that the authorities below should have brought some incriminating material or evidence to show that the activities of assessee trust were not genuine or 12 ITA No.1082/DEL/2010 & ITA No.1795/DEL/2010 were not being carried out in accordance with the objects of the trust or institution. Accordingly we hold that the CIT (A) grossly erred in confirming the change of status of assessee from that of a charitable trust to an (AOP). Hence, Ground No-3 of the assessee is allowed by holding that the status of the assessee trust would remain a charitable trust till the registration granted to assessee under Section 12A of the Act exists.
GROUND NO- 5 & 8.
13. Apropos Ground No-5 & 8 the counsel of the assessee submitted that the CIT (A) has grossly erred in confirming the findings of the Ld. AO that the appellant trust has not undertaken any charitable activity during the year under consideration. He further submitted that the CIT (A) has totally ignore the fact that the documents produced related to charitable activities undertaken by the appellant during the year under consideration show that there was genuine charitable activities undertaken by the appellant and the appellant claimed expenses of Rs.2, 59,763/- for expenses made for charitable purpose towards donations to Khushii, Kalyanam Karoti, and construction of a school at Nasik, Maharashtra. The counsel of the assessee further submitted that the CIT (A) grossly erred in not appreciating the fact that even otherwise as per trust deed of the assessee trust, the appellant was authorized to undertake aforementioned charitable activities which were 13 ITA No.1082/DEL/2010 & ITA No.1795/DEL/2010 genuine and undertaken for the purpose of charity only. He vehemently contended that the authorities below totally overlooked and ignored the fact that the assessee trust has undertaken charitable activities during the year under consideration and they made a wrong conclusion that the appellant did not undertake any charity activity during the year under consideration.
14. Replying to the above, the departmental representative submitted that the assessee did not appear and submitted the required material and evidence before the Assessing Officer despite the fact that the Assessing Officer provided the assessee a due and reasonable opportunity of hearing. Due to this hostile attitude and conduct of the assessee the Assessing Officer had to finalize the assessment under Section 144 of the Act on the principal of the best judgment. The Ld. DR further submitted that on appeal the assessee did not submit any evidence to indicate that the said beneficiary societies and organizations were registered under Section 12A of the Act and were also enjoying benefit of Section 80G of the Act. The Ld. DR also submitted that the contribution towards construction of school at Nasik, by itself would not qualify as charitable activity as there was no evidence to show that whether the school was for a charitable purpose or a commercial enterprises and the contribution made for a musical entertainment programme by itself cannot be considered a charitable activity. The Ld. DR vehemently contended that 14 ITA No.1082/DEL/2010 & ITA No.1795/DEL/2010 the assessee has not brought anything on record to show whether the objects of the assessee trust permit such kind of donations said to have been made as per avowed objects and activities of the appellant trust as mentioned in the trust deed. The Ld. DR supported the orders of the authorities below and submitted that this appeal of the assessee is devoid of merits.
15. On careful and thoughtful considerations of above rival submissions of both the parties, at the outset we observed that neither the Assessing Officer nor the CIT(A) has either noted or observed any fact that the receipts of the assessee trust were misappropriated, misused or used contrary to the charitable objects of the assessee trust as stipulated in the trust deed. We also observed that the authorities below have not made any allegation that the assessee trust had carried out any activities contrary to its object and misusing the funds of the assessee trust. From the orders of the authorities below, we observe that the Assessing Officer disallowed the claim of expenses amounting to Rs.2, 59,763/- with an observation that no evidence has been filed during the assessment proceeding regarding said charitable activities of the trust. Therefore, the Ld. AO had held that when there were no charitable activities then the benefit of Provisions of Section 11&12 of the Act was not available to the assessee and the Assessing Officer 15 ITA No.1082/DEL/2010 & ITA No.1795/DEL/2010 completed the assessment in the status of the assessee trust as AOP instead of a charitable trust.
16. As we have noted above the apropos Ground No-3, that the status of the assessee trust cannot be changed from charitable trust to AOP until and unless the registration granted to the assessee is cancelled by following the due procedure as mentioned in Section 12AA(3) of the Act. Therefore, at the cost of repeatation we hold that the Assessing Officer was not justified in completing the assessment of the assessee in the status of AOP instead of charitable trust. At the same time we also observe that the Assessing Officer had no occasion to examine the evidence and material of the assessee pertaining to the claim of the charitable expenses amounting to Rs. 2, 59,763/-said to have been made in the head of donation during the year to Khushii, Kalyanam Karoti and towards construction of school at Nasik because neither the assessee nor his representative attendant the assessment proceedings and the AO completed the assessment under Section 144 of the Act. From the impugned order, we observe that the CIT (A) in Para 8 and 8.1 upheld the action of the AO with an observation that there was no evidence to indicate that the above beneficiary institution who received donation from the assessee were registered under Section 12 A of the Act and enjoying the benefits of Section 80G of the Act. The counsel of the 16 ITA No.1082/DEL/2010 & ITA No.1795/DEL/2010 assessee submitted that it is not a pre-condition as per act that the charitable trust or institution should have extended donations or conduct charitable activities only for the persons or institutions which are registered under Section 12A of the Act and enjoying benefits of Section 80G of the Act.
17. In view of the above factual matrix we are inclined to hold that as per provisions of the Act this is not a pre-condition for conducting a charitable activity that the persons or institutions towards which the assessee charitable trust is providing donation and conducting charitable activity should be registered under Section 12A of the Act coupled with entitlement to enjoy benefits of Section 80G of the Act. The Assessing Officer and CIT (A) should have examine the claim of the assessee pertaining expenses and donations towards charitable activities in the light of evidence and material submitted before them with a view that whether the expenses and donations claimed by the assessee were for the charitable purpose and in consonance with the objects and permissible charitable activities of the trust as per trust deed.
18. In the case in hand, the Assessing Officer had no opportunity to examine the charitable activities of the trust because the assessment proceedings were completed under Section 144 of the Act in the absence of assessee and his representative. The CIT (A) denied the claim of the 17 ITA No.1082/DEL/2010 & ITA No.1795/DEL/2010 assessee towards expenses for charitable activities on wrong legal notions without considering the genuineness and purpose of the activities conducted by the assessee during the year under consideration. In this situation, we are of the opinion that the issue claim of expenses towards a charitable activity deserved to be examined by the Assessing Officer de novo after affording due opportunity of hearing to the assessee. Accordingly we restore the issue of the claim of the assessee towards expenses relating to charitable activities during the year under consideration and to the file of the Ld. AO and assessee is directed to submit relevant evidence and material before the Assessing Officer towards his claim for the expenses for charitable activities. The Ground Nos.- 5&8 of the assessee are decided in the manner as indicated above and may be treated as allowed for the statistical purpose. ITA No- 179/Del/ 2010 OF THE REVENUE GROUND NO-1
19. Apropos ground no-1 sole ground of the revenue we have heard rival argument of both the parties and carefully perused the record. The Departmental Representative (DR) submitted that the CIT (A) has erred in ignoring the fact that the registration under Section 12A of the Act granted by DIT(E) on certain terms and conditions which have to be met by the assessee because the registration under Section 12 A of the Act does not 18 ITA No.1082/DEL/2010 & ITA No.1795/DEL/2010 automatically guarantee the exemption from income tax under Section 11 of the Act. The Ld. DR further submitted that the main condition for grant of registration u/s 12A of the Act and entitlement of exemption from tax was that the trust or institution should establish before the Assessing Officer that the activities under taken by the trust are charitable in nature and in accordance with objects of the trust and the assessee is complying with all the conditions of the Act. The Ld. DR also submitted that the registration granted under Section 12A of the Act casts onus on the assessee to prove that the Provisions of Section 2(15) and Section 11 of the Act have been satisfied and there is no contravention of Provisions of Section 13 of the Act by the assessee. The Ld. DR vehemently contended that once it is discovered that the assessee trust has not undertaken any charitable activities then the conditions prescribed in registration certificate are violated and Assessing Officer is entitled to hold that the exemption under Section 11 of the Act is not allowable to the assessee. The DR concluded his submissions with a contention that the assessee is bound to prove that it provided donations to the charitable entities which have similar to the objectives assessee trust and in absence of the same it cannot be said that the assessee trust applied its funds, donations and receipts for charitable purpose as per objects of the assessee trust.
19 ITA No.1082/DEL/2010 &ITA No.1795/DEL/2010
20. Replying to the above the Learned Counsel of the assessee submitted that the authorities below have misinterpreted the Provisions pertaining to the registration, cancellation and exemption from taxes available to the charitable trust and institution. He further submitted that the assessee trust as to show only that the activities carried out by it was charitable, for charitable purpose and were genuinely conducted in accordance with the objects of the trust. The counsel of the assessee further submitted that the Assessing Officer did not examine the evidence pertaining to the claim of expenses towards charitable activities of the trust and the CIT (A) wrongly applied the provisions of the Act in upholding the action of the Assessing Officer and in denying the benefit of Section 11&12 of the Act to the assessee.
21. After careful consideration of the above submissions and considering the result of Ground Nos.-5 & 8 of the assessee's appeal we hold that the authorities below has misinterpreted the Provisions of Section 11 to13 of the Act pertaining to the registration, cancellation of registration and exemptions available to the charitable trust and institution. Since we have restored the issue of allowability of the claim of assessee related to the expenses towards charitable activities conducted by the assessee to the file of Assessing Officer, therefore, the ground no-1as raised by the Revenue becomes 20 ITA No.1082/DEL/2010 & ITA No.1795/DEL/2010 infructuous and we do not find it necessary to decide it on the merits. We also observed that since the Assessing Officer has to decide that whether the assessee trust has conducted in charitable activity during the year under consideration as per and in accordance with its objects as stipulated in the trust deed. This point will also be decided by the Assessing Officer that whether the assessee trust is entitled for benefit of Sections 11&12 of the Act or whether there was any contraventions of provisions of Section 13 of the Act by the assessee during the year under consideration. Accordingly, the ground no-1raised by the revenue is also adjudicated with a direction to the Assessing Officer as indicated above and may be treated as allowed for statistical purpose.
GROUND NO-2 OF THE REVENUE
22. Apropos ground no-2, the Ld. DR submitted that the CIT (A) grossly erred in admitting additional evidence under Rule 46(A) of the Income Tax Rules 1962 particularly when there was a continuous history of none- attendance of assessment and remand proceedings before the Ld. AO. The Ld. DR further submitted that the CIT (A) wrongly admitted the additional evidence against the spirit of the statutory provisions. The Learned Counsel of the assessee vehemently contended above submissions and submitted that the CIT (A) followed due procedure of Rule 46(A) of the Rules for 21 ITA No.1082/DEL/2010 & ITA No.1795/DEL/2010 admission of additional evidence and the assessee was prevented by sufficient cause to furnish the additional evidence before the Assessing Officer because the date of hearing before the Assessing Officer was 09/12/2008 which was indeed declared a public holiday due to the festival of Eid-Ul-Zuha.
23. After careful consideration of the above submissions of both the parties, from the impugned order we observe that the CIT (A) allowed the application of assessee under Rule 46(A) of the Rules and admitted the additional evidence with following observations:-
"5. The Assessing Officer vide his remand report dated 29/09/2009 objected to the additional evidence being taken on record. The Assessing Officer mentioned in Para 2.3 of the remand Report that the case was adjourned for 09/12/2008 and none attended on the date, and the order was passed on 12/12/2008 after allowing sufficient opportunities to the assessee.
5.1 The appellant in response to the remand report filed a Rejoinder dated 19/10/2009, wherein, it once again reiterated that 09/12/2008 was declared as a holiday due to the festival of Eid-Ul-Zuha. The Appellant also furnished a proof (extracted from the internet) of the holiday being declared on the said date. After perusal of the record, I find that 09/12/2008 was indeed declared as a holiday and the appellant could not have attended the hearing. Under the circumstances, in my opinion, the appellant was prevented by sufficient cause to not furnish the evidence before the Assessing Officer, and I, therefore, allow the application filed under Rule 46A of the Income Tax Rules, 1962 and take the additional evidence on record. With this, the grievance of the appellant in ground no-3 is meted out. Thereafter, the 22 ITA No.1082/DEL/2010 & ITA No.1795/DEL/2010 Assessing Officer was directed to furnish his comments to the Additional evidence allowed to be filed."
24. On perusal of above findings and observations of CIT (A) we are unable to see any perversity, ambiguity or any other valid reason to interfere with the above findings. Therefore, we are of the opinion that the CIT (A) decided the issue of admissibility of additional evidence following a due procedure as laid down in Rule 46(A) of the Rules and we hold that the Ground No-2 of the Revenue has no legs to stand on legal footings and deserve to be dismissed and we dismiss the same. GROUND NO-3 OF THE REVENUE
25. Apropos ground no-3 the Ld. DR submitted that the CIT (A) has also erred in holding that the amount of Rs.50,00,000/- received from Seagram India Pvt. Ltd was corpus donation and not a general receipt when the same was given without any specific directions as to how it was to be utilized and within what time frame? The Ld. DR further submitted that in absence of any specific directions for utilization of corpus donation including the manner and specified time frame for such utilization of donation the same cannot be termed as corpus donation. The Ld. DR finally submitted that the findings of the CIT (A) may be set aside by restoring that of the Assessing Officer.
23 ITA No.1082/DEL/2010 &ITA No.1795/DEL/2010
26. The Counsel of the assessee drawn out attention towards page Nos 6, 7&8 of the paper book which shows the minutes of the meeting of the Board of Directors of donor Seagram India Pvt. Ltd held on 6th June 2005 by which it was resolved that a donation of Rs.50,00,000/- to the corpus of the assessee has been approved. The counsel further submitted that the assessment proceedings were completed in absence of assessee and the CIT (A) admitted the additional evidence pertaining to the issue of corpus donation and rightly held that the purpose of donation was confirmed by the donor in the minutes of its meeting and the same could not be treated as general receipt instead of a corpus donation.
27. After careful consideration of above rival submission of both the parties and from perusal of impugned order we observed that the Ld. CIT (A) decided the issue in favour of the assessee with following observations:-
" I have considered the assessment order, submission of the Appellant, Remand Report & Rejoinder thereto. Ground No 1 & 2 are general in nature and require no adjudication. Ground No.3 has already been dealt with in the preceding paragraph (Paragraph 5.1). In respect of ground no.4, upon examining the additional evidence furnished by the appellant along with the application under Rule 46A of the Income Tax Rules, the appellant's contention is found to be correct, that the minutes of the meting of Seagram India Pvt. Ltd. were in fact a part of the additional evidence filed by the appellant. On perusal of the same it is seen that the contribution of Rs.50,00,000/- was made by Seagram India Pvt. Ltd towards 24 ITA No.1082/DEL/2010 & ITA No.1795/DEL/2010 Corpus of the Appellant Trust and the amount has been received from Seagram Pvt. Ltd. by an account payee cheque and duly reflected by the appellant. Thus, the observation of the Assessing Officer that the said amount should be treated as a general receipt, is not maintainable, and I hold the said amount to be donation to the Corpus of the Appellant Trust, and delete the addition of Rs.50,00,000/-. Thus, ground no-4 taken up by the Appellant is allowed."
28. From the above observations and findings of the Ld CIT (A), we hold that the assessee was prevented due to sufficient reason for submitting relevant evidence before the Assessing Officer and the same was submitted before the Ld CIT (A) as additional evidence. As we have already held hereinabove that the CIT (A) allowed and admitted the additional evidence of the assessee by properly following due procedure as laid down under Rule 46A of the Rules. Furthermore, the Ld. CIT (A) after examination of additional evidence held that the donation of Rs.50,00,000/- made by Seagram India Pvt. Ltd was a corpus donation for the appellant trust and the same could not be treated as general receipt and the findings of the Assessing Officer were set aside by holding that the said amount was a donation to the corpus of appellant trust. In view of above and in the light of minutes of the meeting of the donor Seagram India Pvt. Ltd available on Page 6 & 7 of the paper book, we hold that the donor contributed Rs.50,00,000/- to the assessee trust as corpus donation for specific purposes and objects. We have no reason to interfere with 25 ITA No.1082/DEL/2010 & ITA No.1795/DEL/2010 the above findings of the CIT (A) and we upheld the same by disallowing ground no-3 of the revenue.
GROUND NO-4 OF THE REVENUE
29. Ground no-4 of the revenue is of general in nature which needs no adjudication and we also dismiss the same.
30. Resultantly, the ground no-3 of the assessee is allowed, ground no-5 & 8 of the assessee & ground no-1 of the revenue is restored to the file of the Assessing Officer as indicated above and may be treated as allowed for the statistical purposes. Ground No-2,3 & 4 of the revenue are dismissed.
31. In the net result, the appeals of the assessee as well as of the revenue are partly allowed with the directions to the Assessing Officer as mentioned hereinabove and may be treated as allowed for the statistical purpose.
Order pronounced in open court on 26th /03/ 2013.
Sd/- Sd/- (J. S. Reddy ) (C. M. Garg) Account Member Judicial Member Dated the 26th day of March, 2013 R. Naheed 26 ITA No.1082/DEL/2010 & ITA No.1795/DEL/2010 Copy forwarded to 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. CIT(ITAT), New Delhi. AR,ITAT NEW DELHI.