Income Tax Appellate Tribunal - Chennai
Veeravel Trust,, Tiruchengode vs Ito, Exemption Ward, , Salem on 22 July, 2021
आयकर अपील य अ धकरण,'सी' यायपीठ, चे नई
IN THE INCOME TAX APPELLATE TRIBUNAL , 'C' BENCH, CHENNAI
ी धु वु आर.एल रे डी, या यक सद!य एवं ी जी.मंजुनाथ, लेखा सद!य के सम'
BEFORE SHRI DUVVURU RL REDDY, JUDICIAL MEMBER
AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER
आयकरअपीलसं./I.T. A.No.2064/Chny/2019
( नधारणवष / Assessm ent Year: 2014-15)
Veeravel Trust Vs The Income Tax Officer,
18, Veeraraghavar Street, Exemption Ward.
Tiruchengode-637 211. Salem.
PAN: AABTV 7506R
(अपीलाथ /Appellant) ( यथ /Respondent)
अपीलाथ क ओरसे/ Appellant by : Mr.T.Banusekar, CA
यथ क ओरसे/Respondentby : Mr. G.Johnson, Addl.CIT
सुनवाईक तार ख/Da t e of h ear in g : 24.06.2021
घोषणाक तार ख /D at e of Pr on o unc e m en t : 22.07.2021
आदे श / O R D E R
PER G.MANJUNATHA, AM:
This appeal filed by the assessee is directed against order of the learned CIT(A), Salem dated 12.03.2019 and pertains to assessment year 2014-15.
2. The assessee has raised following grounds of appeal:-
1. For that the order of the Commissioner of Income Tax (Appeals) is contrary to law facts and circumstances of the case to the extent prejudicial to the interest of the appellant and at any rate is opposed to the principles of equity, natural justice and fair play.2 ITA No.2064/Chny/2019
2. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the total receipts of Rs.55,82,6001- as 'Building Fund' was received for a specific purpose being construction of community building.
3. For that the Commissioner of Income Tax (Appeals) failed to appreciate that funds received for construction of community building is a capital receipt and hence cannot be treated as income of the appellant.
4. For that the appellant objects to the levy of interest u/s.234A, 234B and 234C."
3. At the outset, learned AR for the assessee submitted that appeal filed by the assessee is time barred by 37 days for which necessary petition for condonation of delay along with affidavit explaining the reasons for the delay has been filed. The AR further submitted that the assessee could not file appeal within the time allowed under the Act, due to the fact that there was change in counsel for the assessee. Hence, the delay in filing appeal is neither intentional nor willful, but for unavoidable reasons, therefore, delay may be condoned in the interest of advancement of substantial justice.
4. The learned DR, on the other hand, strongly opposing condonation of delay petition filed by the assessee submitted 3 ITA No.2064/Chny/2019 that the reasons given by the assessee do not come within the ambit of reasonable and bonafide reasons, which can be considered for condonation of delay and hence, appeal filed by the assessee may be dismissed as not maintainable.
5. Having heard both sides and considered the petition filed by the assessee for condonation of delay, we are of the considered view that reasons given by the assessee for not filing the appeal within the time allowed under the Act comes under reasonable cause as provided under the Act for condonation of delay and hence, delay in filing of appeal is condoned and admitted for adjudication.
6. Brief facts of the case are that the assessee is a public charitable and religious trust registered under the Indian Trust Act, 1882, has filed its return of income for assessment year 2014-15 declaring total income of Rs. Nil. The return of income filed by the assessee has been processed u/s.143(1) of the Income Tax Act, 1961, by CPC, Bengaluru and determined total income of Rs.55,82,600/- by making additions towards disallowance of donations received amounting to 4 ITA No.2064/Chny/2019 Rs.55,82,600/-. The assessee has filed appeal against intimation issued u/s.143(1) of the Act, before the first appellate authority and contended that while processing return u/s.143(1) of the Act, only prima-facie adjustments can be made, however, no addition can be made for disallowance of corpus donations. The assessee further contended that corpus donations received by any trust or institution is excluded from the income derived from property held under the trust u/s. 11(1)(d) of the Act and hence, even though trust is not registered u/s.12AA of the Act, corpus donations cannot be included in the income of the trust. The learned CIT(A), for the reasons stated in his appellate order dated 12.03.2019 rejected contention of the assessee and held that conditions precedent for claiming exemption u/s.11 of the Act is registration of trust u/s.12A of the Act and hence, in the absence of registration of trust u/s.12A, exemption claimed towards corpus donations cannot be allowed . Therefore, he opined that there is no error in adjustments made towards corpus donations while processing return u/s.143(1) of the Act. The learned CIT(A) has taken support from the decision of Hon'ble Supreme Court in the case of M/s. U.P.Forest Corporation & Another vs. DCIT in Civil 5 ITA No.2064/Chny/2019 appeal No.9432 of 2003 dated 27.11.2007. Aggrieved by the learned CIT(A) order, the assessee is in appeal before us.
7. The learned A.R for the assessee submitted that the learned CIT(A) has erred in confirming additions made towards disallowance of corpus donations, without appreciating fact that donations have been received for specific purpose and such donations have been utilized for the purpose it was received . He further referring to certain judicial precedents, including the decision of ITAT., Mumbai in the case of Chandraprabhu Jain Swetamber Mandir Vs. ACIT (2016) 50 ITR (Trib) 0355(Mum), submitted that corpus donations received by the trust which was not registered u/s.12A are not taxable, because they assume nature of capital receipt and hence, it is outside scope of income. The AR for the assessee referring to financial statement of the assessee submitted that the assessee has received donations to the specific purpose of construction of building and said donation has been used for construction of building, therefore, same is outside the scope of income of the trust. The AR further relied on the following decisions:-
1. Shree Jain Swetamber Deharshar Upshraya Trust 6 ITA No.2064/Chny/2019 C/o. Anoopchandji Karnava Vs. ACIT (2017) 4 TMI-765 (Mum)
2. ITO Vs.Serum Institute of India Research Foundation (2018) 169 ITD 271(Pune)
3. Bank of India Retired Employees Medical Assistance Trust Vs. ITO(Exemption) 2018 172 ITD 78(Mum)
4. Chandraprabhu Jain Sweatamber MandirVs.ACIT (2016) 50 ITR (Trib) 0355 (Mum)
8. The learned DR, on the other hand, strongly supporting order of the learned CIT(A), submitted that conditions precedent for claiming exemption u/s.11 is registration of trust u/s.12AA of the Act, and hence, in absence of registration of trust u/s. 12AA of the Act, no exemption could be given to corpus donations.
9. We have heard both the parties, perused material available on record and gone through orders of the authorities below. The definition of income as defined u/s.2 of sub-section (24) includes voluntary contribution received by any trust created wholly or partly for charitable or religious purpose. This means, for any assessee, including trust or institution voluntary contribution is income. The provisions of section 11, 12A & 12AA, deals with taxation of trust or institution. The 7 ITA No.2064/Chny/2019 income of any trust or institution is exempt from tax with certain conditions. The provisions of section 11(1)(d) of the Act excludes voluntary contributions received by trust, with a specific direction that they shall form part of corpus of trust or institution. Similarly, provisions of section 12 also states that any voluntary contribution received by a trust or institution, excluding contributions with a specific direction shall for the purpose of section 11 be deemed to be income derived from property held under trust. Further, provisions of section 12A states that provisions of section 11 & 12 shall not apply in relation to income of any trust or institution, unless such trust or institution fulfill certain conditions. As per said section one of the conditions for claiming benefit of exemption u/s. 11 & 12 of the Act is registration of trust under sub-section (aa) of the Act . From conjoint reading of the above provisions, it is very clear that income of any trust including voluntary contributions received with a specific direction is not includable in the total income of the trust, if such trust is registered u/s.12A / 12AA of the Income Tax Act, 1961. In other words, conditions precedent for claiming exemption u/s.11 including for voluntary contributions is registration of trust u/s.12A of the 8 ITA No.2064/Chny/2019 Income Tax Act, 1961. This principle is supported by the decision of the Hon'ble Supreme Court in the case of M/s. U.P.Forest Corporation & Another vs. DCIT (supra), where the Hon'ble Supreme Court has very clearly held that a conjoint reading of section 11, 12 & 12A makes it clear that registration u/s.12A is a condition precedent for availing benefit u/s.11 & 12 of the Act. Unless and until an institution is registered u/s.12A of the Act, it cannot claim benefit of section 11 & 12 of the Act. In this case, trust is not registered u/s.12A / 12AA of the Income Tax Act, 1961. Therefore, we are of the considered view that corpus donations received by the trust with a specific direction that they form part of corpus of the trust falls within ambit of income of a trust derived from property held under trust and hence, includable in total income of the trust.
10. Insofar as various case laws relied upon by the assessee, we find that although the assessee has relied upon four case laws of various benches of this Tribunal, we find that none of the Tribunal has considered the ratio laid down by the Hon'ble Supreme Court in the case of M/s. U.P.Forest Corporation & Another vs. DCIT(supra), while deciding the 9 ITA No.2064/Chny/2019 issue and hence, we are of the considered view that those case laws are not applicable to the facts of the present case.
11. In this view of the matter and considering facts and circumstances of the case, we are of the considered view that voluntary contribution received by the trust with a specific direction that they form part of corpus of the trust is income of the trust within the meaning of section 11 & 12 of the Income Tax Act, 1961. Therefore, we are of the considered view that there is no error in the findings recorded by the learned CIT(A) to confirm additions made by the Assessing Officer towards disallowance of corpus donations. Hence, we are inclined to uphold findings of the learned CIT(A) and dismiss appeal filed by the assessee.
12. In the result, appeal filed by the assessee is dismissed.
Order pronounced in the open court on 22nd July, 2021 Sd/- Sd/-
(धु वु आर.एल रे डी) (जी. मंजुनाथ)
(Duvvuru RL Reddy) (G.Manjunatha)
"या यक सद$य /Judicial Member लेखा सद$य / Accountant Member
चे"नई/Chennai,
'दनांक/Dated 22nd July, 2021
DS
आदे श क त)ल*प अ+े*षत/Copy to:
1. Appellant 2. Respondent 3. आयकर आयु,त (अपील)/CIT(A)
4. आयकर आय,
ु त/CIT 5. *वभागीय त न1ध/DR 6. गाड फाईल/GF.