Income Tax Appellate Tribunal - Ahmedabad
Shri Gujarat Bhavsar Samaj,, Ahmedabad vs The Income Tax Officer (Exemption), ... on 28 June, 2019
आयकर अपील य अ धकरण, अहमदाबाद यायपीठ 'A' अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL "A" BENCH, AHMEDABAD BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER आयकर अपील सं./I.T.A. No. 1175/Ahd/2017 ( नधा रण वष / Assessment Year : 2013-14) Shri Gujarat Bhavsar बनाम/ ITO (Exemption) Samaj Vs. WD-2, 1, Bhavsar chatralay, Ahmedabad D.P. School, New Wadaj, Ahmedabad- 380013 थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. : AAC TS0 636 G (अपीलाथ /Appellant) .. ( यथ / Respondent) अपीलाथ ओर से /Appellant by : Shri Bandish Soparkar, AR यथ क ओर से / Respondent Shri S. K. Dev, Sr. DR by :
सन ु वाई क तार ख / Date of 27/06/2019 Hearing घोषणा क तार ख /Date of 28/06/2019 Pronouncement आदे श/O R D E R PER SUDHANSHU SRIVASTAVA - JM:
This appeal is filed by the assessee against order dated
02.03.2017 passed by the Ld. Commissioner of Income Tax (Appeals)-9, Ahmedabad (hereinafter called the 'CIT(A)') and pertains to assessment year 2013-14.
2.0 The brief facts of the case are that the assessee is a trust and is registered under Sec. 12A of the Income Tax Act, 1961 (hereinafter I T A N o . 1 1 7 5 / Ah d / 2 0 1 7 [ S h r i Gu j a r a t B h a v s a r S a m a j v s . I T O ] A. Y . 2 0 1 3 - 1 4 - 2 -
called 'the Act') vide approval dated 04.02.1993. The trust is also registered under Sec. 80G (5) of the Act vide approval dated 02.11.2007. As per the objects of the trust, the main object of the trust is to provide building for post funeral activity and also provide accommodation to persons coming to Ahmedabad for medical treatment.
2.1 The return of income was filed for the relevant assessment year declaring total income at NIL. The case was selected for scrutiny and during the course of assessment proceedings, the AO observed that the assessee trust had received Rs. 47,50,000/- towards "Girls Chhatralaya Construction Fund" which the assessee had treated as corpus donation received during the year. The assessee trust was required to furnish the name and address of the donor and the directions, if any, issued by the donor so as to treat the donations of Rs. 47,50,000/- as corpus donation. It was submitted by the assessee trust that the assessee trust had received donation of Rs. 50,00,000/- from Shri Natubhai Bhavsar who was a non-resident Indian residing in United States of America. It was further submitted that the donation had been received through M/s. Helena Kaushik Women's College, Malsisar, Jhunjhunu, Rajasthan and the amount of donation was directly credited in the bank account of the assessee trust from the said M/s. Helena Kaushik Women's College. The AO took the view that there were no I T A N o . 1 1 7 5 / Ah d / 2 0 1 7 [ S h r i Gu j a r a t B h a v s a r S a m a j v s . I T O ] A. Y . 2 0 1 3 - 1 4 - 3 -
specific directions from the donor to apply the donation towards a particular cause and, therefore, the donation could not be treated as corpus donation. Since the amount of the donation had been taken directly to the balance sheet without routing it through the income and expenditure account, the donation was treated as regular income of the assessee. Consequently, an addition of Rs. 47,50,000/- was made.
2.2 The assessee took the matter before the Ld. First Appellate Authority and the assessee requested the Ld. CIT (A) to admit additional evidences to verify the fact that the donation received by the assessee trust was a corpus donation. It was submitted before the Ld. CIT (A) that Mr. Natubhai Bhavsar was desirous of making donation for the purpose of establishing Babuben Prahladji Bhavsar Woman Education Hostel through the assessee trust and he had approached the secretary of the assessee trust for the same. The trust had informed Mr. Natubhai Bhavsar that it had no approval of receive foreign funds and, therefore, Mr. Natubhai had approached the trustee of Helena Kaushik Education Foundation at USA for necessary guidance to remit the funds in India to the trust for the purpose for establishing the hostel for women's education. It was further submitted that the trustee of Helena Kaushik Education Foundation had informed Mr. Natubhai Bhavsar that Helena Kaushik I T A N o . 1 1 7 5 / Ah d / 2 0 1 7 [ S h r i Gu j a r a t B h a v s a r S a m a j v s . I T O ] A. Y . 2 0 1 3 - 1 4 - 4 -
Education Foundation could help in receiving donation in USA and in sending the fund to M/s. Helena Kaushik Women's College at Rajasthan as it was having the necessary permission to receive foreign funds and which in turn could be transferred to the assessee trust through banking channels. The assessee also submitted various correspondence/s in this regard before the Ld. CIT (A) and submitted that in view of the correspondence/s the foreign funds which were transferred to the assessee trust through M/s Helena Kaushik Women's College of Rajasthan, a direct link was established and in view thereof the donation received by the assessee trust was a corpus donation as specific direction was expressed in the correspondences which were now submitted before the Ld. CIT (A). It was also submitted that Mrs. Janet, who was corresponding along with Mr. Natubhai was the wife of Mr. Natubhai Bhavsar and, therefore, both of them were working in tandem to ensure that the funds were transferred to the assessee trust. However, the Ld. CIT (A) did not accept the assessee's contention and dismissed the assessee's appeal by holding that the AO was right in denying the benefit of Sec. 11(1)(d) of the Act and adding the same to the income of the assessee.
2.3 Now, the assessee is before this Tribunal (ITAT) and has challenged the order of the Ld. CIT (A) by raising in the following grounds of appeal:-
I T A N o . 1 1 7 5 / Ah d / 2 0 1 7 [ S h r i Gu j a r a t B h a v s a r S a m a j v s . I T O ] A. Y . 2 0 1 3 - 1 4 - 5 -
"1. The learned AO has erred in law and on facts in treating the amount of Rs. 47,50,000/- received as donation for "Girls Chhatralaya Construction" being corpus donation as "General Donation" and Ld. CIT(A)-9, Ahmedabad has erred in confirming the addition even though the purpose of the donation was fully explained to him that the donation received by the appellant trust was corpus donation with reference to the e-mail correspondence of the NRI donor.
2. The Ld. CIT(A)-9, Ahmedabad, while confirming the addition, has erred both in law and on facts in not giving any direction to AO to grant deduction on account of the amount applied for the object of the trust i.e. "construction of Girls Chhatralaya" which is evident from the audit report for the year under consideration."
3.0 The Ld. Authorised Representative (AR) reiterated the submissions as were made before the Ld. CIT (A). He drew our attention to the copies of e-mails placed in the paper book and highlighted the fact that it was implicit in the said e-mails that the donation was being made for the purpose of building a girls' hostel. It was prayed that the assessee's appeal be allowed. 4.0 In response, the Ld. Sr. DR placed extensive reliance on the findings and observations of the Ld. CIT (A) as well as that of the AO and submitted that the addition had been rightly confirmed by the Ld. CIT (A).
5.0 We have heard the rival submissions and have also perused the material on record. The only issue before us for consideration is whether the amount of Rs. 47,50,000/- received by the assessee trust from Helena Kaushik Women's College, Jhunjhunu, Rajasthan can be considered to be corpus donation in the hands of the assessee trust. Admittedly, and undisputedly, the aforesaid amount was not I T A N o . 1 1 7 5 / Ah d / 2 0 1 7 [ S h r i Gu j a r a t B h a v s a r S a m a j v s . I T O ] A. Y . 2 0 1 3 - 1 4 - 6 -
directly received by the assessee trust from the donor Shri Natubhai Bhavsar but was routed through Helena Kaushik Women's College, Jhunjhunu, Rajasthan. It is plea of the assessee that the amount was not directly sent to the assessee trust by Shri Natubhai Bhavsar because the assessee trust did not have the required permission to receive foreign donations and Helena Kaushik Women's College, Jhunjhunu, Rajasthan had the requisite approval and, therefore, the funds were routed through it. It is seen that the sole ground for the AO to make the addition was that the intention of the donor, while giving the donation, was not a specific and, therefore, in absence of specific directions it could not be said that it was in the form of corpus donation. Although, the assessee could not furnish required evidences before the AO, evidences in the in the form of E-mails were filed before the Ld. CIT (A) and these E-mails are dated December 2011 onwards. Copies of these E-mails have been placed in the Paper Book filed by the assessee and it has been mentioned in these E-mails that the donor Mr. Natubhai Bhavsar and his wife Janet have, through the good offices of M/s Helena Kaushik Women's College, transferred the amount for the purpose of furtherance of construction of Girls Hostel by the assessee trust that is Shri Gujarat Bhavsar Samaj. Most of the E-mails have jointly been sent by Mr. Natubhai Bhavsar and his wife Janet. It is also undisputed that the amount of deduction had been transferred by I T A N o . 1 1 7 5 / Ah d / 2 0 1 7 [ S h r i Gu j a r a t B h a v s a r S a m a j v s . I T O ] A. Y . 2 0 1 3 - 1 4 - 7 -
M/s Helena Kaushik Women's College to the assessee trust through banking channels. We have also perused the remand report of the AO which also states that no further verification was required in this regard. Therefore, in view of the peculiar facts of this case, it is our considered opinion that in substance the requirement for a specific direction with regard to the corpus donation stands fulfilled by the various E-mails emanating from Mr. Natubhai Bhavsar and Mrs. Janet and, therefore, the assessee should be granted the benefit of the impugned amount being treated as corpus donation. Accordingly, accepting the contentions of the Ld. AR, we allow the grounds raised by the assessee and direct the AO to treat the impugned donation as corpus donation.
6. In the final result, the appeal of the assessee stands allowed.
This Order pronounced in Open Court on 28 /06/2019
Sd/- Sd/-
(AMARJIT SINGH) (SUDHANSHU SRIVASTAVA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad: Dated 28/06/2019
TANMAY TRUE COPY
आदे श क त!ल"प अ#े"षत / Copy of Order Forwarded to:-
1. राज व / Revenue
2. आवेदक / Assessee
3. संबं*धत आयकर आय,
ु त / Concerned CIT
4. आयकर आयु,त- अपील / CIT (A)
5. 0वभागीय 3त3न*ध, आयकर अपील य अ*धकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड9 फाइल / Guard file. By order/आदे श से, उप/सहायक पंजीकार आयकर अपील य अ*धकरण, अहमदाबाद ।