Seva Home Ayurvedic Charitable Trust, Mathura v. CIT-1, Agra

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH AGRA BEFORE SHRI P.K. BANSAL ACCOUNTANT MEMBER AND SHRI H.S. SIDHU JUDICIAL MEMBER ITA NO.239/AGR/2009 SEVA HOME AYURVEDIC CHARITABLE TRUST VS. COMMISSI ONER OF INCOME TAX-I 1184 KAMPOO GHAT AGRA. SHRI SWAMI NARAYAN MANDIR MATHURA. (PAN : AAFTS 3590 N). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VED PRAKASH SHARMA SECRETARY. RESPONDENT BY : SHRI VINOD KUMAR JR. D.R. ORDER PER P.K. BANSAL A.M.: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT-I DATED 09.04.2009 NOT APPROVING THE ASSESSEE TRUST UNDER SECTION 80G OF THE INCOME-TAX ACT 1961 (THE ACT HEREINAFTER) SATING THEREIN THAT THE ASSESSEE TRUST COULD NOT PROVE THE GENUINENESS OF ITS OBJECTS. THE REASONS GIVEN FOR THE SAME IS THAT THE DONORS S HRI OM PRAKASH SHARMA SHRI VED PRAKASH SHARMA AND SMT. NEELIMA SHARMA WHO HAS DONATED THE FOLLOWING SUMS IN CASH HAVE NOT WITHDRAWN THESE AMOUNTS OUT OF THEIR BANK ACCOUNTS :- DR. OMPRAKASH SHARMA (ANUDHAN RAASHI NAGAD) S.NO . YEAR ANUDHAN RAASHI DATE 1. 2005-06 11 000/- 27.04.2005 2. 2006-07 5200/- 26.02.2007 3. 2007-08 3100/- 22.06.2007 4. 2008-09 3100/- 31.07.2008 2 DR. OMPRAKASH SHARMA (SAHAYATA SHRAN RAASHI NAGAD) 1. 2005-06 5000/- 20.10.2005 2. 2005-06 5000/- 10.12.2005 3. 2005-06 5000/- 26.12.2005 DR. VEDPRAKASH SHARMA (ANUDHAN RAASHI NAGAD) 1. 2005-06 11 000/- 27.04.2005 2. 2006-07 5200/- 12.06.2006 3. 2007-08 3100/- 03.05.2007 4. 2008-09 5100/- 01.09.2008 DR. VEDPRAKASH SHARMA (SAHAYATA SHRAN RAASHI NAGAD) 1. 2005-06 5000/- 13.02.2006 2. 2005-06 2000/- 20.03.2006 DR. NEELIMA SHARMA (ANUDHAN RAASHI NAGAD) 1. 2005-06 5000/- 27.04.2005 2. 2006-07 4120/- 28.04.2006 3. 2007-08 3100/- 22.05.2007 4. 2008-09 3100/- 07.06.2008 DR. NEELIMA SHARMA (SAHAYATA SHRAN RAASHI NAGAD) 1. 2005-06 5 000/- 21.10.2005 2. 2006-07 5 000/- 31.12.2005 3. 2007-08 1500/- 04.01.2006 4. 2008-09 5000/- 18.01.2006 2. THEREFORE HE TOOK THE VIEW THAT THE SOURCES OF AFORESAID AMOUNT GIVEN TO THE ASSESSEE TRUST IS NOT PROVED. IN ADDITION TO THIS THE CIT( A) MENTIONED THAT 5 OF THE DONORS OUT OF THE DONORS LIST FOR THE PERIOD 01.04.2008 TO 31.12.200 8 HAVE NOT SENT CONFIRMATORY LETTER IN REPLY TO THE VERIFICATION LETTER ISSUED TO THEM. THESE DONO RS HAVE DONATED RS.3 100/- OR MORE TO THE TRUST.. 3 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERED THE SAME AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEE IS A CHARITABLE T RUST REGISTERED UNDER SECTION 12AA OF THE ACT WITH THE CIT-I AGRA VIDE ORDER DATED 12.08.2008 AT FILE NO.CIT-1/TECH/12AA(S- 557)/MATHURA/2006-07/2091 IN CONSEQUENCE OF THE ORD ER OF THIS TRIBUNAL DATED 15.10.2007. THE TRUST WAS ALSO APPROVED UNDER SECTION 80G VIDE LETT ER DATED 12.08.2008 BY THE CIT-I AGRA AT FILE NO. CIT-1/TECH/58-59(S-557)80G/MATHURA/2006-07 /2091. AN APPLICATION FOR THE RENEWAL OF APPROVAL UNDER SECTION 80G(5)(VI) WAS FILED FOR THE ASSESSMENT YEAR 2009-10 AND ONWARDS VIDE LETTER DATED 22.09.2008 ALONG WITH NECESSARY DETAIL S CONSISTING OF THE COPY OF REGISTRATION CERTIFICATE UNDER SECTION 12A COPY OF APPROVAL UND ER SECTION 80G AS WELL AS COPY OF THE INCOME TAX RETURN FOR THE ASSESSMENT YEAR 2005-06 AND ONWA RDS ALONG WITH VARIOUS DETAILS. THE INFORMATION AS DESIRED BY THE CIT WERE ALSO AGAIN F ILED ON 05.05.2009. THE CIT SIMPLY REJECTED THE APPLICATION OF THE ASSESSEE UNDER SECTION 80G(5 )(VI) ON THE GROUND THAT THE ASSESSEE TRUST COULD NOT PROVE THE SOURCES OF THE FUNDS DONATED AN D LET OUT TO THE TRUST BY 3 PERSONS NAMELY SHRI OM PRAKASH SHARMA SHRI VED PRAKASH SHARMA AND SMT. NEELIMA SHARMA AS DETAILED ABOVE AND ALSO ON THE BASIS OF THAT OUT OF THE VARIOUS D ONATIONS 5 DONORS DID NOT REPLY TO THE VERIFICATION LETTER ISSUED BY THE DEPARTMENT OUT OF THE LIST OF THE DONATIONS RECEIVED BY THE ASSESSEE DURING 01.04.2008 TO 31.12.2008. ON THAT BASIS THE CIT CAME TO THE CONCLUSION THAT THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF THE OBJ ECTS OF THE SOCIETIES. IN OUR OPINION IF THE DONORS HAVE GIVEN CASH DONATIONS AND IF THEY HAVE N OT SHOWN THE WITHDRAWAL FROM THEIR BANKS THE ASSESSEE TRUST IS NOT REQUIRED TO PROVE THE SOU RCE OF SOURCES AT THIS MOMENT. EVEN IF SOME OF THE DONORS HAVE NOT REPLIED TO THE VERIFICATION CAR RIED OUT FROM THE DONORS WILL NOT MAKE THE OBJECTS OF THE TRUST TO BE NON-GENUINE. THE ASSESS EE HAS FILED INCOME TAX RETURN REGULARLY. THESE ARE THE MATTERS WHICH ARE TO BE LOOKED INTO B Y THE ASSESSING OFFICER DURING THE COURSE OF 4 ASSESSMENT PROCEEDINGS AND THESE CANNOT IN OUR OPI NION MAKE THE OBJECTS AND ACTIVITIES OF THE TRUST TO BE NON-GENUINE. THERE IS NO EVIDENCE OR M ATERIAL BEING BROUGHT ON RECORD WHICH MAY PROVE THAT THE ASSESSEE TRUST IS NOT CARRYING ON CH ARITABLE ACTIVITIES. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF N N DESAI CHARITABLE TRUST VS . CIT 246 ITR 0452 (GUJ.) WHILE DEALING WITH SIMILAR ISSUE HAS HELD AS UNDER :- THE ELIGIBILITY OF THE DONATION FOR DEDUCTION HAS TO BE CONSIDERED WITH REFERENCE TO THE POINT OF TIME AT WHICH DONATION IS MADE AND NOT WITH RESPECT TO THE TIME IN FUTURE DEPENDING ON ASSESSMENTS OF THE DONEE. THAT IS WHERE THE USE OF THE VERB IN FUTURE TENSE 'WOULD' HAS BEEN USED A ND NOT IN PRESENT OR PAST PERFECT TENSE SO AS TO TAKE INTO CONSIDERATION THE ACTUAL INCLUSION OR EXCLUSION OR THE EXTENT OF INCLUSION OR EXCLUSION. THE DIRECT N EXUS OF CLAUSE (I) OF SUB-SECTION (5) OF SECTION 80G AS APPEARS TO US IS TO THE ELI GIBILITY OF THE INSTITUTION OR THE FUND TO CLAIM THAT ITS INCOME IS NOT LIABLE TO BE I NCLUDED IN THE COMPUTATION OF THE TOTAL INCOME. THE TWO ARE DIFFERENT CONCEPTS. FIR ST WHETHER AN INSTITUTION OR FUND IS SUCH WHOSE INCOME IS NOT LIABLE TO BE INCLU DED IN THE COMPUTATION OF THE TOTAL INCOME DEPENDS ON ITS STATUS OR CHARACTER. T HE SECOND IS THE ACTUAL ASSESSMENT OF INCOME WHICH NECESSARILY TAKES PLACE IN FUTURE AFTER DONATION IS RECEIVED BY THE DONEE ON FULFILLMENT OF OTHER CONDI TIONS ABOUT APPLICATION OF INCOME BY THE ELIGIBLE TRUSTS WHICH IN THE VERY NA TURE OF THINGS CAN OPERATE ONLY AFTER RECEIPT OF INCOME. THE ACTUAL EXTENT OF EXCL USION FROM OR INCLUSION IN THE COMPUTATION OF THE TOTAL INCOME THE RECEIPTS OF SU CH INSTITUTION OR FUND DEPENDS ON FULFILLMENT OF OTHER CONDITIONS WHICH MAYOR MAY NOT EXIST AT THE CLOSE OF THE YEAR AND HAS NO DIRECT RELATION TO THE PURPOSE WITH WHICH THE PROVISION IS MADE. THE LATTE FALLS IN THE REALM OF THE ASSESSMENT OF T HE TRUST INSTITUTION OR FUND WHICH DERIVES INCOME WHICH IS NOT ORDINARILY INCLUDIBLE I N ITS TOTAL INCOME. THE LIABILITY TO ASSESSMENT IS NOT AFFECTED BY ISSUANCE OF RECOGN ITION CERTIFICATE OR APPROVAL CERTIFICATE ISSUED UNDER CLAUSE (VI) OF SUB-SECTION (5) OF SECTION 80G NOR IT DEPENDS UPON THE FACT WHETHER THE DONOR ULTIMATELY GETS DEDUCTION IN RESPECT OF SUCH DONATION. IT MAY BE RELEVANT TO TAKE COGNIZAN CE THAT ALL DONATIONS ARE NOT IN THEIR ENTIRETY ELIGIBLE FOR DEDUCTION. THERE EXIST S A MAXIMUM LIMIT ALSO FOR SUCH ELIGIBILITY AND DONATIONS BEYOND SUCH LIMIT BY A PE RSON MAY NOT GET DEDUCTION EVEN IF IT IS TO AN APPROVED INSTITUTION UNDER SECT ION 80G. LIKEWISE ACTUAL INCLUSION OF ANY INCOME IN THE ASSESSMENT OF THE DO NEE IS TAXABLE INCOME DOES NOT AFFECT THE ENTITLEMENT OF THE DONOR TO CLAIM DEDUCT ION UNDER SECTION 80G IF ON THE DATE WHEN HE MADE THE DONATION THE CONDITIONS WERE FULFILLED. THAT WAS THE LAW BEFORE THE INSERTION OF CLAUSE (VI) AND APART FROM THE FACT THAT BY INTRODUCING CLAUSE (VI) WITH RULE 11AA A METHOD OF PROVING THE ELIGIBILITY TO CLAIM DEDUCTION HAS BEEN PROVIDED BY THE STATUTE THERE HAS BEEN NO ALTERATION IN THE SUBSTANTIVE 5 PROVISION THAT IS TO SAY ENTITLEMENT OF THE DONOR TO CLAIM DEDUCTION DEPENDS ON THE ELIGIBILITY OF THE DONEE TO CLAIM EXEMPTION OF ITS INCOME ON THE DATE WHEN DONATION IS MADE. EXAMINING FROM THIS ANGLE WE FIN D THAT FOR APPLICABILITY OF SECTIONS 11 AND 12 WHAT IS REQUIRED IS THAT SUCH T RUST MUST HAVE MOVED AN APPLICATION FOR REGISTRATION UNDER SECTION 12A AND REGISTERED FOR THAT PURPOSE. ONCE A TRUST IS REGISTERED UNDER SECTION 12A ITS I NCOME FROM PROPERTY WHICH INCLUDES DONATIONS WHETHER COVERED UNDER SECTION 11 (1)(D) OR UNDER SECTION 12 SUCH DONATIONS ARE DEEMED TO BE INCOME FROM PROPERT Y IS NOT TO BE INCLUDED IN ITS TOTAL INCOME UNDER SECTION 11 OR SECTION 12. THE E NQUIRY UNDER SECTION 80G( 5) CANNOT GO BEYOND THAT.' 4. RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF HONBLE GUJARAT HIGH COURT WE DIRECT THE CIT-I TO GRANT RENEWAL OF THE APPROVAL TO THE A SSESSEE TRUST UNDER SECTION 80G(5)(VI) OF THE ACT W.E.F. 01.04.2009. 5. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS A LLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 03.02.2011) SD/ SD/- (H.S. SIDHU) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: AGRA DATE: 3 RD FEBRUARY 2011 PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR ITAT AGRA BENCH AGRA 6. GUARD FILE ASSIST ANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL AGRA TRUE COPY