M/s. Shiv Shakti Trust, Bangalore v. DIT, Bangalore

ITA 267/BANG/2009 | misc
Pronouncement Date: 14-03-2011 | Result: Allowed

Appeal Details

RSA Number 26721114 RSA 2009
Assessee PAN FFCRA1976A
Bench Bangalore
Appeal Number ITA 267/BANG/2009
Duration Of Justice 1 year(s) 11 month(s) 12 day(s)
Appellant M/s. Shiv Shakti Trust, Bangalore
Respondent DIT, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 14-03-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 14-03-2011
Date Of Final Hearing 08-03-2011
Next Hearing Date 08-03-2011
Assessment Year misc
Appeal Filed On 01-04-2009
Judgment Text
PAGE 1 OF 5 ITA NO.267/BANG/2009 1 IN THE INOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B BEFORE DR. O K NARAYANAN VICE PRESIDENT AND SMT. P MADHAVI DEVI J.M. ITA NO.267/BANG/2009 M/S SHIV SHAKTI TRUST NO.92 KEDIA ARCADE BANGALORE-21. -APPELLANT VS THE DIRECTOR OF INCOME-TAX (EXEMPTIONS) BANGALORE. - RESPONDENT APPELLANT BY : SHRI A SHANKAR C.A. RESPONDENT BY : SHRI HARSHA PRAKASH CIT-II O R D E R PER P MADHAVI DEVI : THIS IS AN APPEAL FILED BY THE ASSESSEE-TRUST AGA INST THE ORDER OF THE DIT (EXEMPTIONS) BANGALORE DATED 27.02.2009 IN REJECTING THE ASSESSEES APPLICATION SEEKING RECOGN ITION U/S 80G OF THE I T ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE T RUST CAME INTO EXISTENCE BY WAY OF A TRUST DEED DATED 14.3 .2007. IT FILED ITS APPLICATION IN FORM NO.10G SEEKING RECOGN ITION U/S 80G OF THE I T ACT ON 1/8/2008. THE DIT(EXEMPTIONS) ON F INDING CERTAIN DEFICIENCIES IN THE APPLICATION FILED BY THE ASSESSE E TRUST CALLED FOR THE DETAILS AND THE ASSESSEE FURNISHED THE SAID DETAILS. ON PAGE 2 OF 5 ITA NO.267/BANG/2009 2 EXAMINATION OF THESE DETAILS THE DIT(EXEMPTIONS) F OUND THAT THE MANAGING AND FOUNDER TRUSTEE SRI CHELLARAM N KRIPAL ANI AN NRI HAD DONATED AN AMOUNT OF RS.18 LAKHS DIRECTLY TO THE TRUST. THE DIT(EXEMPTIONS) ASKED THE ASSESSEE TO SHOW CAUSE AS TO WHETHER THE ASSESSEE HAS COMPLIED WITH THE PROVISIONS OF FC RA 1976. IN RESPONSE TO THE SAME THE ASSESSEE FILED ITS LETTER DATED 25.2.2009 STATING THAT THE DONATIONS RECEIVED FROM CHELLARAM N KRIPANALI ARE OUT OF DIVIDENDS RECEIVED FROM INDIAN COMPANIES AND DEPOSITED INTO AN ACCOUNT IN INDIA AND THEREFORE THE SAME IS NOT COVERED UNDER FCRA 1976. HOWEVER THE DIT(EXEMPTIONS) OBSERVED T HAT THE ASSESSEE HAS RECEIVED RS.62.20 LAKHS FROM SHARADA E STATES (P) LTD. AND RS.18 LAKHS FROM CHELLARAM N KRIPALANI AND THIS RS.18 LAKHS IS OUT OF DIVIDEND FROM MANGAL TECH PARK (P) LTD. AND MANGAL TIRTH ESTATES (P) LTD. HE ALSO OBSERVED THAT THE AMOUNTS RECEIVED BY THE TRUST ARE APPLIED BY GIVING DONATIONS TO BHAGWAN MAHAVIR JAIN HOSPITAL NARAYAN HRUDAYALAYA FRIENDS TRIBAL SOCIETY O F INDIA WHICH IS ALSO RECOGNIZED U/S 80G OF THE I T ACT AND TO CERTAIN OTHER DONATIONS. 3. AFTER CONSIDERING THE SAME HE OBSERVED THAT TH E ASSESSEE IS IN RECEIPT OF DONATIONS FROM A FOREIGN SOURCE I.E. SRI CHELLARAM N KRIPALANI WHO IS AN NRI AND A CITIZEN OF SINGAPORE AND THEREFORE THE DONATIONS MADE BY HIM ARE FOREIGN CON TRIBUTIONS WITHIN THE MEANING OF FCRA 1976 AND THE ASSESSEE HA S NOT COMPLIED WITH THE PROVISIONS OF THE SAID ACT. THUS HOLDING THAT THE ASSESSEE HAS VIOLATED THE PROVISIONS OF FCRA 1976 HE HELD T HAT THE ASSESSEE PAGE 3 OF 5 ITA NO.267/BANG/2009 3 IS NOT ELIGIBLE TO EXEMPTION U/S 11 OF THE I T ACT. THUS THE ASSESSEES APPLICATION U/S 80G(5)(VI) OF THE I T AC T WAS REJECTED. 4. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LEANED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE DIT(EXEMPTIONS) THAT TH E DONOR SRI CHELLARAM N KRIPALANI IS THE FOUNDER OF THE TRUST A ND HAS DONATED THE FUNDS OUT OF THE DIVIDENDS DECLARED BY THE INDIA N COMPANIES IN INDIA AND ARE CREDITED TO THE ACCOUNT OF SRI CHELLA RAM N KRIPALANI IN A BANK IN INDIA. THUS ACCORDING TO HIM THESE DONATIONS ARE NOT FROM FOREIGN SOURCE AND ARE NOT COVERED BY FCRA ACT. FURTHER TO THE FINDING OF THE DIT (EXEMPTIONS) THAT THE BHAGWA N MAHAVIR JAIN HOSPITAL BANGALORE AND SRI BHAGAWAN MAHAVEER JAIN EDUCATIONAL AND CULTURAL TRUST ARE UNDER THE SAME M ANAGEMENT AND THEREFORE THE DONATIONS BY SHARADA ESTATES PRIVATE LIMITED IS NOTHING BUT DIVERSION OF FUNDS THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT BOTH THE INSTITUTIONS ARE I N THE MANAGEMENT OF DIFFERENT TRUSTEES AND THE QUESTION O F DIVERSION OF FUNDS DOES NOT ARISE. 6. THE LEARNED DR ON THE OTHER HAND SUPPORTED TH E ORDERS OF THE AUTHORITIES BELOW. 7. HAVING HEARD BOTH THE PARTIES AND HAVING CONSID ERED THE RIVAL CONTENTIONS WE FIND THAT THE ASSESSEES CONTENTION IS THAT THE DONATIONS RECEIVED FROM SRI CHELLARAM N KRIPALA NI ARE FROM PAGE 4 OF 5 ITA NO.267/BANG/2009 4 DIVIDENDS DECLARED BY INDIAN COMPANIES DEPOSITED INT O A BANK ACCOUNT IN INDIA AND THUS ARE NOT FOREIGN CONTRIBUT IONS UNDER FCRA 1976. WHAT IS COVERED UNDER FCRA ACT ARE THE FOREIG N CONTRIBUTIONS MADE BY ANY FOREIGN SOURCE OF ANY CURRE NCY WHETHER INDIAN OR FOREIGN. CLAUSE (E) OF SECTION (2) OF FCRA 1976 DEFINES FOREIGN SOURCE TO INCLUDE (X) A CITIZEN OF A FOREIG N COUNTRY. THUS WHAT IS NECESSARY IS THAT THE CONTRIBUTION MAY BE IN ANY CURRENCY BUT IT MUST NOT BE FROM A FOREIGN SOURCE WHICH INCL UDES A FOREIGN CITIZEN. THE CASE OF THE REVENUE IS THAT THE DONOR IS A CITIZEN OF SINGAPORE AND THEREFORE THE PROVISIONS OF FCRA 197 6 ARE ATTRACTED AND THE ASSESSEE HAS TO NECESSARILY COMPLY WITH THE CONDITIONS LAID DOWN THEREUNDER. ACCORDING TO THE ASSESSEE THE DONOR IS AN NRI AND THEREFORE THE PROVISIONS OF FC RA 1976 ARE NOT APPLICABLE. THIS FACT NEEDS PROPER VERIFICATION. FURTHER FOR THE PURPOSE OF GRANTING REGISTRATION U/S 80G OF THE I T ACT THE DIT(EXEMPTIONS) IS REQUIRED TO EXAMINE WHETHER THE ASSESSEE IS CARRYING ON ANY ACTIVITIES OF CHARITABLE PURPOSE AS L AID DOWN IN SUB- SECTION 5 OF SECTION 80G OF I T ACT. AS THE ASSESS EE HAS DEMONSTRATED BEFORE US THAT THE ASSESSEE HAS NOT VI OLATED ANY OF THE CONDITIONS LAID DOWN IN SUB-SECTION 5 OF SECTIO N 80G WE DEEM IT FIT AND PROPER TO HOLD THAT THE ASSESSEE IS ELIGIBL E FOR REGISTRATION U/S 80G OF THE ACT AND THE DIT(EXEMPTIONS) CANNOT D ENY THE SAME WITHOUT PROPERLY EXAMINING THE ISSUE. THE DIT(EXEMP TIONS) OUGHT TO HAVE VERIFIED THE DETAILS IN PROPER PERSPECTIVE BEFORE REJECTING THE SAID APPLICATION. IN VIEW OF THE SAME WE DEEM IT FIT AND PROPER TO REMIT THE MATTER TO THE FILE OF DIT (EXEMPTIONS) TO VERIFY THE PAGE 5 OF 5 ITA NO.267/BANG/2009 5 FACT AS TO WHETHER THE DONOR IS AN NRI OR A FOREIGN CITIZEN AND ALSO IF THE VIOLATION OF FCRA 1976 WOULD MAKE THE ASSESS EE INELIGIBLE FOR THE REGISTRATION U/S 80G OF THE ACT. HENCE THE AS SESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT THE ASSESSEES APPEAL IS ALLOWED . THE ORDER PRONOUNCED ON MONDAY THE 14 TH DAY OF MARCH 2011 AT BANGALORE. SD/- SD/- (DR. O K NARAYANAN) (P MADHAVI DE VI) VICE PRESIDENT JUDICIAL MEMBER COPY TO : 1) THE ASSESSEE (2) THE REVENUE (3) THE CIT(A) CONCERNED. (4) THE CIT CONCERNED. (5) THE DR (6) GUARD FILE. MSP/10.3. BY ORDER ASST. REGISTRAR ITAT BANGALORE.