ADIT(E), New Delhi v. The Indian Confederation of Indigenous and Tribal Peoples, New Delhi

ITA 324/DEL/2010 | 2006-2007
Pronouncement Date: 21-05-2010 | Result: Dismissed

Appeal Details

RSA Number 32420114 RSA 2010
Assessee PAN AABTT0025H
Bench Delhi
Appeal Number ITA 324/DEL/2010
Duration Of Justice 4 month(s)
Appellant ADIT(E), New Delhi
Respondent The Indian Confederation of Indigenous and Tribal Peoples, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 21-05-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 21-05-2010
Date Of Final Hearing 19-05-2010
Next Hearing Date 19-05-2010
Assessment Year 2006-2007
Appeal Filed On 21-01-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C: NEW DELHI BEFORE SHRI I.P. BANSAL JUDICIAL MEMBER AND SHRI K.D. RANJAN ACCOUNTANT MEMBER ITA NO. 324/DEL/2010 ASSESSMENT YEAR: 2006-07 ADIT(E) TRUST CIRCLE IV 2 ND FLOOR AAYAKAR BHAWAN LAXMI NAGAR NEW DELHI. VS. THE INDIAN CONFEDERATION OF INDIGENOUS AND TRIBAL PEOPLES 9555 C-9 VASANT KUNJ NEW DELHI. AABTT0025H (APPELLANT) (RESPONDENT) APPELLANT BY : MONA MOHANTY SR. DR RESPONDENT BY: NONE O R D E R PER I.P. BANSAL J.M. THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DIR ECTED AGAINST THE ORDER OF CIT(A) DATED 30.10.09 FOR A.Y. 2006-07. G ROUNDS OF APPEAL READ AS UNDER: - 1. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DECLARING THE DISALLOWANCES OF EXPENSE S AT RS. 29 74 318./- BECAUSE APPLICATION OF INCOME U/S 11 C ANNOT BE ALLOWED IN THE ABSENCE OF REGISTRATION U/S 12A AND ONLY THOSE EXPENSES ARE ALLOWABLE WHICH HAVE BEEN INCURRED WHO LLY AND EXCLUSIVELY TO EARN INCOME. EXPENSES CLAIMED AS CH ARITABLE EXPENSES ARE IN FACT APPLICATION OF INCOME AND NOT EXPENSES INCURRED TO EARN INCOME. 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN LAW BY EQUATING NET SURPLUS WITH NET INCOM E THUS 2 ITA NO. 324/DEL/2010 IGNORING THE COMMERCIAL PRINCIPLE GOVERNING COMPUTA TION OF INCOME IN THE CASE OF AN AOP. 2. THE ASSESSEE IS AN INSTITUTION ASSESSED AS AOP V IDE ASSESSMENT ORDER DATED 05.11.08 PASSED U/S 143(3)/147 OF INCOM E TAX ACT 1961 (ACT). RETURN OF INCOME HAS BEEN FILED AT NIL ON 3 1 ST JULY 2006. THE AO FOUND THAT THE ASSESSEE WAS NOT REGISTERED U/S 12AA OF THE ACT. THUS IT WAS NOT ELIGIBLE TO CLAIM EXEMPTION U/S 11/12 OF TH E ACT. IT WAS SEEN THAT ASSESSEE HAD RECEIVED TOTAL DONATIONS OF RS. 30 50 111/- AND ITS GROSS RECEIPTS WERE 33 31 387/-. THE EXPENDITURES WERE C LAIMED AT RS. 29 74 318/- LEAVING A SURPLUS OF RS. 3 57 068.96 AN D SUCH SURPLUS WAS CLAIMED AS EXEMPT U/S 11 OF THE ACT. SINCE THE ASS ESSEE WAS NOT REGISTERED U/S 12AA THE AO REQUIRED THE ASSESSEE TO EXPLAIN AS TO HOW THE SURPLUS COULD BE CLAIMED AS AN EXEMPT INCOME AN D THEREFORE HE STARTED REASSESSMENT PROCEEDINGS U/S 147 AND IN RES PONSE TO THAT NOTICE THE REPLY OF THE ASSESSEE WAS THAT ORIGINAL RETURN FILED MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE U/S 148. CONSID ERING THE FACT THAT ASSESSEE WAS NOT REGISTERED U/S 12AA THE AO ASSESSE D THE ENTIRE RECEIPTS AS INCOME BEING VOLUNTARY CONTRIBUTION WIT HOUT ALLOWING ANY EXPENDITURE AND IN THIS MANNER THE INCOME OF THE AS SESSEE HAS BEEN ASSESSED AT RS. 33 31 387/-. 3. BEFORE CIT(A) IT WAS SUBMITTED THAT ASSESSEE IS A NETWORK ORGANIZATION OF TRIBALS BRINGING ABOUT AWARENESS ON THEIR CONSTITUTIONAL AND HUMAN RIGHTS THROUGH REGULAR SEMINARS AND MEETI NGS IN DIFFERENT PARTS OF INDIA. THE SOCIETY IS WORKING PURELY ON PROJECT GRANT RECEIVED 3 ITA NO. 324/DEL/2010 FROM THE FOREIGN DONORS. M/S EVANGELISHER ENTEWICK LUNGSDINST (EED) GERMANY APPROVED ASSESSEES PROJECT EMPOWERMENT OF ADIVASIS IN INDIA VIDE THEIR LETTER OF APPROVAL DATED 1 ST AUGUST 2005 (PROJECT NO. KED20056026) FOR EURO 1 38 000/-. THE PROJECT PERI OD WAS FROM 1 ST JULY 2005 TO 30 TH JUNE 2008. THE ASSESSEE WAS ASKED TO USE THE PROJECT GRANT EXACTLY ON THE BASIS OF SANCTIONED BU DGET WHICH WAS DULY MENTIONED IN THE LETTER OF APPROVAL AND ASSESSEE IS FORBIDDEN TO USE THE GRANTS FOR ANY OTHER PURPOSE EXCEPT FOR ONE MENTION ED IN THE LETTER OF APPROVAL. THE REFERENCE WAS MADE TO VARIOUS DECISI ONS TO CONTEND THAT THE TIED-UP AMOUNTS WHICH ARE RECEIVED BY THE ASSES SEE COULD NOT BE TREATED AS VOLUNTARY CONTRIBUTIONS HENCE COULD NOT BE ASSESSED AS TAXABLE INCOME AND IT WAS PRAYED TO CIT(A) AS FOLLO WS: - I) THE AMOUNT EXPENDED BY THE SOCIETY ON PROJECT AMOUNTING TO RS. 29 74 319/- BE ALLOWED AS EXPENSES. II) THE GRANT AND THE INTEREST RECEIVED AMOUNTING T O RS. 33 31 387/- BE NOT TREATED AS INCOME AS THIS IS NOT VOLUNTARY CONTRIBUTION BUT IS TIED-UP/RESTRICTED GR ANT. III) AS REGARD CHARGING OF INTEREST U/S 234B OF THE ACT AMOUNTING TO RS. 3 58 830/- CONSEQUENTIAL RELIEF MA Y KINDLY BE DIRECTED TO BE ALLOWED HERE. 4. CONSIDERING THE SUBMISSIONS OF THE ASSESSEE LD. CIT(A) HAS HELD THAT SINCE ASSESSEE HAS NOT BEEN REGISTERED U/S 12A A OF THE ACT IT CANNOT BE GRANTED BENEFIT OF EXEMPTION U/S 11 AND 1 2 OF THE ACT. THE AMOUNT OF RS. 33 31 378/- CANNOT BE HELD TO BE NOT AN INCOME IN THE NATURE AS THEY CANNOT BE CONSIDERED TO BE VOLUNTARY CONTRIBUTION. ACCORDING TO LD. CIT(A) EVEN GRANT IN AID RECEIVED FROM DONORS AGENCIES 4 ITA NO. 324/DEL/2010 OR THE GOVERNMENT ARE IN THE NATURE OF VOLUNTARY CO NTRIBUTION U/S 12(1) AS PER THE DECISION OF BOMBAY HIGH COURT IN THE CAS E OF CIT VS. GEM & JEWELLERY EXPORT PROMOTION COUNSEL 143 ITR 579 AND THUS HE HAS HELD THAT SUCH INCOME WOULD FALL UNDER THE AMBIT OF SEC. 11(1) THROUGH SEC. 12(1). HE OBSERVED THAT IF THE ASSESSEE HAS BEEN T REATED AS AOP THEN LOGICALLY IT HAS TO BE ALLOWED FOR THE EXPENDITURE WHICH ARE REVENUE IN NATURE AND ONLY RESULTANT SURPLUS CAN BE BROUGHT TO TAX. HE HAS EXAMINED THE NATURE OF THE RECEIPT WHICH HAS BEEN T REATED AS INCOME AND ALSO THE NATURE OF EXPENSES AND HE HAS FOUND TH AT THEY ARE LINKED TO EACH OTHER CLOSELY AND NONE OF THE EXPENDITURE WAS OF THE CAPITAL NATURE. HE OBSERVED THAT EVEN THE AO IN THE ASSESSMENT ORDE R AFTER EXAMINING THE BOOKS OF ACCOUNT BANK STATEMENT AND OTHER DETA ILS PRODUCED BEFORE HIM HAS NOT ADVERSELY COMMENTED TO ANY OF THE ITEM OF THE EXPENDITURE AND IN THAT CASE EVEN IF THE PROVISION OF SEC. 11 A ND 12 ARE NOT APPLICABLE EXPENDITURE INCURRED OUT OF RECEIPTS EV EN IN THE ABSENCE OF THESE PROVISIONS HAS TO BE ALLOWED AND THUS LD. CI T(A) HAS HELD THAT THE EXPENDITURES CLAIMED BY THE ASSESSEE WERE ALLOWABLE AND ONLY SURPLUS WAS BROUGHT TO TAX. 5. NOTICE OF HEARING WAS SENT TO ASSESSEE. HOWEVER ON THE DATE OF HEARING NONE WAS PRESENT ON BEHALF OF ASSESSEE THE REFORE WE PROCEED TO DECIDE THE PRESENT APPEAL EX-PARTE QUA THE ASSES SEE. 6. AFTER NARRATING THE FACTS LD. DR RELIED UPON TH E ASSESSMENT ORDER AND PLEADED THAT LD. CIT(A) WAS WRONG IN HOLDING TH AT EXPENSES TO THE 5 ITA NO. 324/DEL/2010 TUNE OF RS. 29 74 318/- HAVE WRONGLY BEEN HELD TO B E ALLOWABLE BY LD. CIT(A) AS ASSESSEE WAS NEVER ENJOYING THE BENEFIT O F REGISTRATION U/S 12A. 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSION OF L D. DR AND ALSO GONE THROUGH THE ORDER OF AO AND AS WELL AS LD. CIT (A). A FINDING OF FACT HAS BEEN RECORDED BY LD. CIT(A) THAT THE EXPENDITUR ES INCURRED BY THE ASSESSEE WERE CLOSELY CONNECTED WITH THE NATURE OF RECEIPTS. NONE OF THE EXPENDITURE WAS IN THE NATURE OF CAPITAL AND TH US THE EXPENDITURES WERE TO BE ALLOWED AGAINST RECEIPTS WHICH HAVE BEEN TREATED AS INCOME. WE FIND NO INFIRMITY IN SUCH FINDINGS OF LD. CIT(A) . EVEN IF THE ASSESSEE IS NOT REGISTERED U/S 12A UNDER THE NORMAL PROVISI ONS OF THE ACT IF THE EXPENDITURES ARE CLOSELY CONNECTED WITH THE RECEIPT S WHICH IS TREATED AS INCOME THEN THOSE EXPENDITURES HAVE TO BE ALLOWED. THEREFORE WE DECLINE TO INTERFERE SUCH FINDINGS OF LD. CIT(A). 8. IN THE RESULT DEPARTMENTAL APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.05.2010 (K.D. RANJAN) ACCOUNTANT MEMBER (I.P. BANSAL) JUDICIAL MEMBER DATED: *KAVITA 6 ITA NO. 324/DEL/2010 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT NEW DELHI. TRUE COPY BY ORDER DEPUTY REGISTRAR