2. FROM MY ARCHIVES- USEFUL ITAT , KOLKATA DECISIONS ( 2016 : Part
2)
1. Abacus
Foundation vs. CIT (Exemption)[ITANos.02&03/Kol/2016];order dated 23.09.2016
Carrying
on charitable activity at the stage of application before CIT (Exemption) is
not relevant to decide whether such trust / institution is entitled for
registration u/s 12AA
Sec 12AA
Held:
As
per the provision of Section 12AA of the Income Tax Act, 1961, on receipt of an
application for registration of a trust or institution, CIT (Exemption) shall
call for such documents or information from the trust or institution as he
thinks necessary in order to satisfy himself about the genuineness of
activities of the trust or institution and may also make such inquiries as he
may deem necessary in this behalf. After satisfying himself about the objects
of the trust or institution and the genuineness of its activities, CIT shall
pass an order in writing registering the trust or institution and if he is not
satisfied, pass an order in writing refusing to register the trust or
institution.
In
the instant case, the assessee-trust after rejection of the application for registration u/s 12AA carried the matter in
appeal before the ld. Tribunal.
As
regards granting the registration to the assessee at the commencement stage,
the powers of the CIT are limited to the
aspect of examining whether or not the objects
of trust are charitable in nature and since the Trust was formed on 12.12.2014
and the application for registration was made on 17.04.2015, though the
activities commenced to some extent though less, it is not open for the CIT to
go into the quantitative aspect of the activities of the Trust.
Reference was made
to the following judgments:
(i)
Dharma Sansthapak Sangh (Nivas) vs.
CIT [(2008) 118 TTJ (Del.) 823]
(ii)
Vivekananda Welfare Trust vs. DIT(E)
[ITA Nos. 2095/KOL/2008 and 27/KOL/2009]
(iii)
M/s Ginia Devi Todi Charitable Trust, Kolkata vs. Director of Income Tax [ITA No.738/Kol/2010]
(iv)
Bani Mittra Charitable Trust, Kolkata vs. Director of Income Tax [ITA Nos. 1154 & 1155/Kol/2009]
2. ITO vs. M/s. Chitravali Sales (P) Ltd. [ITA
No.1258/Kol/2010]; order dated 10.08.2016
Monies
received as trade advances and the same having been proved by the assessee as
against supply of material booked as sales, the same cannot be the subject
matter of addition under sec 68
Sec 68
Held:
As
per the provision of section 68 of the Act, where any sum is found credited in
the books of an assessee maintained for any previous year and assessee offers
no explanation about the nature and source thereof or the explanation offered
by him is not, in the opinion of the ld. AO, satisfactory, the sum so credited
may be charged to income tax as the income of the assessee of that previous
year.
In
the instant case, the assessee took advances of Rs. 7,75,34,884/- from 470
customers for supply of sand to them for which sales have been effected
subsequently. The details of total advances were furnished by the assessee
before the AO containing the name, address, mode of payment, bank name, amount
etc. The AO proceeded to issue notices
u/s. 133(6) of the Act. All the 470 customers responded owning the payment of
advances to the assessee and squaring off the entire advances against supply of
sand made by the assessee.
The
assessee had duly discharged its initial onus of explaining the nature and
source of credit, identity of the creditors, genuineness of the transactions.
Assessee only received trade deposit from customers which has been adjusted
against supplies of sand. In this case, the provisions of section 68 of the Act
could not be invoked in respect of trade deposits received from customers.
Reliance was placed
on the following judgments:
(i)
ITO
vs. Laxman das Makhija (2009) 116 ITD 47 (TM)
(ii)
CIT
vs. Bhital Das Modi (2005) 276 ITR 517 (All)
(iii)
CIT
vs. Tulip Finance Ltd. (2009) 178 Taxman 182 (Del)
(iv)
CIT
vs. Chemi Kleen India (P) Ltd. (1990) 181 ITR 198 (Del)
(v)
CIT
vs. S.D. Investment & Trading Co. (2008) 306 ITR 31 (Bom)
(vi)
Crystal
Networks (P) Ltd. vs. CIT ITA No. 158 of 2002 dated 29.07.2010 (Calcutta HC)
Note:
It is pertinent to note that the Calcutta High Court in the case of Crystal Networks (P) Ltd. (supra) has
gone to the extent of holding that no adverse inference can be drawn in respect
of trade advance where the summons issued by the AO to the customers were
returned unserved but the assessee is able to prove that ultimately goods were
supplied against the advance received.
3. St. Joseph’s Convent Educational Society vs.
JCIT [ITA No. 1695/Kol/2012]; order
dated 11.05.2016
Whether
the donation given by one charitable institution to another out of current
year’s income is permitted as an application of income under sec 11 ?
Sec 11 r.w sec.
13(1)(c)(ii)/ sec. 13(3)
Held
It
is well settled that when the donation is given by one charitable trust to
another trust out of current year’s income the same is permitted in sec. 11 as
an application of income and the same cannot be curtailed by another provision
of the Act i.e. sec. 13(1)(c)(ii) r.w. sec. 13(3) of the Act as it would defeat
the very purpose of such provision.
It
is pertinent to note here that as per sec. 13(1)(c)(ii), any income of a
charitable institution cannot be used for the benefit of restricted category of
persons as provided in sec. 13(3) viz., founder, a person making substantial
contribution to the institution, trustee, any relative of these persons, any
concern in which they have substantial interest.
In
the instant case, the charitable trust is constituted for charitable purposes
with a philanthropic mind to give donation. The payment made for benevolent
cause is always a charity.
The
payment of donation by assessee trust to another registered public charitable
trust is not in violation of sec. 13(1)(c) as the said payment is not made for
the benefit of any person either directly or indirectly referred to in sec.
13(3). Admittedly, the donee trust is a registered public charitable trust and
there is no question of any individual holding substantial interest in the said
trust.
Reliance was placed
on the following judgments :
(i)
CIT
vs. Hindustan Charity Trust (1983) 139 ITR 913 (Cal)
(ii)
CIT
vs. Trustees of the Jadi Trust (1982) 133 ITR 494 (Bom)
(iii)
CIT
vs. Sarladevi Sarabhai Trust No. 2 (1988) 172 ITR 698 (Guj)
4. Quality Bags
Exporters (P) Ltd. vs. A.C.I.T [ITA Nos.
2787 to 2790/Kol/2013]; order dated 02.09.2016
Whether
unusual delay in filing appeal (say 2380 days) due to wrong legal advice can be
condoned by the appellate authority?
Sec 250
Facts: Assessee’s original assessment
was completed u/s 143(3) after allowing deduction u/s 80HHC of the Income Tax
Act, 1961 on DEPB licence. Later the case was reopened on the ground that
excess deduction under 80HHC was allowed in respect of export incentive in the
form of sale of DEPB License in view of
the amended provision of section 80HHC brought out by Taxation Laws Amendment
Act of 2005. Finally the re-assessment was completed by disallowing the
deduction u/s 80HHC to the tune of Rs. 14,27,543/-.
The
assessee approached its regular CA for advice. He advised that there is no
point in filing appeal since according to him, withdrawal of excess deduction
u/s. 80HHC in respect of export incentive were in conformity with the amended
provision of sec. 80HHC brought out by Taxation Laws amendment Act of 2005.
Much
later, after passing of around 2380 days, the assessee approached an advocate
to suggest measures for the stay of income for demand as the I.T. Department
was pressing hard for recover of the same. The advocate expressed the opinion
that in view of the decision of the Hon’ble Supreme Court in the case of Topman
Exports vs. CIT 342 ITR 49, the assessee was entitled to the benefit of
deduction u/s. 80HHC. The assessee filed the appeal with a proper petition for
condonation of delay. The appeal was dismissed by the CIT(A) on the ground of
unreasonable delay in filing appeal.
On
appeal before the Tribunal, it was held-
In
the instant case, the assessee company filed an appeal before CIT(A) with a
delay of 2300 days. The reason of delay is non availability of a proper
professional advice. Assessee company would be entitled to get deduction u/s
80HHC but delay of filing appeal would be the only hurdle in not getting such
benefit.
In
my view, in some identical cases, courts have condoned delays in filing appeals
due to wrong legal advice and the appeals of the assessees were allowed.
Reliance was placed
on the following judgments :
(i)
Pahilajrai Jaidishin vs JCIT in ITA No.1398/M-um/2012 order dated 28.08.2013
(ii)
Surajmall Exports in ITA No.410/Kol/2013
order dated 30.11.2015
(iii)
Magnum Export in ITA NO.1111/Kol/2012
order dated 08.02.2013
Reference was also made to the case of Shri Anupam Biswas vs. ITO, ITA No.
2198/Kol/2014 order dated 09.12.2015, where Hon’ble ITAT, Kolkata Bench held that where in view of the strong merit of
the case, the liability of the assessee is non-existent and the assessee has
properly explained the reasons for the delay, the unusual delay in filing
appeal should be condoned.
