M/S Vaishnavi Educational Society,, ... vs Department Of Income Tax

This Revenue's appeal was filed against the order of the Commissioner of Income Tax(Appeals)-Guntur, dated 24-02-2014 for the Assessment Year (AY) 2008-09 for deleting an amount of Rs.14,92,500/- brought to tax by Assessing Officer (AO) u/s.115BC of the Income Tax Act [Act].

I.T.A. No. 1209/Hyd/14 :- 2 -: M/s. Vaishnavi Educational Society

2. Briefly stated, there was a search and seizure operation at the residence of Dr.K.Ramachandra on 12-02-2009 and during such proceedings, certain documents belonging to assessee's society were seized. Notice u/s.153C was issued to the appellant-society. In the consequential proceedings for AY.2008-09, AO brought to tax an amount of Rs.36,22,500/- as corpus donations u/s.115BBC on the reason that the society has not been able to establish the identity and the capacity of the donors and assessee not discharge, the burden of proof vested upon it within the provisions of Section 115BBC. Assessee explained that it has received contributions from 85 persons totaling to Rs.21,30,000/-. It was claimed that they have filed names and addresses of the donors hence, corpus donations should not be added u/s.115BBC. During the appellate proceedings, assessee submitted that out of the amount of Rs.36,22,500/-, there are donations from 85 persons to an extent of Rs.21,30,000/- and corpus/building fund of Rs.14,82,500/- paid by 228 students who were admitted through Counselor of MCET and not under the management quota. It was submitted that the students paid amount as part of fees which was approved and complete details were furnished to the AO. Considering assessee's submissions, Ld.CIT(A) in his order deleted the amount of Rs.14,82,500/- paid by 228 students as building fund and also Rs.10,000/- paid by Dr. B. Manoharamma, W/o. Dr. K.Ramachandra by cheque. Revenue is aggrieved on the deletion of amount received from the students.

3. At the outset, Ld.Counsel submitted that assessee was aggrieved on the confirmation of Rs.21,30,000/- by the CIT(A) and when the matter was carried to ITAT, ITAT vide ITA No.1180/Hyd/2014 for the AY.2008-09 dt.07-11-2014 has deleted that amount. It was submitted that ITAT considered the decision of the Delhi Bench of the ITAT in the case of Hansraj Samarak Society [113 ITD 530] and deleted the I.T.A. No. 1209/Hyd/14 :- 3 -: M/s. Vaishnavi Educational Society

donations. Accordingly, since these donations also, in which assessee has furnished identity and addresses of the donors as provided u/s.115BBC(3), there is no merit in Revenue's appeal.

4. Ld.DR, however, vehemently supported the order of AO.

5. We have considered the issue. As far as addition of donations received, be it as corpus donation or as building fund from the students, the provisions of Section 115BC requires that names and addresses of the donors are to be recorded. Provisions of Section 68 do not apply to the requirements u/s.115BBC. This issue was elaborately discussed in the co-ordinate bench decision in ITA No.1179/Hyd/2014 for AY.2007- 08 in assessee's own case, wherein vide para No.12, 13 & 14 issue was decided as under:

"12. We have heard both parties and perused the material on record. We find that the names of the donors along with their addresses were furnished before the Investigation Wing of the department and were also recorded in the books produced by the assessee before the Assessing Officer. Hence such donations cannot be classified as "anonymous donations" as per the provisions of section 115BBC(3) of the Act. Section 115BBC(3) is as under:

115BBC.

(1) ...

(2) (3) For the purposes of this section, "anonymous donation"

means any voluntary contribution referred to in sub-clause (iia) of clause (24) of section 2, where a person receiving such contribution does not maintain a record of the identity indicating the name and address of the person making such contribution and such other particulars as may be prescribed.]

13. Hence, we are of the opinion that the only requirement u/s. 115BBC(3) is that the names and addresses of the donors are to be recorded. The learned CIT(A) has wrongly applied the provisions of section 68 in the case of the assessee by stating that the recipient society should also be in a position to identity the donors and I.T.A. No. 1209/Hyd/14 :- 4 -: M/s. Vaishnavi Educational Society

establish the capacity to give a donation of the amount mentioned against their names. In this context, reliance is placed on the decision of the Delhi Bench of this Tribunal in the case of Hansraj Samarak Society (133 ITD 530) wherein ht has been held as under:

" ... 4.4 Sub-section (1) of the aforesaid provision provides that where the income of an institution etc., Referred to in section 11 includes income by way of anonymous donation the income-tax payable by it shall be aggregate of - (i) 30% of the anonymous donation and(ii) the income-tax payable on the total income as reduced by anonymous donation. Sub section (2) excludes wholly religious institutions from the purview of the aforesaid provision. It further excludes wholly religious and charitable institutions from the purview of the aforesaid provision if the anonymous donation is made with the specific direction that such donation is for purposes other than for any university, educational institution, hospital or medical institution. It is clear that this provision excludes religious institution and institution whose objects are wholly religious and charitable. Sub-section (3) defines the expression ''anonymous donation" in an exhaustive manner to be a case where the institution etc., does not maintain record of identity indicating the name and address of the person making the contribution. No further particulars remained to be maintained have been prescribed under this sub-section."

14. Respectfully following the ratio of the decision supra, we are of the opinion that the CIT(A) erred in confirming the addition of Rs. 12,50,000 as anonymous donations attracting the provisions of s. 115BBC. Hence the ground taken by the assessee is allowed".

6. Consequent to the above, for this impugned assessment year, addition of Rs.21,30,000/- confirmed by Ld.CIT(A) was also deleted vide para 26 in the same order as under:

"26. The learned counsel for the assessee brought to our notice that the record of donors has been acknowledged in the assessment order itself by the Assessing Officer and hence submitted that the CIT(A) is incorrect in his statement that the record of donors was not available at the time of search. As in the A.Y. 2007-08, since the assessee maintained and produced before the Assessing Officer, the record of identity indicating names and addresses of the donors, in our opinion such donations cannot be classified as anonymous I.T.A. No. 1209/Hyd/14 :- 5 -: M/s. Vaishnavi Educational Society

donations as per the provisions of section 115BBC(3) of the Act. This issue is similar to the issue decided in the A.Y. 2007-08 and the same conclusion is to be drawn in this year also. Hence Ground Nos. 1 to 5 raised by the assessee are allowed".

7. In view of this, since assessee has complied with the provisions of Section 115BBC and furnished the names and addresses of donors to the AO, there is no merit in the Revenue's grounds. Accordingly, CIT(A)'s order is confirmed.

8. In the result, Revenue's appeal is dismissed.

Order pronounced in open Court on 31st March, 2015.

Sd/- Sd/- (SAKTIJIT DEY) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER

Hyderabad, Dated 31st March, 2015

TNMM

Copy to :

1. Deputy Commissioner of Income Tax, Central Circle, 3rd Floor, Aayakar Bhavan, K.T. Road, Tirupati.

2. M/s. Vaishnavi Educational Society, Thanapalli Village, Kuntrapakkam Post, Tirupati Rural.

3. CIT(Appeals)-Guntur

4. CIT(Central)- Hyderabad

5. D.R. ITAT, Hyderabad