1991-VIL-126-ITAT-JAI

Equivalent Citation: TTJ 039, 337,

Income Tax Appellate Tribunal JAIPUR

Date: 16.01.1991

SHRI VASU PUJIYA JAIN DERASAR PEDHI.

Vs

INCOME TAX OFFICER.

BENCH

Member(s)  : V. P. ELHENCE., J. K. VERMA.

JUDGMENT

These three appeals filed by the assessee arise out of the consolidated order dt. 27th July, 1989 of the learned IT, Jodhpur for the asst. yrs. 1979-80 to 81-82.

2. The assessee is a trust constituted under a Trust Deed dt. 4th Dec., 1977. The Trust had not filed any returns for assessment years in question and, therefore, notices dt. 13th Feb.,1987 were issued under s. 148. In response to these notices, the trust filed return on 30th March, 1987 which were claimed to have been filed under the Voluntary Disclosure Scheme. The Income declared for these years were Rs. 10,100, Rs. 10,100 and Rs. 12,100. For the assessment years in question, the assessee trust had received donations of Rs. 1,84,907, Rs. 86,037 and Rs. 44353 (as against Rs. 2,23,816, Rs. 66,040 and Rs. 44,353 mentioned in the order of the Commissioner(A) which were claimed to be corpus donations being for the construction of a temple. The ITO noticed that the counterfoils of the donations receipts bore the description "Shri Dev Dravya (Mandir Nirman)". He observed that none of those counterfoils were signed by the donors and that there was no specific narration thereon that the donations formed part of the corpus. He referred the matter to the Dy. Commissioner, Udaipur for direction under s. 144A and the directions dt. 19th Dec., 1988 of the Dy. Commissioner were that no application for registration under s. 12A had been applied for by the trust within the stipulated period of one year from the establishment of the trust; that it is after the service of the notices under s.148 that the trust has applied for registration; that the CIT, Jodhpur, had granted the registration vide order dt. 18th Aug., 1987 with effect from 4th Dec., 1986; the earlier to 4th Dec., 1986 the trust was not to be taken as having been registered under s. 12A; that the donations received were not with regard to any directions that they were towards corpus and that the identity of the donors was not proved. Accordingly, after following the said directions, the ITO added the donation amounts of Rs. 1,84,907, Rs. 86,037 and Rs. 44,357 as the income of the assessee. He also noted that since the total incomes for the assessment years in question exceeded Rs. 25,000, the accounts of the trust were also required to be audited by an Accountant.

2A. It appears the learned CIT confirmed the orders of the ITO.

3. The rival submissions have been heard and duly considered. We find that the trust deed recited that in village Undri, there were two family temples which were in a dilapidt. state and which were being managed for a long time by Jain Derasar Pedhi and that keeping the social prestige in view a new temple in that place was required to be constructed under the supervision of Shri Vasu Pujiya Jai Derasar Pedhi. For the efficient management of Shri Vasu Pujiya in Derasar Pedhi, rules were framed. The trust deed was executed after resolutions dt. 20th Nov., 1977 and 4th Dec., 1977 of Undri Shri Sangh. The Dy. Commissioner was not right in observing in his directions under s. 144A that it is on the service of the notices under s. 148 that the assessee trust applied for registration before the learned CIT. We find that the application for registration had been given by the assessee trust on 4th Dec., 1986 whereas the notices under s. 148 had been given later i.e., on 13th Feb., 1987. We also find that in the application dt. 4th Dec., 1986 for registration under s. 12A(a) in Form No. 10A, the assessee trust had asked for registration and that by means of a separate application on the same date, the condonation of delay for making the application had also been asked for in terms of the proviso to s. 12A(a). This was because the application for registration had been given after the expiry of the period of one year from the date of creation of the trust as mentioned in s. 12(a). We also find that the proviso to s. 12A(a) does not prescribe or limit the power of the Commissioner for condoning the delay with reference to the period of delay. However, while granting registration vide order dt. 13th Aug., 1987, the learned Commissioner, Jodhpur mentioned that the registration would be valid from 4th Dec., 1986 (the date of registration application). In reply to a query from the Bench, the learned counsel for the assessee submitted that an application moved before the learned Commissioner on 20th Oct., 1989 for rectification of this registration certificate was pending. We notice that the trust deed having been executed on 4th Dec., 1977, normally application for registration under s. 12A was required to be moved by 4th Dec., 1978. Therefore, if the learned Commissioner was willing to entertain the assessee trust's application, and had granted registration to it, he should have condoned the delay which the assessee trust has prayed for. In our view, therefore, the mention by the learned Commissioner in the certificate that it would be effective from 4th Dec., 1986 was a condition which was invalid and being separable, it is liable to be ignored. The assessee is, therefore, right in pointing out that the registration having been granted on 13th Aug., 1987, under s. 12A, it enured from the very inception of the trust i.e., from 4th Dec., 1977. The factors of granting registration finds place in the directions of the Dy. CIT(A). Thus, the assessee trust being a registered one, there was no impediment to the application of the provisions of ss.11 and 12 in relation thereto.

4. Next comes the question of audit of the accounts of the trust by an Accountant as defined in the Explanation below s. 288(2). So far as this point is concerned, the case of the trust was that this requirement had not been originally complied with by it because it claimed its total income to be below Rs. 25,000 for each of the three assessment years in question and that audit reports in Form No. 10B were attempted to be filed on 10th Jan., 1989 before the ITO but were not accepted and again they were attempted to be filed before the CIT(A) who also did not permit them to be placed on the file for the three assessment years in question. We would presently find that since the total income of the trust as computed under the IT Act, 1961 without giving effect to the provisions of ss. 11 and 12 did not exceed Rs. 25,000 for any of the assessment years in question, there was no obligation on the part of the assessee trust in terms of s. 12A(b) to furnish audited accounts in Form No. 10B.

5. This brings us to the question of corpus donations. Sec. 2(24)(iia) r/w s.12 excludes corpus donations from the income of the trust. Therefore, the question for consideration is whether the voluntary contributions received by the assessee trust during the three assessment years in question were contributions made with the specific direction that they shall form part of the corpus of the trust. According to the assessee trust corpus donations for the construction of the temple had been received by cash, by cheques as also by DDs from the donors. The three photostat copies of the counterfoils of receipts dt. 1st Aug., 1978, 9th Aug., 1978 and 1st Aug., 1978 pertaining to Harakchandji Gulabchandji, Ugamchandji Vanechandji, and Mahendra Kumarji Dulichandji for Rs. 1,101, Rs. 701, and Rs. 1,501 have been placed by the assessee on the record, which have been signed by the donors. Therefore, the mention by the ITO that the counterfoils of the receipts were not signed by the donors was not correct. In reply to a query from the Bench, it was submitted by the learned Departmental Representative that the assessee's trustee, one Shri Chouthmal was examined by the ITO on 15th Oct., 1987 wherein he stated that these donations were received towards the construction of temple as the temple was under construction at that time and that soon after 17th Feb., 1978 when the foundations were laid, the construction started and that it got completed in 1984. This statement, therefore, supports the assessee. The ITO does not appear to have required the assessee to produce any donors for satisfying himself that the donations were towards the corpus. In fact a perusal of the counterfoil receipts referred to above shows that there were three heads mentioned therein, namely, (i) Shri Devi Dravya (Mandir Nirman), (ii) Shri Sadharan (Upashraya Dharamsala Nirman), & (iii) Shri Anya. The donations in question were shown against the S. No 1. Therefore they wee shown corpus donations and if the ITO entertained any doubt, he could ask for any details from the assessee or require the assessee to produce the donors or to furnish such other evidence as he specified. However, the ITO seems to have rested satisfied by not requiring any such thing and by remaining contended in examining the assessee's trustee Shri Chouthmal. In such a situation the income tax authorities could not take the view that the facts that the donations were towards the corpus was not established.

The assessee had explained that it had received separate donations for the construction of the temple and for Dharamsala and the figures of the donations had also been submitted before the learned CIT(A) in the written submissions filed on behalf of the assessee trust. The assessee had also produced the original counterfoils of the receipts before the ITO and filed photostat copies thereof. In the case of ITO vs. Maliram Puranmal Charitable Trust (1981) 12 TTJ (Jp) 245 it was held that as no specific mode of giving the direction is prescribed by the statute, the direction regarding corpus donation is to be gathered from the facts and the circumstances of the case. In the case of the Agnel Charities (Agnel Sewa Sang) vs. ITO (1988) 31 TTJ (Del) 160 it was held that if a circular letter was issued by the school that they had invited subscriptions and donations for the sake of school buildings, the plea of the assessee that it should be taken as a donation towards the corpus was reasonable. In the present case, the preamble to the trust deed, directions of the donors and the contends of the receipts show that the donations were treatable as corpus donations. In the case of St. Ann's Home for the Aged vs. ITO (1982) 13 TTJ 1895 (Bang) it was held that the donations for the construction of the building for the trust constituted donations for the corpus of that trust. Again in Sukhdeo Charity Estate vs. CIT (1984) 42 CTR (Raj) 218; (1984) 149 ITR 470 (Raj), the jurisdictional High Court of Rajasthan held that it depends upon the given circumstances of the case as to whether the donations would constitute corpus or capital of the receiving trust or would fall within the ambit of its income. Reliance on the part of the assessee on these decisions as mentioned in its written submissions before us, therefore, appears to be correct. The assessee had additionally placed reliance on the following decisions which also support it.

(i) Escorts Employees Welfare Trust vs. ITO (1983) 5 ITD 226 (Del)

(ii) ITO vs. Jeevdaya Khata (1981) 24 CTR (Trib) 34 (Ctk).

Trustees of Virjhi Peraj Trust vs. Eighth ITO (1984) 19 TTJ (Bom) 538.

We are, therefore, of the1 view that on the basis of the material furnished by the assessee it had established that the voluntary contributions in question had been made with the specific direction that they shall form part of the corpus of the trust and, therefore, they could not have been treateds the income of the assessee. So treated, since the income of the assessee. So, treated, since the income of the assessee fell below Rs.25,000 for each of the assessment years in question, there was no obligation on its part to furnish audited accounts in terms of s. 12A (b) as referred to above.

6. The ground regarding assessment order being time barred not having been pressed at the time of hearing of the appeals before us, no longer survives for our consideration.

7. The only other ground relates to the charging of the interest under ss. 139 (8) and 217. However, we find that these grounds do not arise out of the order of the learned CIT(A). They are, therefore, not entertained.

8. In the result the appeals filed by the assessee have to be taken as having been partly allowed.

 

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