Case Law Details

Case Name : DCIT Vs All India Pingalwara Charitable Society (ITAT Amritsar)
Appeal Number : ITA Nos.212 & 431(Asr)/2014
Date of Judgement/Order : 25/02/2016
Related Assessment Year : 2010-11 & 2011-12
Courts : All ITAT (1731) ITAT Amritsar (23)

Brief of the Case

ITAT Amritsar held in the case of DCIT vs. All India Pingalwara Charitable Society that object of section 115BBC was to catch the unaccounted money which was brought in as Tax Free Income in the hands of the Charitable Trusts and this law was never meant for taxing the Petty Charities. The Legislature intended to tax the unaccounted money or black money which was brought in the books of charitable trusts in bulk and this law was not meant for taxing the small and general charities collected by the Genuine Charitable Trusts. Moreover, the concept and importance of charity, against the backdrop of the Indian Society, has been in existence from time memorial in all religions, without exception. Hence, CIT (A) has correctly deleted the addition for both the assessment years under consideration.

Facts of the Case

The assessee is a charitable society and is registered under section 12AA. The assessee is also registered u/s 80G. The assessee is stated to have been engaged in charitable activities.  The case of the assessee was selected for scrutiny under the CBDT guidelines. After examining the books of account produced and after going through the detailed list of donations in golaks for the AY 2010-11, the AO noticed that the assessee was stated to be in receipt of golak donations amounting to Rs.1,99,86,858/-.

After carrying out a comparison the total golak donations stated at RS.1,99,86,888/- as per list supplied with the appellant’s  reply and RS.82,97,352/- being 5% of total annual donations Rs.16,59,47,049/-, the resultant difference of Rs.1,16,89,535/-, according to the AO, represented  excess amount as per provisions of section 115BC. The AO proposed to tax the anonymous donations in accordance with the provisions of Section 115BBC (1), as against the assessee’s version that the same being cash received through golak, did not partake the character of the anonymous donations covered u/s 115BBC(2).

 Contention of the Assessee

The ld counsel of the assessee submitted that the amounts in question, deposited in the golaks installed in front of the Gurudwara, amounted to religious charity, which comes under the provisions of section 115BBC (2) (b) and they cannot be said to be anonymous donations; that charity is different from donation and in the present case, the amounts received represent charity and not donation. It has been submitted that in the earlier years, no such addition has been made by the Department and the facts in the year under consideration have not undergone any change from the said earlier years.

Contention of the Revenue

The ld counsel of the revenue submitted that the ld. CIT(A) has erred in law in deleting the addition made by the AO at Rs.1,16,89,535/- by invoking the provisions of section 115BBC(1)(i). She further submitted that the CIT (A) was not correct in treating the assessee trust to be covered under the provisions of section 115BBC (2) (b), ignoring the fact that the assessee is registered as a charitable trust and not as a religious and charitable trust.

Held by CIT (A)

CIT (A) deleted the addition.

Held by ITAT

ITAT held that CIT (A) deleted the addition, relying on the decision of the Hon’ble Gujarat High Court in the case of CIT vs. Barkate Saifiyah Society,  213  ITR 493 (Guj.)  No decision to the contrary has been cited. The CIT (A) also relied on the decision of the Hon’ble Supreme Court in the case of “Pat. Ram Chandra Shukla vs. Shree Mhahadeoji, Mahabirji and Hazrat Alikanur vs. Ors. 1969 SCC (3) 700, wherein, it has been held that there is no line of demarcation in the Hindu system between religion and charity. Again, no contrary decision has been cited or brought on record by the department.

The object of bringing sec.115BC in the Statute Book w.e.f. 01.04.2006 is well explained in the Memorandum explaining the provisions of the Finance Bill, 2006, reported in 281 ITR (St.) Page 148 and (St.) page 185. From memorandum, it is clear that the object was to catch the unaccounted money which was brought in as Tax Free Income in the hands of the Charitable Trusts and this law was never meant for taxing the Petty Charities. The Legislature intended to tax the unaccounted money or black money which was brought in the books of charitable trusts in bulk and this law was not meant for taxing the small and general charities collected by the Genuine Charitable Trusts.

Moreover, as contended, the concept and importance of charity, against the backdrop of the Indian Society, has been in existence from time memorial in all religions, without exception. The assessee, in this regard, has cited Zakaat from Islam, Dasvand from Sikhisim and the recognition of this concept from Manu-Samriti, the original magnum opus on the Indian social system. That this concept has continued to be accepted and practiced in India all along down the ages, and thus it is firmly entrenched in our society, cannot be questioned.

Accordingly, we hold that the CIT (A) has correctly deleted the addition for both the assessment years under consideration.

Accordingly appeals of the revenue dismissed.

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