IN THE ITAT DELHI BENCH ‘B’
Chiranjiv Charitable Trust
Vs
Additional Director of Income-tax (E), Range-1, New Delhi
IT APPEAL NOS. 3602 & 3856 (DELHI) OF 2009 AND 786 (DELHI) OF 2011
[ASSESSMENT YEARS 2006-07 & 2007-08]
APRIL 30, 2012
ORDER
R.P. Tolani, Judicial Member
This is a set of cross appeals for A.Y. 2006-07 and assessee’s appeal for A.Y. 2007-08. All these appeals are heard together and being disposed of by a common order for the sake of convenience. Respective grounds are as under:
ITA no. 3602/Del/09 (Assessee’s appeal for A.Y. 2006-07):
“1.1 That on the law, facts and in the circumstances of the case, the learned CIT (Appeals) has erred in sustaining the addition of Rs. 1.50 crores u/s 68 of Income-tax Act, 1961 being the corpus donation received by the appellant trust from S. Jagjit Singh in utter disregard to the facts and evidence of the case on record as reproduced in the impugned order and relying merely on alleged denial of making any donation in form of statement recorded by the Additional Director of Income-tax (Investigation), inter alia, the learned CIT (Appeals) failed to appreciate that without allowing the requested opportunity to the appellant to cross examine the party, the said evidence could not be used as evidence in law.
1.2 Without prejudice, even otherwise, the alleged assertion of the party in the statement denying the fact of making the donation stood vitiated by other evidence on record, the party himself not disputing the donation to the appellant Trust of his own funds and under his own direction.
2. That on the law, facts and in the circumstances of the case, the learned CIT (Appeals) has erred in sustaining the addition of Rs. 25 lacs as corpus donation received by means of account payee cheque from Shri Piyush Jain in utter disregard to the confirmatory letter dated 24-02-2006 forwarding the donation containing details of payment of cheque and details of bank account number and branch as also the appellant’s request for summoning the party and the requisite information from his bank account.
3. That on the law, facts and in the circumstances of the case, the learned CIT (Appeals) has erred in treating the development fund charges of Rs. 59,58,384/- recovered during the year and directly credited to the development fund in the balance sheet as corpus of the trust. The receipts were embedded as source with the obligation to apply them to the development activities for the welfare of the students.
4. That on the law, facts and in the circumstances of the case, the learned CIT (Appeals) has erred in confirming the denial of depreciation in computing the real income for the purpose of determination of application of income on the ground that investment in fixed assets had duly been claimed as application of income and acceptance of the appellant’s claim amounted to granting of double deduction.
5. That the order of CIT (Appeals) is wrong being in violation of the principles of natural justice and contrary to facts and law of the case.
6. That the appellant craves leave to add, alter or amend or forego any grounds of appeal at the time of hearing.
ITA no. 3856/Del/09 (Revenue’s appeal for A.Y. 2006-07):
“1. Whether on the facts & in the circumstances of the case, the ld. CIT(A) was correct in holding that there was no violation of the provisions of Section 13(1)(c) read with Section 13(2) of the I.T. Act, 1961 particularly when a sum of Rs. 8,17,15,200/- was in fact given as loan or advance by the assessee to M/s Ansal Properties and Infrastructure Ltd. and as such it cannot be treated as the sum paid for purchase of plots from M/s Ansal Properties and Infrastructure Ltd. at Gurgaon.
2. Whether on the facts & in the circumstances of the case, the ‘Agreement to Sell’ entered into by Charanjiv Charitable Trust with Ansal Properties and Infrastructure Ltd. in March 2004 can be considered as real or genuine for effecting the transfer of plots at Gurgaon particularly when such agreement was, a colourable device, made simply for facilitating transfer of funds by the assessee to M/s Ansal Properties and Infrastructure Ltd. in order to escape the rigors contained in Section 13(1)(c) read with section 13(2) of the Income-tax Act, 1961.
3. Whether on the facts & in the circumstances of the case, the ld. CIT(A) was correct in holding that there was no violation of the provisions of Section 13(1)(c) read with section 13(2) of the Income-tax Act, 1961, particularly when ‘interest’ and ‘rent’ outstanding at Rs. 51,59,370/- and Rs. 9,54,240/-respectively on 31-03-2006 continued to be lent to M/s Ansal Properties and Infrastructure Ltd. by the assessee.
4. Whether on the facts & in the circumstances of the case, the ld. CIT(A) was correct in holding that advances made by the assessee to Charanjiv Educational Society were meant for establishing an educational institution at Chhattisgarh particularly when Charanjiv Educational Society was not registered u/s 12A of the Act.
5. Whether on the facts & in the circumstances of the case, the ld. CIT(A) was correct in holding that there was no violation of the provisions of Section 13(1)(c) read with section 13(2) of the Income-tax Act, 1961, particularly when an amount of more than Rs. 2 crores was continued to be lent to Charanjiv Educational Society during the relevant accounting period and a sum of Rs. 16,55,448/- remained payable on 31-03-06.
6. Whether on the facts & in the circumstances of the case, the ld. CIT(A) was correct in holding that corpus donation received by the assessee from M/s HCL Corporation Ltd. and M/s Blue Bird Electrotrading Ltd. amounting respectively to Rs. 15,00,000/- and Rs. 13,00,000/- are eligible for benefit u/s 11(1)(d) of the Income Tax Act, 1961.
7. The Appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal.”
ITA no. 786/Del/11 (Assessee’s appeal for A.Y. 2007-08):
“1.1 That on the law, facts and in the circumstances of the case, the learned CIT(A) has erred in not following the decision of his predecessor CIT(A) and in holding that the amount of Rs. 16,58,736/- standing debited in the name of Chiranjiv Educational Society was a transaction in violation of provisions of section 13(1)(c) read with section 13(2) of the Act on the mere ground that Chiranjiv Educational Society was not registered u/s 12A of the Income-tax Act which was mandatory without rejecting the explanation of the appellant that monies given to the Society were in pursuance of the objects of the appellant trust and were solely given and also solely utilized by the society for establishing a private university in Chhattisgarh.
1.2 Without prejudice, the learned CIT (Appeals) has erred in holding that it was mandatory for the society to have been registered u/s 12A of the Income-tax Act. There was no such mandatory provision under the Income-tax Act.
1.3 Without prejudice to the foregoing grounds, even otherwise, there was no violation of the provisions of section 13(1)(c) and section 13(2) in as much as the society could not be regarded as a concern in which the trustees or other specified persons were substantially interested within the meaning of Explanation 3 to Sub-section (7) of Section 13 of the Income-tax Act.
2. That on the law, facts and in the circumstances of the case, the learned CIT(A) has erred in not following the decision of his predecessor CIT(A) in the immediately preceding year and in holding that the amount standing debited as interest receivable in the account of Ansal Properties & Industries Limited (APIL) constituted violation of Section 13(1)(c) read with section 13(2) of the Income-tax Act without considering and appreciating the appellant’s explanation that the outstanding amount neither represented any advance, deposit nor an investment in APIL.
2.2 That without prejudice to the above, the learned CIT(A) failed to consider and appreciate that the amount had been set off against the credit balance in the account of APIL there being sufficient opening and closing credit balance in the account of APIL.
3. That on the law, facts and in the circumstances of the case, the learned CIT(A) has erred in confirming the addition of Rs. 59,06,750/- recovered by the Appellant Trust towards development fund charges directly crediting the same to the development fund in the Balance Sheet as corpus of the trust in utter disregard to the fact that the receipts were embedded at source with the obligation to apply the same solely for development activities and welfare of the students.
4. That on the law, facts and in the circumstances of the case, the learned CIT(A) has erred in confirming the addition of Rs. 25,00,000/-u/s 68 received as donation from M/s Kuberswamy Ashutosh Consultants (P) Limited. He, inter alia, failed to consider and appreciate the fact that in response to summons u/s 131, the party had duly appeared through his representative and not only confirmed the donation and also filed copy of its bank account in support.
5. That on the law, facts and in the circumstances of the case, the learned CIT(A) has erred in confirming the addition of Rs. 9,06,000/- u/s 68 received as donation from M/s Sun Systems Institute of Information Technology (P) Limited by not properly and judiciously appreciating the evidence adduced before him.
6. That the order of CIT (Appeals) is wrong being in violation of the principles of natural justice and contrary to facts and law of the case.
7. That the appellant craves leave to add, alter or amend or forego any grounds of appeal at the time of hearing.
2. Brief facts are: Assessee is a charitable trust registered u/s 12A of the Income-tax Act, 1961 since 28-5-1976. It is one of the group trust managed by Ansal group. The main objects of the Trust include to promote and encourage educational activities and in furtherance thereof, it runs various educational organizations, which are as under:
a. Charanjiv Bharti School, Palam Vihar, Gurgan.
b. Charanjiv Bharti School, Sushant Lok, Gurgan
c. Sushant School of Art & Architecture, Sushant Lok, Gurgaon; and
d. Ansal Institute of Technology, Sushant Lok, Gurgaon.
2.1 The trust has been assessed to tax in earlier years enjoying benefits u/s 11 & 12, there is no change in the objects of the trust. For the impugned A.Y. 2006-07 it filed its return of income with following computation:
