Case Law Details

Case Name : Boyakonda Gangamma Devasthanam Vs ITO (ITAT Hyderabad)
Appeal Number : I.T.A. No.1983/HYD/2018
Date of Judgement/Order : 29/01/2021
Related Assessment Year : 2013-14
Courts : All ITAT (7783) ITAT Hyderabad (394)

Boyakonda Gangamma Vs ITO (ITAT Hyderabad)

The clinching fact that has come to our notice during the course of hearing is that this assessee is governed by the provisions of Andhra Pradesh Charitable and Hindu Religious Institutions and Endowments Act, 1987. This ‘Act’ received the assent of the President on 15-05-1987. Chapter-VIII Section 65 Explanation (1)(g) thereof stipulates that ‘donations in cash or kind by the donors as contributions to capital’ shall not be deemed to be income of the concerned institution. A perusal of the assessment order dt.09-02-2016 makes it clear that even the Assessing Officer was also fair enough in not disputing assessee’s hundis during the course of scrutiny.

In this case none of the lower authorities have disbelieved or rebutted the assessee’s plea that the impugned sums are in the nature of a ‘hundi receipts’ being donors’ donations in cash or kind only; as per the state endowment law. There can be no dispute in principle that in case of a general vis-à-vis specific provisions, the latter prevails over the former as per maxim ‘Generalis Specialibus Non Derogent’. We, however, do not find the facts of the case attracting ‘repugnancy’ qua the above state law vis-à-vis tax law as per Article 251 of the Constitution of India. The foregoing legal maxim also does not apply here. The clinching fact that emerges here is that assessee’s ‘hundi’ receipts in cash from donors are not revenue items but capital receipts only. The relevant provisions of the ‘Endowment Act’ duly makes it clear that they are corpus donations which nowhere go against the provisions of tax law. We therefore see no reason to sustain the learned lower authorities’ action treating the assessee’s hundi receipts embedded with specific purpose of corpus donation u/s.11(1)(d) of the Act are not entitled for exemption being revenue receipts. We thus direct the Assessing Officer to delete the impugned addition.

FULL TEXT OF THE ITAT JUDGEMENT

This assessee’s appeal for AY.2013-14 arises from the CIT(A)-Tirupati’s order dated 02-08-2018 passed in case No.420/2016-17/CIT(A)/TPT, in proceedings u/s.143(3) of the Income Tax Act, 1961 [in short, ‘the Act’].

Heard both the parties. Case file perused.

2. The assessee has raised the following substantive grounds in the instant appeal:

“1. The Order of the Learned Commissioner of Income Tax (Appeals), Tirupati, is erroneous and is not based on facts and circumstances of the case.

2. The Ld.Commissioner of Income Tax (Appeals), Tirupati erred in upholding the statement of the Ld. AO that corpus fund donations were utilised for day-to-day expenses. The Ld. CIT(Appeals) erred in not examining the financial picture put out by the Income and Expenditure statement and Balance Sheet of the appellant for the assessment year under appeal.

3. The Ld.Commissioner of Income Tax (Appeals), Tirupati erred in upholding the stand of the Ld. AO that the treatment of Corpus donations under the AP Charitable and Hindu Religious Institutions and Endowments Act 1987 has a bearing on the taxability of Corpus donations under the Income Tax Act 1961. The Ld.CIT (Appeals) and the Ld.AO erred in understanding that the nature and taxability of Corpus Donations is determined by the Income Tax Act 1961 and not by other statutes.

4. The Ld.Commissioner of Income Tax (Appeals), Tirupati erred in not allowing the plea of the appellant to file the Form 10 for accumulation at the appellate stage. The Ld.ClT(Appeals) erred in not considering the various judicial precedents laid in this behalf.

5. Any other ground may be urged with the kind permission of the Hon’ble Tribunal at the time of hearing”.

3. Both the learned representatives have taken us to the CIT(A)’s lower appellate discussion upholding the Assessing Officer’s impugned action as follows:

“6. I have considered the submissions made by the appellant and also findings given by the AO carefully. The AO treated the entire Hundi receipts and donations as regular income on several counts. The AR of the appellant makes a specific plea that appellant is maintaining a public Hundi, wherein inscription on the Hundi stated as “donations received through this Hundi are towards the corpus of the temple trust“. During the course of appellate proceedings, the AR of appellant showed the photographs of Hundi with inscription as described above. It was stated that devotees put the money in Hundi and these receipts were not offered as income, instead they are taken directly to the Balance Sheet which are added to the corpus fund. However, the AO gave a specific finding that the corpus fund was not utilised for a specific purpose, and entire money was utilised for day to day expenses of the assessee-devasthanam. The AR of the appellant did not dispute with any evidence as to what was the purpose for corpus fund and also how the money was utilised. The AR of the appellant did not dispute the findings of the AO that the corpus fund Was utilised for meeting day to day expenses of the assessee. The AR of the appellant also did not give details as to how many types of Hundies were maintained, i.e. the Hundies for corpus and also Hundies for general purpose. Since the money deposited in Hundies meant for corpus fund was utilised for day to day expenses of the assessee, it cannot be treated that donations received in Hundies were meant for a specific purpose with a specific direction. The contention of the appellant that similar practice was done in the past and the same was accepted cannot be a ground for allowing this claim in this year. The each year is different. The assessment proceedings in each year are independent. Therefore, the contention of appellant is rejected. The ratio of the decision of the Hon’ble Tribunal reported in 133 TTJ 57, cited by AR of the appellant is not applicable to the facts of the case. In the case cited by the AR of the appellant, it was noted that the concerned assessee maintained separate Hundies for construction of the building and also for general purposes. No such facts existed in the case. The AR of the appellant did not bring out any facts about existence of general Hundi, i.e. for meeting general expenditure, apart from Hundi for corpus fund, Moreover, the appellant included such receipts in the assessable income for calculation of the fees payable to the Endowment Department. The appellant’s plea to accept Form No.10 at the appellate stage is also not acceptable. Such form even though belated one, needed to be filed before Pr.Commissioner of Income Tax, not before CIT(Appeals). Therefore, the reliance placed by the appellant on the decision of the Gurajarat High Court, reported in 274 ITR 562 is also not tenable. Looking to the facts and circumstances of the case, and legal position on the issue, I confirm the action of the AO in treating the Hundi receipts and donations as regular income”.

4. Both parties reiterated their respective stands against and in support of the lower authorities’ action treating the assessee’s foregoing sum(s) as regular income. The clinching fact that has come to our notice during the course of hearing is that this assessee is governed by the provisions of Andhra Pradesh Charitable and Hindu Religious Institutions and Endowments Act, 1987. This ‘Act’ received the assent of the President on 15-05-1987. Chapter-VIII Section 65 Explanation (1)(g) thereof stipulates that ‘donations in cash or kind by the donors as contributions to capital’ shall not be deemed to be income of the concerned institution. A perusal of the assessment order dt.09-02-2016 makes it clear that even the Assessing Officer was also fair enough in not disputing assessee’s hundis during the course of scrutiny.

5. Learned CIT-DR at this stage vehemently argued that the provisions of the said Endowments law tend to override the provisions of the Income Tax Act despite the fact the latter law is specific in nature. Mr.Sai further threw light on legislative relations between the Union and the States as per Part-XI of the Constitution of India that the latter statute; enacted under Union list, prevails over the state endowment law hereinabove.

6. After giving our thoughtful consideration to the foregoing rival contentions, we find no merit in the Revenue’s stand. We wish to reiterate here that none of the lower authorities have disbelieved or rebutted the assessee’s plea that the impugned sums are in the nature of a ‘hundi receipts’ being donors’ donations in cash or kind only; as per the state endowment law. There can be no dispute in principle that in case of a general vis-à-vis specific provisions, the latter prevails over the former as per maxim ‘Generalis Specialibus Non Derogent’. We, however, do not find the facts of the case attracting ‘repugnancy’ qua the above state law vis-à-vis tax law as per Article 251 of the Constitution of India. The foregoing legal maxim also does not apply here. The clinching fact that emerges here is that assessee’s ‘hundi’ receipts in cash from donors are not revenue items but capital receipts only. The relevant provisions of the ‘Endowment Act’ duly makes it clear that they are corpus donations which nowhere go against the provisions of tax law. We therefore see no reason to sustain the learned lower authorities’ action treating the assessee’s hundi receipts embedded with specific purpose of corpus donation u/s.11(1)(d) of the Act are not entitled for exemption being revenue receipts. We thus direct the Assessing Officer to delete the impugned addition.

No other argument has been raised before us.

7. This assessee’s appeal is allowed.

Order pronounced in the open court on 29th January, 2021

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