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R.D. Foundation v. Income Tax Officer, Ward (Exemption) .

Income Tax Appellate Tribunal
Feb 5, 2019
Judgment
Subsequent
References
CaseIQ
Case Information
CITATION CODES
citation codes
CASE NO.

ITA No. 7877/Del/2018 Assessment Year: 2010-11

Attorney(S)

Dr. Rakesh Gupta, Adv. & Sh. Shubham Sobit, Adv. for Assessee

Sh. Sunrender Pal, Sr. DR. for Department

JUDGES

H.S. Sidhu, J.M.

L.P. Sahu, A.M.

ACTS

exempt u/s 10(23)(iiiad) and benefit of section 11 and 12

u/s 143(3) of the Income Tax Act, 1961 (in short Act)

sub-section (2) of s. 12A by Finance Act, 2014

exempt u/s 10(23C)(iiiad) of Income Tax Act.

u/s 10(23C)(iiiad) of the Income Tax Act,

provision of section 11 arid 12

section 11 and section 12

section 11 sand 12

FINANCE ACT 2014

section 11 2 & 12

section 11(1)(d)

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Smart Summary (Beta)

Concise Analytical Summary of the ITAT Opinion (Dated 05/02/2019)

Factual and Procedural Background

The appeal arises from the assessee's challenge to the order dated 24.10.2018 of the learned CIT(A), Ghaziabad in respect of assessment year (A.Y.) 2010-11. The Assessing Officer (A.O.) completed the original assessment under section 143(3) of the Income Tax Act, 1961 on 22.03.2013 at a total income of Rs. 3,24,88,010/-. The assessee appealed to the CIT(A) (order dated 19.02.2015), and the Tribunal in ITA 3229/DEL/2015 disposed the appeal on 29.06.2016 by restoring issues to the A.O. for fresh adjudication and directing the A.O. to consider certain higher court and Tribunal decisions (including Queens Educational Society 372 ITR 699 (SC) and Sree Sree Ram Krishna Samity 156 ITD 646 (Kol.)). Pursuant to that remand, the A.O. passed a fresh assessment order on 29.11.2017 (under section 143(3) and in the light of remand). The CIT granted registration under section 12AA by letter dated 16.07.2013 with effect from 01.04.2011 after an earlier refusal dated 28.10.2011 (the refusal having been addressed by the Tribunal's order dated 12.11.2012). The assessee filed the present appeal before the Tribunal against the CIT(A)'s order of 24.10.2018. The Tribunal pronounced its decision on 05.02.2019, partly allowing the appeal.

Legal Issues Presented

  1. Whether the assessee is entitled to the benefits of sections 11 and 12 for A.Y. 2010-11 in view of registration under section 12AA granted w.e.f. 01.04.2011 (and the proviso to section 12A(2) inserted by Finance Act, 2014).
  2. Whether corpus donations amounting to Rs. 1,63,00,000/- are exempt under section 11(1)(d) or taxable.
  3. Whether the addition of Rs. 1,61,20,000/- (loans treated as unexplained under section 68) is justified.
  4. Whether the assessee's income is exempt under section 10(23C)(iiiad).
  5. Whether the deficit of Rs. 88,85,091/- ought to be reduced as per law (in light of other reliefs sought).

Arguments of the Parties

Appellant's (Assessee's) Arguments

  • The assessee contended that registration under section 12AA was granted by the Commissioner with effect from 01.04.2011 (order dated 16.07.2013), and thus the proviso to section 12A(2) (inserted by Finance Act, 2014) should be read as clarificatory/retrospective so as to make sections 11 and 12 applicable to A.Y. 2010-11 (the assessment year under appeal), particularly because assessment proceedings were pending when registration was granted.
  • The assessee relied on Tribunal and High Court decisions (e.g., Sree Sree Ram Krishna Samity 156 ITD 646 (Kol.), SNDP Yogam (2016) 161 ITD 1 (Cochin), ITO vs. Shri Vishwakalyan Jivraksha (Pune order dated 22.07.2016)) to support retrospective application of the proviso and entitlement to sections 11 and 12.
  • Regarding corpus donations of Rs. 1,63,00,000/-, the assessee argued that the amounts were originally received as loans in the previous year (relevant to A.Y. 2009-10), accepted as genuine loans for A.Y. 2009-10, and later converted into corpus donations by letters from the lenders; therefore, section 11(1)(d) exemption should apply. Alternatively, corpus donations are capital receipts and not taxable even if registration were not available.
  • Regarding the aggregate addition of Rs. 1,61,20,000/-, the assessee produced confirmations, bank evidence of receipts and repayments, tax returns and other documents to establish identity, creditworthiness and genuineness of the lenders and the loans (contending that notices under section 133(6) were served on lenders and non-compliance by them should not prejudice the assessee).
  • The assessee also relied on multiple authorities concerning the burden and standards for additions under section 68 (citing several case laws included in their compilation, e.g., Pr. CIT vs. Hi‑Tech Residency (SC), CIT vs. Real Time Marketing (Del.), and others) to support the contention that the loans were genuine and not to be taxed as unexplained.

Respondent's (Revenue's) Arguments

  • The Senior Departmental Representative (Sr. DR) opposed retrospective application of the proviso to section 12A(2), arguing that the proviso (inserted w.e.f. 01.10.2014) is not retrospective and that registration granted w.e.f. 01.04.2011 cannot validate exemption claims for A.Y. 2010-11 where the registration date and the pendency of assessment appeal issues differ materially.
  • On corpus donations, the Sr. DR relied on the Chennai Bench decision in Rasipuram Rotary Club Trust vs. ITO (ITA No. 45/MDS/2015) and the Supreme Court decision in U.P. Forest Corporation vs. DCIT (297 ITR 1 (SC)) to contend that corpus donations received by an unregistered trust are taxable.
  • Regarding the disallowance under section 68 (addition of Rs. 1,61,20,000/-), the Sr. DR relied on the assessment records and a Delhi High Court decision (DCIT vs. NDR Promoters P. Ltd., ITA No. 49/2018 dated 17.01.2019) to support the additions, arguing that the assessee had not met the statutory ingredients for proving the loans.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court in this Opinion
Sree Sree Ram Krishna Samity vs. DCIT (2016) 156 ITD 646 (Kol.) Supports the view that the proviso to section 12A(2) can be given retrospective/clarificatory effect where registration is granted and assessment proceedings are pending. The Tribunal relied upon this decision to support the assessee's entitlement to sections 11 and 12 for A.Y. 2010-11 in view of registration w.e.f. 01.04.2011 and pending proceedings.
Queens Educational Society 372 ITR 699 (Supreme Court) Authority on the application of exemption provisions to educational activities (as followed by the A.O. in the assessment order). Noted that the A.O. had followed this Apex Court decision and allowed exemption under section 10(23C)(iiiad) in the assessment order; the Tribunal treated this as supporting that the trust was engaged solely in educational activities.
SNDP Yogam vs. Asstt. DIT (Exemption) (2016) 161 ITD 1 (Cochin) Explains that where registration under section 12AA was granted during pendency of appeals, such pendency should be treated as assessment proceedings pending before the A.O. for the purposes of the proviso; supports purposive interpretation. The Tribunal reproduced and relied on this decision to hold that registration granted while appeals were pending entitles the assessee to exemption under section 11.
ITO vs. Shri Vishwakalyan Jivraksha (ITA No. 2013/Pune/2014, dated 22.07.2016) Listed by the assessee as supporting retrospective/clarificatory application of proviso and entitlement to exemption. Referred to by the Tribunal as part of the body of authorities supporting the assessee's claim to sections 11 and 12 for the year under appeal.
U.P. Forest Corporation vs. DCIT 297 ITR 1 (Supreme Court) Authority cited by Revenue to support the proposition that corpus donations received by an unregistered entity may be taxable. The Tribunal considered this decision but held it not applicable on the facts because registration is deemed granted by reason of the proviso to section 12A(2) (as interpreted) and, alternatively, held that corpus donations are capital receipts and not taxable; thus the Tribunal found U.P. Forest Corporation distinguishable.
Rasipuram Rotary Club Trust vs. ITO (ITA No. 45/MDS/2015) (Chennai Bench, single‑member) Held (per the Revenue's reliance) that corpus donations to an unregistered trust are taxable. The Tribunal observed this is a single-member bench decision and chose to follow division-bench and High Court decisions to the contrary; the Tribunal declined to follow Rasipuram for the facts here.
DCIT vs. Basanti Devi & Shri Chakhan Lai Garg Education Trust (Delhi High Court, order dated 23.09.2009) Authority holding that corpus donations may be capital receipts and not taxable even if trust is not registered under section 12AA. The Tribunal cited and followed this High Court decision as supporting the alternative contention that corpus donations are capital receipts and not taxable.
Pr. CIT vs. Hi‑Tech Residency (P) Ltd. (2018) 257 Taxmann 335 (SC) Part of the body of authorities concerning evidentiary standards for proving loans/credit transactions (relied upon by the assessee). The Tribunal observed that decisions relied upon by the assessee — including this Supreme Court authority — support the case that the assessee had established identity, creditworthiness and genuineness of lenders/loans for purposes of section 68.
Pr. CIT vs. Hi‑Tech Residency (P) Ltd. (2018) 257 Taxmann 390 (Delhi) Same body of principles (as cited by assessee) on proving genuineness of loans. Referred to as part of the compilation of authorities that the Tribunal found supportive of the assessee's proof of loans.
CIT vs. Real Time Marketing P. Ltd. (2008) 306 ITR 35 (Delhi) Principles relevant to proof of cash/loan transactions and applicability for additions under section 68. Included in the assessee's compilation and relied upon by the Tribunal as supporting the assessee's evidentiary showing about loans.
CIT vs. Jai Kumar Bakiliwal (2014) 366 ITR 217 (Raj) Authority cited on evidentiary aspects for additions under section 68. Part of the set of precedents that the Tribunal found corroborated the assessee's case on the genuineness of loans.
Aravli Trading Co. vs. ITG (2010) 187 Taxmann 338 (Raj) Relied upon by the assessee regarding proof of loans and related standards. Listed among the cases that supported the assessee's position; the Tribunal said the aggregate of such authorities supported deletion of the addition under section 68.
Nemi Chand Kothari vs. CIT & Anr. (2003) 264 ITR 254 (Gau) Evidentiary principles regarding unexplained cash/loans and additions. Part of the body of authorities considered by the Tribunal in assessing whether the assessee had proved identity/creditworthiness/genuineness.
CIT vs. Shri Ram Narain Goel (1997) 224 ITR 180 (P&H) Older authority on principles relevant to section 68 additions. Included in the compilation relied upon by the assessee; the Tribunal considered the collective force of these precedents in favour of the assessee.
DCIT vs. NDR Promoters P. Ltd. (ITA No. 49/2018 dated 17.01.2019) Decision relied upon by Revenue in support of making additions under section 68. The Tribunal found the facts of the present case materially different from that decision and therefore did not follow it; the Tribunal nevertheless considered it in the contest of other authorities.

Court's Reasoning and Analysis

The Tribunal's analysis proceeded issue by issue, grounded in the facts on record and the authorities placed before it:

  1. Registration and applicability of sections 11 and 12 (Ground No. 1):
    • The Tribunal observed that the A.O. had treated the assessee as engaged solely in educational activities and had followed the Queens Educational Society (372 ITR 699 SC) in the assessment order to allow exemption under section 10(23C)(iiiad).
    • The Commissioner had initially refused registration (order dated 28.10.2011) on a technical jurisdictional ground but, after the Tribunal's direction (order dated 12.11.2012), the Commissioner granted registration on 16.07.2013 with effect from 01.04.2011. There were no adverse findings by the Commissioner on the objects or activities of the trust.
    • The Tribunal examined the first proviso to section 12A(2) (inserted by Finance Act, 2014 w.e.f. 01.10.2014) which provides that where registration under section 12AA is granted, sections 11 and 12 shall apply in respect of income of preceding assessment years for which assessment proceedings are pending before the A.O. as on the date of registration, provided objects and activities remain the same.
    • Given that registration was granted effective 01.04.2011 and when the impugned assessment order was passed on 29.11.2017 registration had already been granted, and that there were no adverse observations showing that objects/activities had changed, the Tribunal concluded that the proviso applied and sections 11 and 12 should be made available for A.Y. 2010‑11.
    • The Tribunal reinforced this conclusion by reference to Kolkata and Cochin Tribunal decisions (including Sree Sree Ram Krishna Samity and SNDP Yogam) which support treating pending appellate proceedings as proceedings pending before the assessing officer for the purpose of the proviso and adopting a purposive interpretation.
  2. Corpus donations of Rs. 1,63,00,000/- (Ground Nos. 2 & 3):
    • The A.O. had taxed these amounts on the view that section 11(1)(d) was not available because the trust was not registered under section 12AA in the year under appeal. The A.O. relied on the Supreme Court decision in U.P. Forest Corporation and on a Chennai Bench decision (Rasipuram Rotary Club Trust) taking a contrary view.
    • The Tribunal found that (i) these amounts were originally accepted as loans in the previous year (relevant to A.Y. 2009‑10) where the A.O. had accepted their genuineness; (ii) the lenders had provided letters converting loans into corpus donations (paper book pages 64–72); and (iii) there were no adverse observations on the nature of those donations in the earlier assessment.
    • Because the Tribunal had already concluded (under Ground No. 1) that the trust is entitled to the benefits of sections 11 and 12 for the year under appeal, section 11(1)(d) applied and the corpus donations are exempt.
    • Alternatively, the Tribunal noted authorities (including the Delhi High Court decision in Basanti Devi) holding that corpus donations are capital receipts and not taxable even if registration were not in place; thus, on that alternative footing the amounts would still not be taxable.
    • The Tribunal distinguished the U.P. Forest Corporation decision on the facts, and declined to follow the single‑member Chennai Bench Rasipuram decision in preference to division‑bench and High Court authorities favorable to the assessee.
  3. Additions of Rs. 1,61,20,000/- under section 68 (Grounds Nos. 4 & 5):
    • The A.O. made additions treating amounts received from five parties as unexplained under section 68. The A.O. was not satisfied about ingredients of section 68.
    • The assessee produced confirmations, ledger entries, PANs, bank statements showing receipt and substantial repayment through banking channels, income-tax returns of lenders, and other documentary material (the Tribunal catalogued numerous paper book pages — PB 83–127, PB 169–186, etc.).
    • The Tribunal reviewed the evidentiary material and concluded that the assessee had established identity, creditworthiness and genuineness of the loans, and demonstrated repayments through banking channels; hence the ingredients of section 68 for making additions were not satisfied.
    • The Tribunal considered the Delhi High Court decision relied on by the Revenue but found the facts materially different (no share capital involved, no evident accommodation entries), and therefore deleted the addition of Rs. 1,61,20,000/-. The Tribunal observed that the precedents relied upon by the assessee supported this outcome.
  4. Exemption under section 10(23C)(iiiad) (Ground No. 6) and deficit (Ground No. 7):
    • The Tribunal noted that the A.O. himself had allowed exemption under section 10(23C)(iiiad) in the assessment order (para 4.1 of the assessment order). On that basis it held that the income of the trust is exempt under section 10(23C)(iiiad).
    • Because the trust's income was held exempt under section 10(23C)(iiiad) and because sections 11 and 12 were held applicable, Ground No. 7 (relating to reduction of deficit) was found to have no substance and was dismissed.

Holding and Implications

Holding: PARTLY ALLOWED — The Tribunal partly allowed the assessee's appeal.

Direct consequences and directions:

  • The Tribunal directed the Assessing Officer to grant the benefit of sections 11 and 12 to the assessee for A.Y. 2010‑11, treating the registration under section 12AA (granted w.e.f. 01.04.2011 by order dated 16.07.2013) as validating the exemption in terms of the proviso to section 12A(2) (as interpreted by the Tribunal and supported by cited Tribunal decisions).
  • The addition of Rs. 1,63,00,000/- (corpus donations) was deleted; those donations were held exempt under section 11(1)(d) (and alternatively characterized as capital receipts not taxable).
  • The addition of Rs. 1,61,20,000/- (amounts treated under section 68) was deleted on the basis that the assessee proved identity, creditworthiness and genuineness of the lenders and produced repayment evidence.
  • The Tribunal held that the trust's income is exempt under section 10(23C)(iiiad) (as the A.O. had allowed), and consequently Ground No. 7 (reduction of deficit) was dismissed for lack of substance.
  • The appeal was thus partly allowed and the order was pronounced on 05/02/2019 by the Tribunal (Accountant Member L.P. Sahu; Judicial Member H.S. Sidhu).

Broader implications: The Tribunal applied existing Tribunal and High Court authorities to interpret the proviso to section 12A(2) in a manner favorable to the assessee where registration was granted with an earlier effective date and where assessment proceedings were pending; the Tribunal did not purport to lay down a novel principle of law beyond applying cited precedents and distinguishing adverse authorities on their facts.

Order pronounced on: 05/02/2019. Result: Appeal partly allowed. Copy intimations were directed to the appellant, respondent, CIT, CIT(A) and the DR, ITAT.

Show all summary ...

PER H.S. SIDHU, JM This appeal has been filed by the Assessee against the order dated 24.10.2018 of the Ld. CIT(A), Ghaziabad relating to assessment year 2010-11. The assessee has raised the following grounds.

1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in not allowing the benefit of section 11 & 12 and that too in the light of decision of Kolkata Bench of ITAT in the case of Sree Sree Ramkrishna Samity vs DCIT (2016) 156 ITD

646.

2. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making addition of Rs. 1,63,00,000/- on account Of corpus donation by observing that assessee has not qualified for exemption u/s ll(l)(d) and that too by recording incorrect facts and findings and without observing the principles of natural justice.

3. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making addition of Rs. 1,63,00,000/- on account of corpus donation by observing that assessee has not qualified for exemption u/s 11(1)(d), is bad in law and against the facts and circumstances of the case.

4. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making addition of Rs.1,61,20,000/- on account of loan received and that too by recording incorrect facts and findings and without observing the principles of natural justice.

5. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making addition of Rs. 1,61,20,000/- on account of loan received, is bad in law and against the facts and circumstances of the case.

6. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not holding the entire income assessed as exempt u/s 10(23C)(iiiad) of Income Tax Act.

7. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not reducing the deficit of Rs. 88,85,091/- as per law.

8. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.

2. The brief facts of the case are that the assessee filed its original assessment in this case for A.Y. 2010-11 and AO completed the assessment u/s 143(3) of the Income Tax Act, 1961 (in short Act) on 22.03.2013 at total income of Rs.3,24,88,010/-. Assessee appealed against the said assessment order, which was dismissed by the Ld. CIT(A) vide his order dated 19.02.2015 against which assessee preferred appeal before the Tribunal which was disposed by Tribunal vide its order dated 29.06.2016 in Appeal No. ITA 3229/DEL/2015. Copy of the order of the Tribunal dated 29.06.2016 is enclosed at page 283 to 303 of the paper book filed by the assessee, according to which all the issues involved in that appeal were restored to the A.O. for fresh adjudication and it was directed by the Tribunal in that order to A.O. to consider the decision of the Honble Apex Court in the case Queens Educational Society 372 ITR 699(SC) and also the decisions of Kolkata Bench in the case Sree Sree Ram Krishna Samity 156 ITD 646. Accordingly, the present assessment order dated 29.11.2017 was passed by the A.O. u/s 143(3) /

254. The appeal order dated 24.10.2018 was passed by Ld. CIT(A), Ghaziabad against which the present appeal before us has been filed raising the above mentioned grounds of appeal. At the time of hearing Counsel for the Assessee, Dr. Rakesh Gupta filed written synopsis and also orally argued the case and relied upon various pages of paper book also. Ld. Counsel for the assessee filed case laws compilation consisting 19 cases running into 119 pages. Ld. Counsel for the assessee made submissions relating to GROUND NO. 1 and contended that benefit of section 11 and 12 should be granted to the assessee in view of the fact that registration u/s 12AA has been granted by the Commissioner w.e.f. 01.04.2011 vide letter dated 16.07.2013. Ld. Counsel drew our attention to page 62-63 of the paper book, which is the order passed by CIT, dated 16.07.2013 in which registration has been granted w.e.f. 21.04.2011. Ld. Counsel for the assessee submitted that proviso to section 12AA(2) was inserted w.e.f. 01.04.2014 but which should be read as retrospective as it is clarificatory in nature. Ld. Counsel for the assessee drew our attention to page 159 to 161, 166- 168 of the paper book explaining the case of the appellant and relied upon the following judicial decisions in support of his contention:- Sree Sree Ram Krishna Samity vs. DCIT, (2016) 156 ITD 0646 (Kol.) SNDP Yogam vs. Asstt. DIT (Exemption), (2016) 161 ITD 0001 (Cochin.) ITO vs. Shri Vishwakalyan Jivraksha, ITA No. 2013/Pune/ 2014, dated 22.07.2016.

3. On the other hand, Ld. Sr. DR opposed the contention made on behalf of the assessee and submitted that benefit of section 11 and 12 was granted w.e.f. 01.04.2011, whereas the case of the assessee relates to A.Y. 2010-11. Ld. Sr. DR further argued that proviso to section 12A(2) is not retrospective and the case laws relied upon by Ld. Counsel are distinguishable and registration was not granted during the period when assessment was pending of the present assessment year.

4. Having heard the rival submissions and having gone through the paper book, case laws cited before us, we are of the considered view that appellant is bound to succeed in respect of Ground No. 1. It is seen from para 4.1 at page 3 of the assessment order that assessee has been treated as engaged solely in the educational activities and has been , granted exemption by the A.O. himself u/s 10(23C)(iiiad) by following the decision of the Apex Court in the case Queens Educational Society 372 ITR 699(Supra). It is also seen that CIT has granted registration w.e.f. 01.04.2011 vide his letter dated 16.07.2013 as is clear from page 62-63 of the paper book. Registration initially was refused by Ld. CIT vide his order dated 28.10.2011 on the technical ground that since assessees Trust is registered in Delhi, he being CIT, Ghaziabad does not have jurisdiction. Copy of this order dated 28.10.2011 is enclosed at page 325-326 of the paper book. Thus, it is clear that registration initially was refused on the technical ground that CIT did not have jurisdiction on the assesse trust. There were no adverse comments / findings or observations of CIT either in the matter of objects of the trust or in respect of the activities of the trust. When this order dated 28.10.2011 was appealed by the assessee before the Tribunal, the Tribunal vide its order date 12.11.2012 restored the matter back to the CIT to consider the issue on merit and further that if CIT, Ghaziabad does not have jurisdiction, then CIT, Ghaziabad should transfer the application to the CIT, who holds jurisdiction over the assessee trust. This order of the Tribunal dated 12.11.2012 is available at page 327-330 of the paper book. The registration order dated 16.07.2013 was passed by CIT after receiving the direction from the Tribunal vide its order dated 12.11.2012 and such registration order is available at page 62-63 of the paper book in which CIT held that he was having jurisdiction over the assessee trust and since he was satisfied as to the charitable objects and activities of the trust, registration u/s 12AA was granted with effect from 01.04.2011. We find that first proviso has been inserted to section 12A(2), which is reproduce d as under:- Provided that where registration has been granted to the trust or institution under section 12AA, then, the provisions of sections 11 and J2 shall apply in respect of any income derived from property held under trust of any assessment year preceding the aforesaid assessment year, for which assessment proceedings are pending before the Assessing Officer as on the date of such registration and the objects and activities of such trust or institution remain the same for such preceding assessment year: Provided further that no action under section 147 shall be taken by the Assessing Officer in case of such trust or institution for any assessment year preceding the aforesaid assessment year only for non-registration of such trust or institution for the said assessment year: Provided also that provisions contained in the first and second proviso shall not apply in case of any trust or institution which was refused registration or the registration granted to it was cancelled at any time under section 12AA. 4.1 The above proviso was added by Finance Act, 2014 w.e.f 01.10.2014, according to which, if registration has been granted to the trust then the provision of section 11 arid 12 shall apply in respect of any income derived from property held under trust of any assessment year preceding the aforesaid assessment year for which assessment proceedings are pending before the A.O. as on the date of such registration. 4.2 In the instant case, original assessment order was passed on 22.03.2013 whereas the registration was granted by CIT vide his order dated 16.07.2013 but it cannot be ignored that the registration was given w.e.f. 01.04.2011. It is also seen that the assessment order dated 22.03.2013 was appealed by the assessee and thus as on 16.67.2013, the appeal was pending before CIT(A). In any case when the present assessment order was passed on 29.11.2017 after the remand by the Tribunal, registration was already granted by CIT vide his order dated 16.07.2013. Therefore, in our considered opinion, the case of the appellant stands on better footing in as much as the registration stood already granted when the present assessment order was passed on 29.11.2017. Thus the benefit of section 11 and 12 should be made available to the assessee for the present assessment year i.e. A.Y. 2010- 11 also in terms of the proviso to section 12A(2). Ld. CIT while granting registration vide his order dated 16.07.2013 or the A.O. while passing the impugned assessment order have not made any adverse observation about the objects and activities of the assessees trust or that the objects and activities of assessee trust were not same in the year when the registration was granted. In other words the objects and activities of the trust remained same in A.Y. 2010-11 and in A.Y. 2012-13 and therefore, the conditions as required in terms of proviso to section 12A(2) stand met in the preset case. We are fortified in support our view and also as to the retrospectivity of the amendment, with the decision of Kolkata bench in Sree Sree Ram Krishna Samity vs. DCIT, (2016) 156 ITD 0646 (Kol.) 86 SNDP Yogam vs. Asstt. D1T (Exemption), (2016) 161 ITD OOO1(Cochin) 86 ITO vs. Shri Vishwakalyan Jivraksha, ITA No. 2013/Pune/ 2014, dated 22.07.2016. It is appropriate to reproduce the relevant portion of the decision of Cochin Bench in the case of SNDP Yogam vs. Asstt. DIT (Exemption) (Supra . When section 12A of the Act was amended by introducing new provisos to sub-section (2) of s. 12A by Finance Act, 2014 with effect from 01.10.2014, the assessment orders passed by the assessing officer in respect of the present assessee were pending in appeal before the first appellate authority. During such pendency, the assessee was granted registration u/s 12AA of the Act on 29.07.2013 w.e.f. the assessment year 2013-14. Those appeals were the continuation of the original proceedings and that the power of the Commissioner of Income-tax was co- terminus with that of the assessing officer [ADIT (Exemption) in the present case] were two well established principles of law. In view of the above and going by the principle of purposive interpretation of statues, an assessment proceeding which is pending in appeal before the appellate authority should be deemed to be assessment proceedings pending before the assessing officer' within the meaning of that term as envisaged under the proviso. It follows there-from that the assessee which obtained registration u/s I2AA of the Act during the pendency of appeal was entitled for exemption claimed u/s 11 of the Act. 4.3 Therefore, in view of the above discussion we hold that assessee is entitled to the benefit of registration & section 11 &

12 of the Act in the present assessment year i.e. AY 2010-11 also and it is directed to Ld. A.O. to grant benefit of section 11 and 12 to the assesee. Accordingly, this ground of appeal is decided in favour of the appellant-assessee.

5. Regarding Ground No. 2 & 3 in which challenge has been made to the addition of Rs. 1,63,00,000/- on account of corpus donations, A.O. held that such corpus donation cannot be treated as exempt u/s 11(1)(d) as according to the A.O. assessee trust is not registered u/s 12AIA in the year under appeal. 5.1 The facts relating to this addition are that assessee raised loans aggregating to Rs. 1,63,00,000/- from nine persons during the F.Y. 2008-09 as under:- S.NO. NAME AMOUNT

1. Anuj Mittal Rs.20,00,000/-

2. Ashwani Goel Rs. 18,00,000/-

3. Dhanesh Chand Gupta Rs. 15,00,000/- 1

4. Mayank Goel Rs. 20,00,000/-

5. Naresh Agarwal Rs. 20,00,000/-

6. Rakesh Mohan Goel Rs. 15,00,000/-

7. Shivalya Steel Rs. 20,00,000/-

8. Sushma Bhatia Rs. 20,00,000/-

9. Tejindra Singh Rs. 15,00,000/- 5.2 During the year covered by the present appeal, the above said loans were converted into corpus donations at the instance of the lenders. According to the A.O. since benefit of section 11 and 12 is not available to the assessee trust, such corpus donations become taxable in view of the decision of Honble Supreme Court in the case of U.P. Forest Corporation vs. DCIT

297 ITR 1(SC) as the per decision of Rasipuram Rotary Club Trust vs. ITO ITA No. 45/MDS/2015 (supra). Accordingly ne said amount of Rs. 1,63,00,000/- was brought to the tax by A.O. and which addition was confirmed by C1T(A). 5.3 Ld. Counsel for the assessee submitted that the said amount aggregating to Rs. 1,63,00,000/- was not received during the year under appeal but were received in previous year relevant to A.Y. 2009-10 where these loans were accepted as genuine loans. Ld. Counsel further submitted that since these loans were given by the promoters for the purpose of construction of the building of the assessee society, the promoters gave letters to the assessee trust converting their loans to the corpus donations. Our attention was drawn to page 64-72 of the paper book, which are the copies of letters from the promoters transferring their loans to the donations. Also copy of the assessment order u/s 143(3) for A.Y. 2009-10 was placed before us which is available at page 73-74 of the paper book. Ld. Counsel further submitted that since benefit section 11 sand 12 is to be granted to the assessee in view of the arguments made in Ground No. 1, benefit of section ll(l)(d) may also be allowed in respect of such corpus donations aggregating to Rs. 1,63,00,000/-. It was further submitted by Ld. Counsel for the assessee on a without prejudice basis that even if benefit of section 11 and 12 is not granted to the assessee yet such corpus donations are capital receipts and are not taxable in view of several judicial decisions mentioned at page6 of the synopsis filed by the Ld. Counsel. Regarding the decision of Honble Supreme Court, it was argued by Ld. Counsel for the assessee that facts of that case and proposition of the law are different from the fact & case of the assessee. 5.4 Regarding the decision of Chennai Bench of Tribunal in the case Rasipuram Rotary Club Trust vs. ITO ITA No. 45/MDS/2015 (supra), it was argued that decision is of single member bench whereas assessee seeks to rely upon the decisions of the Tribunal rendered by division benches and also by Honblc Delhi High Court decision in the case of DCIT vs. Basanti Devi & Shri Chukhan Lai Garg Education Trust and Sh. Chakhan Lai Garg Education Trust, dated 23.09.2009, Copy of which was placed at page 62 of the case laws compilation. 5.5 On the other hand, it was argued by the Ld. Sr. DR that benefit of section 11(1)(d) cannot be made available to the assessee as assessee trust is not registered u/s 12AA for the current year and the decision of Chennai Bench in the case of Rasipuram Rotary Club Trust vs. ITO ITA No. 45/MDS/2015 (supra) be followed in which it has been held that corpus donation received by an unregistered trust is taxable. Ld. Sr. DR relied upon the decision of Honble Supreme Court also in the case of U.P. Forest Corporation vs. DCIT 297 ITR 1(SC). 5.6 Having heard the rival submissions and perused the entire material before us and in view of our decision of Ground No. 1 it is held that the donations being corpus donation are eligible for exemption u/s 11(1)(d). Assessee trust having been granted registration w.e.f. 01.04.2011 vide CITs order dated 16.7.2013, benefit of section 11 and 12 is to be given for the year before us as per our detailed decision given in Ground No.

1. Accordingly, as per section 11(1)(d), such corpus donations are exempt and cannot be brought to tax. Therefore, the action of A.O. in bringing to tax the corpus donation of Rs.1,63,00,000/- to tax is not justified & hence is reversed. In any case, the corpus donations received as loans in 2009-10 were accepted as genuine and the assessment order for A.Y. 2009-10 was passed u/s 143(3) placed at page 73-74 of the paper book. We have gone through page 64-72 being copies of the letters from the promoters directing the assessee trust to transfer their loans to corpus donation. There is not even an iota of adverse observation as to the nature of impugned donations not being in the nature of corpus donations. Therefore, these amounts having been accepted as genuine loans in A.Y. 2009-10 and having been accepted as corpus donations in the year under appeal, benefit of section 11(1)(d) cannot be denied in view of our decision rendered in Ground No. 1 above. Regarding the alternative contentions raised by Ld. Counsel for the assessee, we find that it has been held in the decisions reproduced at page6 of the synopsis and also the decision of Honble Delhi High Court in the case of Basanti Devi, supra that even if trust is not registered u/s 12AA yet corpus donation being in the nature of capital receipts cannot be brought to tax. Therefore, the action of A.O. in making addition of Rs.1,63,00,000/- covered by Ground No. 2 fit 3 cannot be approved and therefore, the addition is directed to be deleted. Accordingly Ground No. 2-3 are decided in favour of appellant. 5.7 We have gone through the decisions of Honble Supreme Court in the case of U.P. Forest Corporation vs. DCIT 297 ITR 1 (Supra) and in our considered opinion the said decision is not applicable to the fact of the present case in as much as in the present case the benefit of section 11 and section 12 is deemed to be granted in view of the retrospective operation of the proviso to section 12A(2) and in any case even if it is taken that such benefit of section 11 and section 12 is not applicable yet corpus donations being in the nature of capital receipts cannot be brought to tax. Regarding Chennai Bench decision in the case of Rasipuram Rotary Club Trust vs. ITO ITA No. 45/MDS/2015 (supra), we find that the said decision is a single member Bench decision and therefore, we are inclined to follow the decisions of various division Bench, Supra and also the decision of Honble Delhi High Court in the case DIT vs. Basanti Devi & Shri Chakhan Lai Garg Education Trust, ITA No. 927/2009, date of order 23.09.2009.

6. Regarding Ground No. 4-5, which is in respect of an aggregate addition of Rs. 1,61,20,000/- , A.O. held that these amounts were received from five persons as under:- S.NO. NAME OF PARTY ADDITION

1. Nav Bharat Enterprises 9,00,000/-

2. Pranjal Steel Trading Co. 15,50,000/-

3. Salasar Steel Syndicate 30,50,000/-

4. Singhal Enterprises 48,00,000/-

5. Sri Vasudcv Iron P. Ltd. 58,70,000/- Total:- 1,61,20,000/- 6.1 According to A.O. the assessee has not established ingredients of section 68. Accordingly the addition was made which was confirmed by CIT(A). 6.2 Ld. Counsel for the assessee drew our attention to various pages of the paper book given at page 8-9-10 of the synopsis and submitted that these loans were confirmed by the respective lenders, that these loans were given through banking channel & that the lenders were assessed to tax and so much so these amounts have been returned through banking channel to the respective lenders. Ld. Counsel submitted that the notice issued u/s 133(6) were served on the lenders and yet if lenders chose not to comply with such notices, blame cannot be put on the assessee. Ld. Counsel for the assessee therefore submitted that assessee has established not only the identity of the lenders but also the creditworthiness of the lenders and also the genuineness of the loans. Ld. Counsel for the assessee relied upon judicial decisions which are as under & which were part of case laws compilation: - Pr. CIT vs. Hi-Tech Residency (P) Ltd. (2018) 257 Taxmann

335 (SC) Pr. CIT vs. Hi-Tech Residency (P) Ltd. (2018) 257 Taxmann 390 (Del.) CIT vs. Real Time Marketing P. Ltd. (2008) 306 ITR 0035 (Del.) CIT vs. Jai Kumar Bakiliwal (2014) 366 ITR 0217 (Raj.) Aravli Trading Co. vs. ITG (2010) 187 Taxmann 0338 (Raj.) Nemi Chand Kothari vs. CIT & Anr. (2003) 264 ITR 0254 (Gau.) CIT vs. Shri Ram Narain Goel (1997) 224 ITR 0180 (P&H) 6.3 On the other hand, Ld. Sr. DR relied upon the assessment order and CIT(A)s order and relied upon the decision of Honble Delhi High Court in the case of DCIT vs. NDR Promoters P. Ltd. ITA No. 49/2018 dated 17.01.2019, 6.4 We have perused the entire material, which is before us and we find that assessee has brought sufficient material on record to prove that lenders have confirmed the amount of loans, which have been given through banking channel and the lenders were assessed to tax and that the loans have substantially been repaid back through banking channel. We would like to refer to various pages of the paper book relied upon by Ld. Counsel in the synopsis at page 8-9-10. We have gone through the various pages of the paper book as referred by Ld. Counsel and we are of the considered opinion that not only the identity and creditworthiness of the lenders stand proved but also the genuineness of the loans stands proved. The decisions relied upon by Ld. Counsel support the case of the assessee. The pages of the paper book referred by Ld. Counsel which we have also perused are as under: PB 169-171 are submissions to Ld. CIT(A). PB 173 is the details of repayment of loan of Rs. 38,70,000/- to Shri Vasudev Iron P. Ltd. PB 174, 175-176 arc the copies of bank statement / bank advice showing the repayment of Rs. 38,70,000/- through M/s Shri Vasudev Iron P. Ltd. PB 177-178, 179 are the evidences of repayment of loans of Singhal Enterprises aggregating to Rs. 48,00,000/-. PB 180, 181 is the copy of evidence of repayment of loans of Rs. 16,0,000/- to M/s Nav Bharat Enterprises. PB 182-186 is the copy of bank statements of the assessee showing the repayments of various loans. PB 83-127are the evidences of loans as under:- PB 83 is the copy of ledger account of M/s Nav Bharat Enterprises in the book of appellant. PB 84 is the copy of confirmed ledger account of M/s Nav Bharat Enterprises. PB 85 is the copy of PAN of M/s Nav Bharat Enterprises. PB 86 is the copy central Excise registration certificate in the Form RC PB 87-89 is the copy of bank statement of M/s Nav Bharat Enterprises to show that loan were received and refunded back through banking channel. PB 90-92, 93-97 is the copy of computation of income, acknowledgment of return for A.Y. 2010-11 and A.Y. 2016-17 of M/s Nav Bharat Enterprises. PB 98-99 is the copy of bank statement of the appellant to show that repayment of loan through banking channel. PB 100 is the copy of ledger account of M/s Pranjal Steel Trading Co. in the book of appellant. PB 101, 102 is the copy of confirmation of M/s Pranjal Steel Trading Co. along with confirmation letter. PB 103-104 is the copy of statement of account of M/s Pranjal steel Trading Co. PB 105 is the copy of ledger account of M/s Salasar Steel Syndicate in the book of appellant. PB 106, 107 is the copy of confirmation of account of M/s Salasar Steel Syndicate along with confirmation letter. PB 108-110 is the copy of statement of account of M/s Salasar Steel Syndicate PB 111 is the copy of ledger account of M/s Singhal Enterprises in the book of appellant. PB 112, 113 is the copy of confirmation of account of M/s Singhal Enterprises along with confirmation letter. PB 114 is the copy of statement of account of M/s Singhal Enterprises PB 115 is the details of repayment of loan to M/s Singhal Enterprises. PB 116-118 is the copy of bank statement of the appellant to show that repayment of loans through banking channel. PB 119 is the copy of ledger account of Sh. Vasudev Iron P. Ltd. in the book of appellant PB 120, 121 is the copy of confirmation of account of M/s Vasudev Iron P. Ltd. along with confirmation letter. PB 122-124 is the copy of statement of account of Sri Vasudev Iron P. Ltd. PB 125 is the detail of repayment of loan to M/s Sri Vasudev Iron P. Ltd. PB 126-127is copy of bank statement of the appellant to repayment of loan to M/s Vasudev Iron P. ltd. through banking channel. 6.5 We have gone through the decision of Delhi High Court relied upon by Ld. Sr. DR but we find that the facts in the present case are materially different from the facts of the present case. In the present case there is no share capital involved nor is there any statement of accommodation entry having been given by any person. Therefore, addition of Rs. 1,61,20,000/- made in the assessment order is hereby deleted in view of above mentioned factual evidences establishing the identity, capacity of the lenders and genuineness of the loans. Thus, Ground No. 4-5 of the present appeal stand allowed in favor of the appellant.

7. Regarding Ground No. 6, it is held that Ld. A.O. himself has allowed the benefit of exemption u/s 10(23C)(iiiad) of the Income Tax Act, vide para 4.1 at page 3 of the assessment order, therefore, the income of the assessee trust is exempt u/s 10(23C)(iiiad) and it is held accordingly.

8. Regarding Ground No. 7 since the income of the assessee trust is exempt u/s 10(23)(iiiad) and benefit of section 11 and

12 having been allowed as per our decision in Ground No. 1, there is no substance left in (Ground No. 7 and hence it is dismissed.

9. In the result, the appeal filed by the assessee is partly allowed. Order pronounced on 05/02/2019. Sd/- Sd/- [L.P. SAHU] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER Dated:05/02/2019 *SR BHATNAGAR* Copy forwarded to: -

1. Appellant

2. Respondent

3. CIT

4. CIT(A)

5. DR, ITAT TRUE COPY By Order, ASSISTANT REGISTRAR

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