Case Number: ITA 1641/DEL/2019
Appellant: Hamdard National Foundation (India), New Delhi
Respondent: ACIT (E), New Delhi
Assessment Year: 2013-14
Result: 2013-14
Case Filed on: 2019-02-27
Order Type: Final Tribunal Order
Date of Order: 2020-06-03
Pronounced on: 2020-06-03
The present appeal has been filed by Hamdard National Foundation (India) (the appellant) against the order of the CIT (A)-40, New Delhi dated 27.12.2018. The primary issue pertains to the denial of exemption under Section 11 of the Income Tax Act, 1961, by the Assessing Officer (AO) and its subsequent upholding by the CIT(A).
The appellant raised several grounds, primarily challenging the denial of exemption under Section 11 of the Act, the application of provisions of Section 13(2)(b) read with Section 13(3), and the incorrect taxation of corpus donations as income.
The CIT(A) upheld the AO’s action in denying the benefit of exemption under Section 11, citing alleged violations of Section 13(2)(b) read with Section 13(3). The AO argued that the lease transactions between the appellant and another charitable institution, Hamdard Dawakhana (Wakf), were at rents lower than the market rates, thereby benefiting the latter.
The CIT(A) failed to appreciate that the AO did not provide concrete evidence to support the application of Section 13(2)(b). The AO’s reliance on information from the Internet and two estate agents without confronting the appellant with this evidence was contested.
The appellant argued that the CIT(A) disregarded the principle of consistency, as similar transactions in previous assessment years (2008-09, 2010-11, 2011-12, and 2012-13) were accepted without any issues.
The CIT(A) upheld the AO’s action in taxing corpus donations as income, despite these being capital receipts. The appellant contended that these donations should not be taxed, irrespective of the exemption under Section 11.
The Tribunal found that the AO’s application of Section 13(2)(b) was based on conjectures and without concrete evidence. The lease transactions were between two charitable institutions, and no individual derived any benefit. The rents received were higher than the municipal valuation, and the AO did not provide any corroborative evidence to support the market rate claims.
The Tribunal cited the decision in the case of Patanjali Yogpeeth (Nyas) vs. ADIT, stating that corpus donations are capital receipts and not liable to tax. The donations received by the appellant were for charitable purposes and should not be taxed as income.
The Tribunal concluded that:
The appeal of the appellant was allowed, and the AO was directed to delete the additions made on these grounds.
The final judgment was pronounced in the Income Tax Appellate Tribunal, Delhi Benches ‘C’, New Delhi, by Ms. Sushma Chowla, Vice President, and Dr. B. R. R. Kumar, Accountant Member, on 03.06.2020.
Hamdard National Foundation vs. ACIT (E): Exemption Dispute for AY 2013-14
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