DIT vs. Raunaq Education Foundation (2013) 350 ITR 420 (SC)
During the relevant accounting year 2002-03 of the respondent-assessee had, by way of donation, received two cheques for a sum of Rs.40 lakhs each from M/s. Apollo Tyres Ltd. One of the cheques was 22nd dated April, 2002, and yet it was given in the accounting year 2001-02, i.e., before 31st March, 2002.
In the assessment proceedings for the assessment year 2002-03, the Assessing Officer came to the conclusion that with an intention to do undue favour to M/s. Apollo Tyres Ltd., the cheque dated 22nd April, 2002, given by way of donation for a sum of Rs. 40 lakh had been accepted by the respondentassessee and receipt for the said amount was also issued before 31 March, 2002, i.e., in the accounting year 2001-02. According to the Assessing Officer, many of the trustees of the assessee-trust were related to the directors of M/s. Apollo Tyres Ltd., and as to give undue advantage under the provisions of section 80G of the Act, the cheque had been accepted before 31st March, 2002, although the cheque was dated 22nd April, 2002.
In the opinion of the Assessing Officer, this was clearly in violation of the provisions of section 13(2)(d), (h) and as such exemption u/s. 11 and 12 could not be allowed to the assessee. The assessment was made in the status of an association of persons.
The appeal which was filed against the assessment order was dismissed by the Commissioner of Income-tax (Appeals).
The second appeal filed before the Income-tax Appellate Tribunal by the respondent-assessee was however allowed. The Tribunal held that there was no violation of the provisions of sections 13(2)(b) and 13(2)(h) of the Act and the assessee-trust had not acted in improper and illegal manner.
The Tribunal noted the fact that the amount of donation, i.e., Rs. 40 lakhs received by way of a cheque dated 22nd April, 2002, was treated as donation receivable and, accordingly, accounting treatment was given to the said amount. The said amount was not included in the accounting year 2001-02 as donation but was shown separately in the balance-sheet as amount receivable by way of donation. Moreover, M/s. Apollo Tyres Ltd., had also not availed of the benefit of the said amount u/s. 80G of the Act during the accounting year 2001-02 but had availed of the benefit only in the accounting year 2002-03, the period during which the cheque had been honoured and the amount of donation was paid to the assessee-trust.The High Court dismissed the appeal to the Revenue observing that the Tribunal found that it was only a post-dated cheque and it could not be said to be an amount which was made available for the use of the drawer of the cheque and, therefore, the provisions of section 13(2)(b) of the Act did not apply.
Also, no service of the assessee was available to the drawer of cheque and, therefore, the provisions of section 13(2)(d) also did not apply.
In the civil appeal filed by the revenue the Supreme Court noted certain undisputed facts. It was not in dispute that though the assessee-trust has issued receipt when it received the cheque dated 22nd April, 2002, for Rs. 40 lakh in March 2002, it was clearly stated in its record that the amount of donation was receivable in future and, accordingly, the said amount was also shown as donation receivable in the balance-sheet prepared by the assess-trust as on March 31, 2002. It was also not in dispute that M/s. Apollo Tyres Ltd., did not avail of any advantage of the said donation during the accounting year 2001-02. Upon a perusal of the assessment order of M/s. Apollo Tyres Ltd., for the assessment year 2002-03, it was clearly revealed that the cheque dated 22nd April, 2002, was not taken into account for giving benefit under section 80G of the Act as the said amount was paid in April 2002, when the cheque was honoured.
Looking into the aforestated undisputed facts, and the view expressed by the court in the case of Ogale Glass Works Ltd. [(1954) 25 ITR 529 [(SC)], the Supreme Court was of the view that no irregularity had been committed by the assesseetrust and there was no violation of the provisions of section 13(2(b) or 13(2)(h) of the Act. The fact that most of the trustees of the assessee-trust and the directors of M/s. Apollo Tyres Ltd., were related was absolutely irrelevant. The Supreme Court therefore dismissed the appeal.
