Commissioner Of Income Tax vs Hps Social Welfare Foundation
2010 Latest Caselaw 3235 Del

*     IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                        Date of Decision: 13th July, 2010

+                              ITA 845/2010

      COMMISSIONER OF INCOME TAX                ..... Appellant
                           Through Mrs. P.L. Bansal, Adv.

                   versus

      HPS SOCIAL WELFARE FOUNDATION                        ..... Respondent

Through None.

CORAM:

HON'BLE THE CHIEF JUSTICE HON'BLE MR. JUSTICE MANMOHAN

1. Whether reporters of the local papers be allowed to see the judgment?

2. To be referred to the Reporter or not?

3. Whether the judgment should be reported in the Digest?

DIPAK MISRA, CJ (ORAL)

This is an appeal against the order of Income Tax Appellate Tribunal

dated 4th May, 2009 whereby the appeal filed by the Revenue being ITA No.

2344/Del of 2008 against the order dated 10th April, 2008 passed by

Commissioner of Income Tax (Appeals), in respect of A.Y.2005-06, was

dismissed.

2. The assessee foundation was setup in order to provide fees, books,

equipments and scholarship, etc. to needy students, to help mentally

retarded, crippled and other physically handicapped children in their

rehabilitation, to render assistance to indigent persons for their medical

treatment, etc. and to conduct education in public health. The Chairman

and Directors are stated to be mostly retired bureaucrats and other persons,

who have worked for upliftment of the needy and poor. During assessment

of the respondent for the assessment year 2005-06 the Assessing Officer

noted that the assessee had made donations amounting to Rs 70,98,120/- to

43 different parties. Confirmation from 39 such institutions were also

submitted. The Assessing Officer was of the view that the donations must

have been made as per directions of the directors or specified persons of a

profit making company to the person of their choice. He concluded that the

assessee was a tool in the hands of the parent company, that is, HCL Perot

System. Accordingly, he denied benefit of exemption under Section 11 and

12 of the Income Tax Act, 1961 to the assessee and determined its taxable

income at Rs.70,98,120/- and expense of Rs.10,00,820/- inclusive of

depreciation.

3. On appeal filed by the assessee, Commissioner of Income Tax

(Appeals) deleted the additions except in respect of two donations, one made

to S.D. Public School and the other in respect of medical. He was of the

view that the donations made to the various institutions were absolutely of

charitable nature and that there was no reason not to allow the exemption u/s

11 and 12 to the assessee. The assessee filed confirmation from 41 out of 43

parties to which donations were given by it. The addition made in respect of

two parties, namely, S.D. Public School and medical were, however, upheld.

4. The Tribunal noted that the learned DR could not advance any

arguments as to how infringement of provision of section 13 is attracted in

the case and there is a finding in the impugned order that no donation was

received from M/s HCL Perot Systems Ltd. The Tribunal accordingly

maintained the finding recorded by Commissioner of Income Tax (Appeals).

5. We have heard Ms. Bansal, learned counsel for the revenue on the

question of admission. Section 13 of Income Tax Act stipulates the

circumstances in which the income of a trust will not be exempted from its

income. In the present case, as noted by Commissioner of Income Tax

(Appeals), there was no material on record to suggest that the assessee

infringed provision of Section 13(1) of the Income Tax Act. The finding

recorded by Commissioner of Income Tax (Appeals) in this regard has been

confirmed by the Income Tax Appellate Tribunal and there is no material

before us to indicate that the finding recorded by Commissioner of Income

Tax (Appeals) and the Tribunal is perverse in any manner.

6. Commissioner of Income Tax (Appeals) as well the Income Tax

Appellate Tribunal, both have found that the organizations to which

donations were given by the assessee during assessment year in question

were genuine charity organizations. There was no evidence before the

Assessing Officer to show that these were not genuine organizations or were

not engaged in social and charitable activities. The Assessing Officer

attributed personal elements to these donations without even indicating any

circumstance which could give rise to such an inference. The order passed

by the Assessing Officer does not show that the Directors of HCL Perot

Systems were connected with these organizations or were managing their

affairs. The payments to all the organizations were made by account payee

cheques. Confirmations from 41 out of 43 organizations were submitted by

the assessee. Deletion in respect of remaining two donations were

confirmed by CIT(A) and have not been interfered with by the ITAT. If the

Assessing Officer doubted any particular donation, he could have summoned

the officer bearers of the organization which received that donation. That

having not been done, he could not have disputed the genuineness of the

donations.

7. There was absolutely no material before the Assessing Officer to

show that the funds given to these NGOs/institutions were used for personal

benefit of HCL Perot System or any of its Directors. Therefore, it cannot be

said that the finding of fact recorded by Commissioner of Income Tax

(Appeals) and Income Tax Appellate Tribunal upholding genuineness of the

donations is perverse, calling for intervention by this Court. No

contravention of Section 13 of Income Tax Act having been made out and

the genuineness of the donations having been accepted by Commissioner of

Income Tax(Appeals) as well as by the Income Tax Appellate Tribunal,

there is no ground for interference by this Court under Section 260A of

Income Tax Act. No substantial question of law arises for our consideration

in this case. The appeal is hereby dismissed.

CHIEF JUSTICE

MANMOHAN, J JULY 13, 2010 vkm