Case: Director Of Income Tax(Exempn)N.Delhi Vs. Raunaq Education Foundation

4) The facts giving rise to the present appeal in a nutshell are as under:5) Theis a trust, who was treated as an AOP by the Assessing Officer for the assessment yearby an order dated 24th May, 2005 and exemption under Sections 1112 of the Income Tax Act [hereinafter referred to as ?the Act?] had not been continued. Being aggrieved by the said order of the Assessing Officer, thehad preferred an appeal before the Income Tax Commissioner. The Income Tax Commissioner was pleased to dismiss the appeal by an order dated 29th May, 2005. Being aggrieved by the said order of dismissal, thehad filed an appeal before the Income Tax Appellate Tribunal, Delhi Bench ?F? at New Delhi. The said appeal, being ITA No.2657/DEL/2006, was allowed by an order dated 09th March, 2007. Being aggrieved by the said order, the Revenue had filed ITA No.150 of 2008 before the High Court of Delhi at New Delhi which had been dismissed. Being aggrieved by the dismissal of the said appeal by an order dated 04th March, 2008, the Revenue has filed the present appeal.6) The facts of the case pertain to the assessment yearof the respondent assessee. During the relevant accounting year i.e.ee had, by way of donation, received two cheques for a sum of Rs.40 lac each from M/s Apollo Tyres Ltd. One of the cheques was dated 22nd April, 2002 and yet it was given in accounting yeari.e. before 31st March, 2002. The said cheque for donation was received by thebefore 31st March, 2002 but was honoured after 1st April, 2002 i.e. in accounting year 20022003.7) In the assessment proceedings, the Assessing Officer came to the conclusion that with an intention to do undue favourto M/s Apollo Tyresthe cheque dated 22nd April, 2002, given by way of donation for a sum of Rs.40 lac had been accepted by theand receipt for the said amount was also issued before 31st March, 2002 i.e. in the accounting year 20012002. 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 so 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. Thus, by accepting a post dated cheque and by giving receipt in the earlier accounting year, the assessee trust had done undue favour and, therefore, the Assessing Officer observed as under in para 8 of the Assessment Orderhas been primarily done with the sole objective of giving advantage to the donor company M/s Apollo Tyre Ltd. in which the main trustees and their relatives were substantially interested as per provisions of section 13 (3) of the I.T. Act, 1961. This is clearly in violation of provisions of section 13(2) (d) (h) and as such exemption u/s 11 and 12 cannot be allowed to the assessee and the assessment will be made in the status of AOP. With these remarks the income is computed asAs stated hereinabove, the appeal which was filed against the assessment order had been dismissed and the second appeal filed before the Income Tax Appellate Tribunal by thehad been allowed by an order dated 09th March, 2007.9) The Tribunal, after hearing the concerned advocates, came to the conclusion that there was no violation of the provisions of Sections 13 (2)(b)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 lac 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 yearas 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 benefit of the said amount under Section 80G of the Act during the accounting yearbut had availed the benefit only in the accounting yearthe period during which the cheque had been honoured and the amount of donation was paid to the assessee trust. For the aforestated reason, the appeal filed by the assessee was allowed.10) Being aggrieved by the aforesaid order passed in the appeal, the Revenue had filed Income Tax Appeal No.150 of 2008 in the High Court of Delhi. The said appeal has been dismissed and, therefore, the present appeal has been filed by the Revenue.

Reasoning: In the case before us none of the cheques has been dishonoured on presentation and payment cannot, therefore, be said to have been defeated by the happening of the condition subsequent, namely dishonour byand that being so there can be no question, therefore, that the assessee did not receive payment by the receipt of the cheques. The position, therefore, is that in one view of the matter there was, in the circumstances of this case, an implied agreement under which the cheques were accepted unconditionally as payment and on another view, even if the cheques were taken conditionally, the cheques not having been dishonoured but having been cashed, the payment related back to the dates of the receipt of the cheques and in law the dates of payments were the dates of the delivery of the cheques.?15) Looking into the aforestated undisputed facts, and the view expressed by this court in the case of M/s Ogale Glass Works Ltd. (supra), we are of the view that no irregularity had been committed by the assessee trust and there was no violation of the provisions of Sections 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. are related is absolutely irrelevant.