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II. Direct Taxes Case Laws:
1. CIT Vs. Bhagwan Shree Laxmi Narain Dham, I.T.A. No. 269/2015, Date of Order: 07.09.2015, High Court of Delhi
Whether
the AO is correct in holding that the anonymous donation received by
assessee would not be exempt within the scope of section 115BBC of the
Act, since the activity of the trust was spiritual and not religious.
Held No.
As
rightly pointed out by the ITAT itself, the above question cannot be
addressed within the narrow scope of the specific wording of some of the
clauses of the Trust Deed but in the overall context of the actual
activities in which the Trust is involved in including imparting
spiritual education to the persons of all castes and religions,
organizing Samagams, distribution of free medicines and clothes to the
needy and destitute, provision of free ambulance service for needy and
destitute patients and so on. The Supreme Court in The Commissioner,
Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar
1954 AIR 282 SC held that “a religious denomination or organization
enjoys complete autonomy in the matter of deciding as to what rites and
ceremonies are essential according to the tenets of the religion they
hold and no outside authority has any jurisdiction to interfere with
their decision in such matters.”
It might
well be that a Hindu religious institution like the Assessee is also
engaged in charitable activities which are very much part of religious
activity. In carrying on charitable activities along with organising of
spiritual lectures, the Assessee by no means ceases to be a religious
institution. The activities described by the Assessee as having been
undertaken by it during the AY in question can be included in the broad
conspectus of Hindu religious activity when viewed in the context of the
objects of the Trust and its activities in general. For the
aforementioned reasons, the Court finds no legal infirmity in the
conclusion of the ITAT that for the purpose of Section 115 BBC (2) (a)
anonymous donations received by the Assessee would qualify for deduction
and it cannot be included in its assessable income.
(Please click here for judgment)
2. DIT Vs. M/s Erricsson Communications Ltd., I.T.A. No. 106/2002, Date of Order: 04.09.2015, High Court of Delhi
Whether
the assessee is obliged to deduct tax at source in respect of the
amount credited to the account of Telefonaktiebolaget L.M. Ericsson,
Sweden (hereafter ‘TLME’) on account of royalty payable, where the said
entry was subsequently reversed, since the payment of royalty to TLME
was not permissible as per the Industrial policy in force atthe material
time.
Held No.
The
Assessee having accepted that no royalty was payable had also not
charged the same as an expense in its books and as indicated earlier,
the entries passed for payment of royalty has been reversed.
Indisputably, the Assessee neither paid royalty during the period nor
reflected the same as payable. In such circumstances, it is difficult to
accept that there was any income chargeable to tax which had accrued in
favour of TLME. In any view, the Assessee cannot be held to have
acknowledged the same by crediting the account of TLME, as admittedly,
that entry had been reversed. In our view, mere passing of the book
entries, which are reversed,would not give rise to an obligation to
deduct TAS by the Assessee, as clearly, there is no debt that can be
said to be acknowledged by the Assessee.
Imposition
of an obligation to deduct TAS in these circumstances would amount to
enforcing payments from one person towards a tax liability of another,
even where the person does not does not acknowledge that any sum is
payable. This, in our view, is contrary to the scheme of provisions
relating to collection of TAS under the Act. It is also not disputed
that TLME had not claimed royalty payable from the Assessee and,
concededly, no royalty for the period has been paid either. In the
circumstances, we are unable to accept that any income had accrued or
arisen or deemed to have accrued or arisen, which is chargeable to tax
in the hands of TLME. In the absence of any income chargeable to tax
arising on account of royalty in the hands ofTLME at the material time,
the question of withholding TAS would not arise.
(Please click here for judgment)
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