CREDIT GUARANTEE FUND TRUST FOR MICRO AND SMALL ENTERPRISES,MUMBAI vs. DCIT (E), MUMBAI

ITA 2684/MUM/2022Status: DisposedITAT Mumbai24 November 2023AY 2018-201928 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee is following the mercantile system of accounting and is entitled to the benefits of Section 11 of the Act. The provision for guarantee claims, made on actuarial valuation, was considered a legitimate deduction.

What were the facts?

The assessee, a trust, claimed exemption under Section 11 of the Income Tax Act. The lower authorities rejected the exemption and disallowed a provision for guarantee claims, arguing the trust was carrying on business activities and not following mercantile accounting. The assessee contended that its objects were charitable and it followed mercantile accounting.

What were the issues?

Whether the assessee's activities fall within the proviso to Section 2(15) and whether provision for guarantee claims is allowable as a deduction under mercantile accounting.

Which sections of the Income-tax Act were involved?

Section 11,Section 12,Section 2(15),Section 37(1),Section 145

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Cases cited in this judgment(3)Show list

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Income Tax Appellate Tribunal, MUMBAI BENCH “C”, MUMBAI

Before: SHRI KULDIP SINGH & SHRI S RIFAUR RAHMAN

For Appellant: Shri Bhupendra Karkhanis, A.R. &, Shri Jay Bharod, A.R
For Respondent: Shri Manoj Kumar Sinha, D.R

Per : Kuldip Singh, Judicial Member: The appellant, M/s. Credit Guarantee Fund Trust For Micro And Small Enterprises (hereinafter referred to as ‘the assessee’) by filing the present appeal, sought to set aside the impugned order dated 22.08.2022 passed by the National Faceless Appeal Centre(NFAC) [Commissioner of Income Tax (Appeals), Delhi] 2 M/s. Credit Guarantee Fund Trust For Micro And Small Enterprises

(hereinafter referred to as CIT(A)] qua the assessment year 2018-19 on the grounds i

The order continues below.

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