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Income Tax Appellate Tribunal, DELHI BENCH: ‘B’ NEW DELHI
Before: SHRI N. K. BILLAIYA & SH. YOGESH KUMAR U.S.
This appeal has been filed by the assessee against the order dated 22/04/2019 passed by CIT (A)-40, Delhi, for Assessment Year 2014-15.
The brief facts of the case are that, the assessee is a Public Charitable Trust formed in the year 1972, carrying on charitable activities since its inception. The assessee had received shares of Bajaj Auto Ltd. and Bajaj Electrical Ltd. towards its corpus in the year 1972 i.e. prior to 31st March, 1973. Subsequently, in terms of the Scheme of Arrangement of Demerger between Bajaj Auto Ltd., Bajaj Holdings & Investment Ltd., and Bajaj Finserv Ltd., duly approved by the Hon'ble Bombay High Court vide its Order dated
18th December, 2007, the erstwhile share holders of Bajaj Auto Ltd. (Demerged Company) were allotted shares in the above referred three companies.
The assessee did not disinvest the said shares within prescribed period of one year from the receipt of these shares, which lead to contravention of the provisions of Section 11(5) of the Act read with Section 13(l)(d) of the Act. Accordingly, the Trust has not claimed benefits of Section 11 & 12 of the Act with effect from Assessment Year 2009 - 2010 onwards. The assessee has filed Return of Income in the Status of the Association of Persons (AOP). From year to year without claiming benefits of Section 11 and 12 of the Act. The assessments of the assessee Trust have also been completed on the same lines year after year.
The assessee had filed return of income for AY 2014-15 on 29-07-2014 declaring NIL income. Assessee had declared gross total income of Rs 24,66,037/- and also claimed deductions under chapters VI-A for Rs. 24,66,037/-. However the return was processed by Centralized Processing Centre (CPC), Bangalore u/s 143(1) of the Income Tax Act on 02-02-2016, wherein the claim of the assessee for deduction under chapters VI-A for Rs. 2,46,80,371- was denied by the CPC and the income of the assessee was assessed at Rs 2,46,80,371/- and a demand of Rs 7,43,608/- was raised vide assessment order dated 02/02/2016.
The assessee filed application u/s 154 of the Act to rectify the order u/s 143(1) of the Act before CPC which was not considered. Thereafter, the assessee had filed rectification application in the office. The application filed by the assessee has been rejected on the ground that, the assessee has claimed the deduction under Chapter VI-A of the Act which are not allowable in the case of Trust/Charitable Institution. The ITO was of the opinion that, the claim of the assessee is outside the scope of rectification u/s 154 of the Act as there was no mistake apparent on record. Accordingly, dismissed the application filed by the assessee on 16/05/2018.
As against the order dated 16/05/2018, the assessee has filed an appeal before CIT(A). The Ld.CIT(A) vide order dated 22/04/2019 dismissed the Appeal filed by the assessee.
Aggrieved by the same, the assessee has preferred the present Appeal on following grounds:-
DENIAL OF DEDUCTION UNDER CHAPTER VI-A/SECTDION 80- G/80GGA READ WITH SECTION 35AC OF THE ACT RS. 24,66,037/-.
“1.1On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) [CIT(A)] erred in confirming the denial of Deduction claimed by the Appellant for a sum of Rs. 24,66,037/- under Chapter VI-A / Section 80GGA read with Section 35AC of the Act in respect of donation paid to eligible trusts.
1.2 The learned CIT (A) erred in dismissing the appeal without dealing with the submissions made by the appellant. The Appellant submits that the order passed by the CIT (A) is based on non-application of mind and therefore should be struck down.
1.3. The CIT (A) failed to appreciate that there is no mistake / error in the Return of Income filed by the appellant and the adjustment made under Section 143(1) of the Act itself is illegal, invalid and bad in law.
1.4 The learned Assessing Officer and the CIT (A) failed to appreciate that all along in earlier years deduction has been claimed by the appellant trust under Chapter VI-A / Section 80-G/80-GGA read with Section 35A of the Act and such deduction has been allowed consistently and there is no change in facts of the case and on that basis the CIT (A) ought to have considered the same and allowed the said deduction under Section 80-G / 80-GGA of the Act read with 35AC of the Act.
1.5 The learned CIT (A) failed to appreciate that the failure to apply statutory provisions of the Income tax Act, 1961 and assessment of income framed in violation of such provisions is a mistake apparent from the records. It is submitted that the Appellate Order amounts to failure to correct / rectify such mistake and hence the same is unsustainable in law.
In view of the above, the appellant prays that the learned Assessing Officer be directed to grant deduction under Chapter VI-A/ Section 80-G / Section 80-GGA of the Act and reduce the total income of the appellant accordingly.
The Ld. Counsel for the assessee submitted that, the Ld.CIT(A) and the Ld. A.O committed grave error in denying the deduction claimed by the assessee for a sum of Rs. 24,66,037/- under Chapter 6-A/80GGA read with Section 35AC of the Act in respect of donations paid to eligible trustee. The Ld. Counsel has also drawn our attention to the order passed u/s 143(3) of the Act, wherein it is specifically observed that, the assessee has not claimed exemption u/s 11 & 12 of the IT Act and the assessee has given donation out of the income received from the dividends. Further, the Ld. Counsel for the assessee has relied on the order of Mumbai Bench of the Tribunal vide order dated 07/02/2022 in the case of Bhoopati Shikshan Pratisthan, in .
Per contra, the Ld. DR submitted that, the assessee is a Public Charitable Trust and the Assessee’s claim of deduction cannot be considered under Chapter VI-A of the Income Tax Act, 1961 which are not allowable in the case of trusts/charitable institution. By relying on the orders of the Lower Authorities, submitted that the same requires no interference.
We have heared the parties, verified the material on record and gave our thoughtful consideration.
The factual matrix are not disputed by the Ld. DR. The only question arises for consideration as to whether the assessee being charitable trust which has not claimed benefits of Section 11 & 12 of the Act with effect from Assessment Year 2009 - 2010 onwards, having filed return as AOP, is eligible for deductions under Chapter VI-A of Income Tax Act, 1961 or not.
The identical issue involved in the present Appeal has been dealt and decided against the Revenue by the Mumbai Bench of the Tribunal in the case of Bhoopati Shikshan Pratisthan, in vide order dated 07/02/2022, wherein it is held that, the assessee being a charitable trust registered u/s 12A of the Income Tax Act is entitled to claim deduction u/s 80G/80GGA of the Act. The relevant portion of the same is as under:-
“7. We find that in the preceding AY i.e. AY 2013-14 and in the succeeding AY i.e. AY 2015-16 the assessee's claim of deduction under section 80G/80GGA has been accepted by the Department. Ostensibly, the assessee has been making similar donations in the preceding and the succeeding AYs towards Chief Minister's Relief Fund, and donation to some other eligible institutions and the consequent benefit of deduction under section 80G has been allowed to the assessee. In AY 2013-14 in scrutiny assessment proceedings, the assessee’s claim was allowed and in Assessment Year 2015-16, the assessee ‘s claim of deduction u/s 80GGA was accepted by the CPC as is evident from the intimation u/s 143(1) of the Act dated 02/08/2016. Thus, disallowance of assessee's claim of deduction under Chapter-VIA in the impugned AY was purely a computational error which could have been rectified under section 154 of the Act. The assessee had furnished relevant documents evidencing the donations made eligible for deduction under section 8.0G6A/80G of the Act. The same were not disputed by the Department, it is not a case where the assessee's donations were suspected or the institutions/funds to whom donations were made were under lense of suspicion, therefore, the observations made by CIT(A) for dismissing assessee's appeal are unsustainable. Consequently, the impugned order is set-aside and the appeal of assessee is allowed. The AO is directed to grant benefit of deduction claimed by the assessee under Chapter-VIA of the Act.”
By respectfully following the order made in the case of Bhoopati Shikshan Pratisthan, (supra) we hold that, the assessee is entitled for deduction of Rs. 24,67,036/- claimed under VI-A/80GGA read with Section 35AC of the Act and further we direct the A.O to grant benefit of the deduction claimed by the assessee under Chapter VI-A of the Act in accordance with law.
In the result, the Appeal filed by the assessee is allowed.
Order pronounced in the open court on 07th July, 2022.