ASSOCIATED STONE INDUSTRIES (KOTAH) LIMITED CHARITABLE TRUST,RAMGANJMANDI vs. ASSISTANT DIRECTOR OF INCOME TAX CPC, BENGALURU

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ITA 465/JODH/2024Status: DisposedITAT Jodhpur07 August 2026AY 2020-213 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that while exemption under Section 11 was not available without Section 12AA registration, the entire receipts could not be treated as income. The assessee's income should be computed as an Association of Persons (AOP) applying commercial principles.

What were the facts?

The assessee, a charitable trust, claimed exemption under Section 11. However, due to lack of registration under Section 12AA, the CPC disallowed the exemption and treated gross receipts as income. This was confirmed by the First Appellate Authority.

What were the issues?

Whether the entire gross receipts of a charitable trust without Section 12AA registration can be treated as income, or if it should be computed as AOP income applying commercial principles.

Which sections of the Income-tax Act were involved?

Section 11,Section 12AA

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JODHPUR BENCH, JODHPUR

Before: SHRI SAKTIJIT DEY, HON’BLE & SHRI MAKARAND VASANT MAHADEOKAR, HON’BLE

For Appellant: Shri Rajendra jain, Advocate and Smt, CA (Physical)
For Respondent: Ms. Nidhi Nair, Addl. CIT-DR (Physical)

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI SAKTIJIT DEY, HON’BLE VICE PRESIDENT AND SHRI MAKARAND VASANT MAHADEOKAR, HON’BLE ACCOUNTANT MEMBER ITA No. 465/Jodh/2024 (Assessment Year – 2020-21) Associated Stone Industries Assistant Director of Income Tax (Kotah) Limited Charitable Trust CPC ASI House, Kudayala Industrial Bengaluru Area, Ramganjmandi, Dist. Kota Rajasthan-326519 PAN No. AAATA 1768 R Assessee by Shri Rajendra jain, Advocate and Smt. Raksha Birla, CA (Physical) Revenue by Ms. Nidhi Nair, Addl. CIT-DR (Physical) Date of Hearing 05 / 08 / 2026. Date of Pronouncement 07 / 08 / 2026. ORDER PER: SHRI SAKTIJIT DEY, V.P.: This is an appeal by the assessee against order dated 27.03.2024 passed by the Additional Commissioner of Income Tax (Appeals) Gurugram for the Assessment Year 2020-21.

2.

The issue arising in the appeal relates to addition of an amount of Rs. 23,68,315/- representing revenue expenditure claimed by the assessee.

3.

Briefly the facts are, the assessee stated to be a charitable trust filed its return of income for the assessment year under dispute claiming exemption u/s

2 ITA No. 465/Jodh/2024 Asst. Year: 2020-21 11 of the Act. However, while processing the return of income, in absence of registration u/s 12AA of the Act, the Centralised Processing Centre (CPC) disallowed assessee’s claim of exemption and the entire gross receipt was treated as income of the assessee without allowing any deduction. The addition so made by the CPC was confirmed by Ld. First Appellate Authority.

4.

We have considered rival submissions and perused the materials on record. It is the say of the assessee before us that though the assessee is not eligible to claim exemption u/s 11 of the Act in absence of registration u/s 12AA of the Act, however, the assessee should have been treated as Association of Persons (AOP) and its income should have been computed applying commercial principles. Hence, deductions claimed towards expenses should have been allowed.

5.

Ld. DR has relied upon the observations of the Departmental Authorities.

6.

Having considered rival submissions, we find substantial merit in the submissions of the assessee. Though, it may be a fact that the assessee is not eligible to claim exemption u/s 11 of the Act in absence of registration u/s 12AA of the Act, however, the entire receipts cannot be treated as income without allowing any deduction towards expenses. In absence of registration u/s 12AA of the Act, assessee’s income as AOP has to be computed applying commercial

3 ITA No. 465/Jodh/2024 Asst. Year: 2020-21 principles. Since the Assessing Officer has failed to do so. We are inclined to set aside the impugned order of Ld. First Appellate Authority and restore the issues back to the file of the Assessing Officer with a direction to compute the income of the assessee applying commercial principles after verifying the genuineness of the expenses claimed.

7.

In the result, appeal is allowed for statistical purpose.

Order pronounced in the open court on 07/08/2026.

Sd/- Sd/- (MAKARAND VASANT MAHADEOKAR) (SAKTIJIT DEY) ACCOUNTANT MEMBER VICE PRESIDENT Dated : 07/08/2026. Nimisha, Sr. PS True Copy Copies to : (1) The appellant. (2) The respondent. (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File BY ORDER,

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