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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC-2’, NEW DELHI
Before: SH. N. K. BILLAIYA
This appeal by the assessee is preferred against the order of the CIT(A)-15, Dehradun dated 13.02.2019 pertaining to A.Y. 2014-15.
The substantive grievance of the assessee read as under :- 1. The Appellant Trust is approved u/s 12A / 12AA of the Income Tax Act, 1961 and therefore, the denial of exemption u/s 11 of the application of profits, made in business of Rs,13,70,345/-, in charitable activities by way of revenue and capital expenditure is contrary to law and therefore, the exemption u/s 11 is liable to be provided to the Appellant. 2. That the addition of Rs.13,70,345/- as business income of the appellant and confirmation of the same by the Commissioner of Income Tax (Appeals) by not accepting the application of income by way of revenue and capital expenditure is contrary to facts and law and therefore, application of such income is liable to be allowed u/s 11 of the Income Tax Act, 1961.
None appeared on behalf of the assessee inspite of notice, therefore, I decided to proceed exparte. The DR was heard at length who strongly relied upon the findings of the CIT(A).
Having heard the DR, I have carefully perused the orders of the authorities below.
Briefly stated the facts of the case are that the appellant is a registered society under the society registration Act and is also registered u/s. 12A of the IT Act.
During the year under consideration the appellant society has been engaged into the business of manufacturing of Ayurvedic medicines and allied Herbal Food Products. During the course of scrutiny assessment proceedings the assessee was specifically show caused as to why income of the society may not be treated as business income.
7. Vide reply dated 14.11.2016 the assessee submitted that the business of the society is not charitable rather surplus arising from the activities is utilized for charitable activities hence, exemption has been claimed.
In the light of the aforementioned reply of the assessee the AO treated the income of the assessee as business income and denied the exemption u/s. 12 A. Accordingly the surplus of Rs.1370345/- was treated as business income for the year under consideration.
Assessee agitated the matter before the CIT(A) but without any success.
The relevant findings of the CIT(A) read as under :-
“Decision & Reason The Id. AR in his submission on page 2 in para 3 has himself mentioned,. "The business activities are being run by the society and whatever surplus is arising through donation and business profit is being utilized for charitable activities." During the year under consideration, the assessee has drawn Manufacturing Trading & Profit & Loss A/c, through which a net profit of Rs. 13,70,345/- has been earned. From the perusal of P & L A/c, none of the expenditures claimed is for charitable purpose .and no amount has been spent on Research or any other Charitable activities. What the AR is claiming, is presumed .to be correct then also there is no application for carrying forward the surplus to be utilized in the subsequent years and there is no evidence brought before me to show that the surplus has been parked with any Scheduled Bank either in the form of FDR or in any Saving Bank or Current A/c. So the Appellant has not fulfilled the conditions of Section 11/12A as is seen from the facts on record. Therefore, the case laws relied upon by Id. AR are not applicable on the facts of the case. The disallowance made by the AO is confirmed.
In the result, the appeal is dismissed.”
I have given a thoughtful consideration to the aforementioned findings of the first appellate authority. I do not find any error or infirmity in the aforementioned findings hence appeal by the assessee is dismissed.
Order pronounced in the open court on 13.03.2020.