LALA GAURI MAL BUTAIL TRUST,PALAMPUR vs. INCOME TAX OFFICER (E), SOLAN

The assessee-trust filed Form No.10B claiming accumulation of income u/s 11(2) for Rs.5.14 Lacs. The Ld. AO noted shortfall of Rs.56,947/- in the application of income and brought the same to tax. The Tribunal, vide order dated 19-11-2020, restored the issue to Ld. AO for re-adjudication by considering receipts and payments and compute shortfall which was not applied towards the objects of the society. In the set aside proceedings, the assessee filed receipt and payment account. The total receipts worked out to be Rs.53.09 Lacs. The 85% of the same worked out to be Rs.45.13 Lacs which the assessee was required to apply for the objects of the trust. The assessee reflected application of income for Rs.40 Lacs which include increase in advance receivable for Rs.59,483/-. The receipt side had increase in liability for Rs.2,984/. However, this item was disregarded by Ld. AO. Finally, the amount of Rs.56,947/- was determined as total income of the assessee. The Ld. CIT(A) confirmed the same on the ground that the assessee did not furnish any evidence with regard to increase in advance receivables which was claimed by him towards application of income. Aggrieved, the assessee is in further appeal before us.

It could be gathered that it was never the case of Ld. AO that the assessee did not furnish any evidence with regard to increase in advance receivables which was claimed by the assessee as application of income. The Tribunal had directed Ld. AO to recompute the application by considering receipts and payments account which Ld. AO was bound to do. The Ld. CIT(A)’s adjudication is on wrong logic / reasoning. The application of income has to be considered as per the earlier directions of the Tribunal. Considering the same, the claim of the assessee is to be accepted. Consequently, the impugned assessment of income at Rs.56,947/- stand deleted. The Ld. AO is directed to accept the claim of the assessee. We order so.