DCIT (E) 2(1), MUMBAI vs. SAURASHTRA TRUST, MUMBAI

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ITA 6469/MUM/2018Status: DisposedITAT Mumbai14 January 2020AY 2009-103 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal dismissed the revenue's appeal, primarily on the grounds that the tax effect of the disputed addition was below the monetary limit prescribed by CBDT circulars for filing appeals.

What were the facts?

The assessee, a registered trust, claimed a statutory deduction of 30% on its rental and service charge income. The Assessing Officer disallowed this deduction, viewing it as inapplicable to trusts. The CIT(A) allowed the deduction, following a previous tribunal decision.

What were the issues?

Whether a registered trust is eligible for the statutory deduction under Section 24 on its rental income, and if the revenue's appeal is maintainable given the tax effect.

Which sections of the Income-tax Act were involved?

Section 24,Section 11,Section 12A,Section 13

AI-generated summary — verify with the full judgment below

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

Before: Shri Pawan Singh (JM) & Shri S.Rifaur Rahman(A.M.)

For Appellant: Shri Vinodkumar Sr DR
For Respondent: Ms. Ruchi Tamhankar AR

O R D E R PER PAWAN SINGH, JM : 1. This appeal by revenue is directed against the order of CIT(A)-7, Mumbai dated 03-08-2018 for assessment year 2009-10. The revenue has raised the following ground of appeal:-

“1. ""Whether on the facts and in the circumstance of the case and in law, the Tribunal was right in upholding the decision of the Commissioner of Income Tax (A) of directing the Assessing Officer to allow the deduction u/s.24 of the Income Tax Act, 1961, whereas provisions of Section 11 to 13 clearly speaks of the income for determining the total income of the trust for quantification of application of the object the trust?”

2.

Brief facts of the case are that assessee is a registered trust, having registration u/s 12A of the I.T. Act, 1961. The assessee filed return of income on 30-09-2009 declaring income of Rs.44,15,288/-. In the 2 ITA 6469/Mum/2018 return of income, the assessee has shown rental income from two properties, viz. Rajkot property of Rs.1,020/- and Mumbai property of Rs.2,23,44,981/- and service charges of Rs.85,68,380/-. After claiming deduction of municipal and land tax of Rs. 2,95,779/- and statutory deduction @30% of Rs.91,94,673/-, the remaining amount was offered to tax. The AO took a view that provisions of section 23 & 24 are not application in case of trust and accordingly statutory claim of deduction of 30% amounting to Rs.91,94,673/-was disallowed. On appeal before CIT(A), the statutory deduction was allowed by following the decision of the Tribunal in the case of Sri Sathya Sai Trust in ITA No.7350/Mum/2011. Thus, aggrieved by the deletion of addition, the revenue has filed this appeal before the Tribunal.

3.

At the outset of hearing, the Ld.AR of the assessee submits that the tax effect involved in the present appeal is less than the monetary limit of Rs.50 lakhs fixed by the CBDT in its circular No.17/2019 dated 8th August 2019, therefore, the appeal filed by the revenue is not maintainable. The Ld.AR of the assessee also furnished the working of tax effect on disputed addition which comes to Rs.27,58,402/-.

4.

On the other hand, the Ld. departmental representative (DR) for the revenue, after going through the working of tax effect, though not 3 ITA 6469/Mum/2018 disputed the working of tax effect, submits that he would rely upon the order of AO.

5.

We have considered the submission of both the parties and find that the disputed addition in the present appeal with regard to the deduction u/s 24 is only of Rs.91,94,673/- on which the tax effect is only Rs.27,58,402/- . The quantum of tax effect is not disputed by the Ld. DR for the revenue. Considering the fact that tax effect involved in the present appeal is less than the monetary limit of Rs. 50 Lakhs, fixed by the CBDT; hence, the appeal filed by the revenue is not maintainable and, therefore, dismissed.

6.

In the result, appeal filed by the revenue is dismissed.

Order pronounced in the open court on 14 -01-2020.

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