YOUNG MEN'S CHRISTIAN ASSOCIATION,SALEM vs. ITO, EXEMPTIONS WARD, SALEM

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ITA 2209/CHNY/2019Status: DisposedITAT Chennai14 February 2020AY 2015-163 pages

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

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that income of a trust registered under Section 12AA should be computed in the normal commercial manner, not under Section 14. Therefore, the claim for deduction under Section 24(a) was not permissible.

What were the facts?

The assessee, a charitable trust registered under Section 12AA, appealed against the dismissal of its rectification applications. The core issue was the refusal to allow a 30% deduction on rental income under Section 24(a) of the Income Tax Act.

What were the issues?

Whether a charitable trust registered under Section 12AA is entitled to a deduction under Section 24(a) on its rental income, and if the computation of income should follow the normal commercial manner.

Which sections of the Income-tax Act were involved?

Section 24(a),Section 12AA,Section 143(1)(a),Section 154

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “ C ” BENCH, CHENNAI

Before: SHRI MAHAVIR SINGH & SHRI S. JAYARAMAN

For Respondent: Shri. J. Pavithran Kumar, JCIT
Hearing: 13.02.2020Pronounced: 14.02.2020

आदेश/ O R D E R

PER S. JAYARAMAN, ACCOUNTANT MEMBER : The assessee filed these appeals against the orders of the Commissioner of Income Tax (Appeals), Salem in and ITA No.49/2018-19, both dated 30.05.2019 for the assessment years 2015-16 and 2016-17, respectively, wherein the assessee’s appeals

1.

:-2-: & 2210/Chny/2019 against the orders passed U/s.154 of the Income Tax Act, 1961 (in short ‘the Act’) was dismissed.

2.

The Ld.AR submitted that the assessee has filed various grounds in its appeals. The main issue is that the Ld.CIT(A) is not justified in refusing to allow deduction U/s.24(a) at the rate of 30% of the rental income of the assessee, which is registered U/s.12AA of the Act, in the respective assessment years and argued on this issue alone.

3.

Per contra, the Ld.DR submitted that the Centralized Processing Centre, processed the cases U/s.143(1)(a) of the Act, on which the rectification orders were passed. Therefore, the assessee’s claim is prima facie is not allowed U/s.154 of the Act. Further, he submitted that as conceded fairly by the Ld. AR that as per the jurisdictional High Court’s decision in the case of CIT v. Rao Bahadur Calavala Cunnan Chelty Charities in 135 ITR 485, particularly in Page No. 495, the income in the case of a trust has to be arrived at in the normal commercial manner without reference to the provisions which are attracted by section 14 of the Act. Therefore, there is no merit in the assessee’s case.

4.

We heard the rival submissions. Since the assessee is registered U/s.12AA of the Act and claimed to be a charitable trust, its income has :-3-: & 2210/Chny/2019 to be computed in accordance with normal commercial manner and not U/s.14 of the Act. Therefore, the assessee’s claim that it is entitled for a deduction U/s. 24(a) of the Act at the rate of 30% on the rental income is not correct and hence, we do not find any merit in the grounds of the appeals filed by the assessee.

5.

In the result, both the appeals of the assessee are dismissed.

Order pronounced on Friday, 14th February, 2020 at Chennai.

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