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Facts
The assessee, a charitable institution, filed its return declaring nil income for AY 2012-13. The assessee had applied for registration u/s.12A in 2009 and was granted it w.e.f. 21.12.2017. During the year, it received Rs.6,48,000/- as contribution and applied it for charitable activities. An intimation u/s. 143(1) was issued on 26.09.2013, disallowing expenses claimed as application of income.
Held
The Tribunal held that the adjustments made in the intimation u/s. 143(1) were not permissible as there was no arithmetical error. Even if registration u/s. 12AA was not in place, expenses claimed as application of income could not be disallowed u/s. 143(1). The intimation was considered bad in law.
Key Issues
Whether the disallowance of expenses claimed as application of income in an intimation u/s. 143(1) without any arithmetical error is permissible?
Sections Cited
12A, 12AA, 143(1)
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Income Tax Appellate Tribunal, “SMC” BENCH CUTTACK
Before: SHRI GEORGE MATHAN
(िनधा�रण वष� / Assessment Year : 2012-2013) Kali Kalusha Nasana Seva Trust, Vs ITO, Exemption, Cuttack Plot Noo:- 482/1238 Dibyajyoti Sharada Sunya Gadi, Srivihar Colony, Tulsipur, Cuttack 753008 PAN No. : AABTK 6142 L (अपीलाथ� /Appellant) .. (��यथ� / Respondent) िनधा�रती क� ओर से /Assessee by : Shri B.V.R.Swamy, Advocate राज�व क� ओर से /Revenue by : Shri Vijay Singh, Sr. DR सुनवाई क� तारीख / Date of Hearing : 22/09/2025 घोषणा क� तारीख/Date of Pronouncement : 22/09/2025 आदेश / O R D E R This is an appeal filed by the assessee against the order of the Ld. Addl/JCIT(A), Udaipur dated 24/12/2024 passed in for the assessment year 2012-2013.
It was submitted by the Ld. AR that the assessee is a charitable institution. It had applied for registration u/s.12A of the Act in 2009. The assessee had received a communication asking for details on 3rd February, 2010. Subsequently, the assesee applied in form 10A of the Act on 21.12.2017 and the assessee has been granted registration u/s. 12A of the Act on w.e.f 21.12.2017. It was submission that the assessee during the 2012-13 had received Rs.6,48,000/- as contribution and the assessee had applied the said amount of Rs.6,48,000/- for its charitable activities. The assessee had filed its return of income declaring nil income. It was submission that the intimation u/s. 143(1) of the Act came to be issued on 26.09.2013, wherein the expenses claimed by the assessee representing application of income, has not been allowed. It was submission that the adjustment which has been done in the intimation u/s. 143(1) of the Act are not the adjustments which are permissible under the provisions of sections 143(1) of the Act, insofar as there is no arithmetical error which has been pointed out. It was submission that the intimation issued u/s. 143(1) of the Act is to be quashed.
In reply, the Ld. SR DR submitted that the intimation has been issued by the ITO, Exemption Ward, Cuttack. It was submission that the intimation is a computer generated intimation and as there was the no order of 12A of the Act, the system automatically denies the expenses. It was the prayer that the issue may be restored to the file of the AO for verification.
I have considered the rival submissions. The adjustments permissible u/s. 143(1) of the Act have been specifically provided for in the provisions of Section 143(1) of the Act. The denial of the expenses in its entirety, which represents the application, is one of the adjustments which is permissible in the intimation u/s.143(1) of the Act. Even assuming that the assesee does not have the registration u/s.12AA of the Act, still the expenses claimed cannot be disallowed u/s.143(1) of the Act. The best case scenario would be to treat the activity of the assesee as business and compute its business income and bring to tax the profits and gains from such business. Admittedly, that has not been done. This being so, as the intimation issued u/s.143(1) of the Act is not as per the