SAURASHTRA RACHNATMAK SAMITI SEVA TRUST,RAJKOT, GUJARAT vs. ADIT, CPC, BENGALURU, JURISDICTION - RAJKOT

Succinctly, the factual panorama of the case is that assessee before us, is a public charitable trust and duly registered u/s 12AA of the Act and is regularly assessed to tax at Rajkot. The assessee e-filed its return of income on 10.10.2019, declaring therein net taxable income of Rs. 1,45,250/- after setting off the expenses incurred for the object of the trust and the allowable accumulation u/s 11(1)(a) of the Income Tax Act. The assessee also duly declared the corpus donation of Rs. 3,00,00,000/- and claimed the same as exempt u/s 11(1)(d) of the Act. However, Learned assessing officer (CPC) whilst processing the return u/s 143(1) of the Act, has treated the corpus donation, as the income of the assessee and brought the same to tax accordingly.

Aggrieved by the order of Commissioner of Income Tax (Appeal), the Assessee is in further appeal before us.

We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. We note that assessee is a public charitable trust duly registered under the provisions of section 12A of the Income Tax Act, 1961.The assessee filed an appeal before the ld. CIT(A) against the intimation u/s 143(1) of the Act. The assessee-trust stated before us that it had received a corpus donation of Rs. 3,00,00,000/-during the course of assessment year under consideration, which was claimed, as exemption u/s 11(1)(d) of the Act. However, the CPC-AO, whilst processing the return of income has considered the said corpus donation, as regular voluntary donation and thus assessed the returned income of Rs. 1,45,247/- at Rs. 3,01,45,247/-. The CPC-AO has not provided any reason for the same. The Ld. CIT(A) has confirmed the said adjustment done by CPC-AO, therefore, assessee is in further appeal before us.

Learned Counsel for the assessee, vehemently submitted that it is evident that the adjustment made by the CPC-AO, is clearly debatable in nature and hence on this count the said adjustment cannot fall within the ambit of Section 143(1) of the Act. Reliance is placed by the ld Counsel, on the following decisions:

The ld. Counsel also invited our attention towards the 1st proviso of section 143(1) of the Act, which reads as under:

On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity.

We have considered the submission of both the parties. We find that the main grievance of the assessee is that the CPC-AO has considered the corpus donation claimed by the assessees, exempt under section 11(1)(d) of the Act, as a regular voluntary contribution. If this be the case then the assessee would be entitled to the basic exemption of 15% under section 11(1) (a) of the Act, which has not been given by the CPC-AO.

The Ld Counsel for the assessee also submitted that now the main grievance of the assessee is to decide the nature of donation, whether it is corpus donation or regular donation. Considering these facts, we are of the view that nature of donation is to be decided, therefore, we find appropriate to remit this issue back to the file of the assessing officer with the direction to the assessing officer to examine whether the donation is a corpus donation or regular donation and assessee should be given liberty to file relevant documents and evidences before the assessing officer to substantiate its claim, therefore, issue pertaining to nature of donation, should be remitted back to the file of the assessing officer for examination and adjudication. The Ld. DR has no objection, if the matter is remitted back to the file of AO for the examination of the nature of the donation. The Ld. Counsel for the assessee, also does not have any objection, if the case is remitted back to the file of assessing officer to examine the nature of the donation, whether it is a corpus donation or regular donation.

We accept the prayer of the ld. Counsel for the assessee and ld DR for the Revenue and therefore, we set aside the order of CIT(A) and remand the various issues raised by the assessee in the grounds of appeal before CIT(A) for fresh consideration by the jurisdictional assessing officer with a liberty to the assessee to prove his case by producing sufficient evidence/material to the (AY 2019-20) Saurastra Rachnatmak Samiti Seva Trust satisfaction of the assessing officer, about the nature of donation, whether it is a corpus donation or regular donation. For statistical purposes the appeal of the assessee is allowed.

In the result, the appeal of the assessee is allowed for statistical purposes.