GREAT EASTERN CSR FOUNDATION,MUMBAI vs. ACIT, CPC,BANGLORE, MUMBAI
In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal held that the unspent surplus of the assessee was below the taxable limit of ₹2.50 lakhs. It directed the CIT(A) to consider the provisions of Section 164(2) of the Act, which states that such income should be taxed at the rate applicable to an Association of Persons (AOP).
What were the facts?
The assessee, a charitable trust, filed its return of income declaring a surplus of ₹1,65,911/-. The return was processed under section 143(1) of the Income Tax Act, creating a demand of ₹88,693/-. The CIT(A) directed the Assessing Officer to re-compute the tax without confirming the trust's registration under section 12AA.
What were the issues?
Whether the CIT(A) erred in directing re-computation of tax without confirming the assessee's status as a charitable trust registered under Section 12AA and the applicability of AOP tax rates.
Which sections of the Income-tax Act were involved?
Section 143(1),Section 12AA,Section 234B,Section 234C,Section 11(1),Section 11(1)(a),Section 164(2),Section 2(24)(iia),Section 11(4A),Section 11,Section 12
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SRI MAHAVIR SINGH
Aayakr ApIla saM./ (inaQa-arNa baYa- / Assessment Year 2015-16) Great Eastern CSR The Asst. Commissioner of Foundation Income Tax, CPC, Plot 34-A, Ocean House, Dr. Bangalore Vs. Annie Besant Road, Shivaji Nagar, Worli, Mumbai-400 018 .. (p`%yaqaaI- / Respondent) (ApIlaaqaI- / Appellant) स्थायी लेखा िं./PAN No. AAFCG88950P अपीलाथी की ओर े / Appellant by : Shri Falee H. Bilimoria, AR प्रत्यथी की ओर े / Respondent by : Shri Satischandra Rajore, DR ुनवाई की तारीख / Date of hearing: 04.02.2019 घोषणा की तारीख / Date of pronouncement : 04.02.2019 AadoSa / O R D E R महावीर स िंह, न्याययक दस्य/ PER MAHAVIR SINGH, JM:
This appeal by the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-3, Mumbai [in short CIT(A)], in appeal No. CIT(A)-3/ACIT-CPC/IT-622/2017-18 vide dated 28.03.2018. The return of income was processed by Centralized Processing Centre 2 Bangalore under section 143(1) of the Income Tax Act, 1961 (hereinafter the Act) dated 15.09.2016.
The only issue in this appeal of assessee is against the direction of CIT(A), who passed the order without giving any finding that the assessee is a charitable Trust registered under section 12AA of the Act and consequently thereto which rate is applicable. For this assessee has raised the following two grounds: - “1) The learned Commissioner of Income Tax (Appeals) erred in merely directing the Assessing Officer to re-compute the tax and education cess thereon as also the interest under Section 234B and 234C of the Act without giving any finding that the Appellant was a Charitable Trust registered under Section 1 2AA of the Act and consequent thereto, the rates applicable to a company were not applicable to the Appellant.
2) Having regard to the facts of the case, the Assessing Officer be directed to compute the tax and interest under Section 234B and 234C of the Act, by treating the Appellant as a Charitable Trust which is eligible for the benefit of the slab rates of tax and minimum threshold limit of Rs.2,50,000/-, applicable to an Association of Persons.”
Briefly stated facts are that the assessee filed its return of income for AY 2015-16 on 29.09.2015 declaring total income at ₹ 1,65,911/-. The 3 return was processed under section 143(1) of the Act by Central Centralized Processing Centre, Bangalore (CPC) added 15.09.2016. Thereby the demand of ₹ 88,693/- was created. Aggrieved, assessee preferred the appeal before CIT(A). The CIT(A) directed the AO to recompute the tax and interest by observing in Para 4.4.1 as under: - “4.4.1 I have considered the appellant’s contentions. During the course of appeal proceedings, the appellant stated that the error in computation of income was rectified under section 154 but the error in computation tax was not rectified. The AO is therefore, directed to re- compute the tax and education cess and also interest under section 234B and 234C of the Act. The AO is also directed to furnish the computation of tax and interest in the order.”
Now, the learned Counsel for the assessee before us contended that the Revenue has carried out rectification of intimation issued under section 143(1) of the Act by CPC Bangalore and finally determined the total income at ₹ 1,65,911/-. But charged income tax on total income declared by assessee at ₹ 1,65,911/- and created the demand at ₹ 88,693/- again. The learned Counsel explained that the assessee is a charitable trust registered under section 12A of the Act and thereby for its return of income claiming deduction application under section 11(1) and 11(1)(a) of the Act, exercised the option available under clause 2 of the explanation to section 11(1) of the Act. The assessee claimed that as per return of income filed there was unspent surplus of ₹ 1,65,911/- and this is within the basic limit prescribed for taxable income at ₹ 2.50 lacs. It was 4 claimed that no tax was payable by the assessee after considering the fact that the assessee was to be assessed as charitable trust under the provisions of section 164(2) of the Act. The learned Counsel explained that the rate of tax applicable to a charitable trust for the purpose of assessment under the Act which is applicable to AOP. If the income of the trust is not exempt under section 11 of the Act it will have to pay tax as per the provision sub section of section 164 of the Act. It was claimed before us that unspent surplus of the assessee is to be taxed at the rates applicable to AOP and not that of domestic company. The learned Counsel only urged that the benefit of basic exemption limit of Rs. 2.50 lakhs be made available to the assessee and tax cannot be levied at a flat rate of 30%. On the other hand, the learned Sr. Departmental Representative urged that the directions can be given to the CIT(A) accordingly.
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