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Facts
The assessee, a charitable organization, filed a return of income declaring nil income. The Assessing Officer (AO) made disallowances for corpus donations and statutory deductions from house property income. The CIT(A) upheld the AO's findings.
Held
The Tribunal held that additional evidence regarding corpus donations should be admitted and the issue restored to the AO for fresh examination. Regarding house property income deductions, the Tribunal also found it appropriate to restore the issue to the AO for verification of double benefit claims.
Key Issues
Whether corpus donations were correctly treated as non-corpus income and whether the assessee is eligible for statutory deductions from house property income.
Sections Cited
Sec11(1)(a), Sec11(1)(d), Sec23, Sec24, Sec24(1), Sec24(3), Sec11, Sec143(3)
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Income Tax Appellate Tribunal, MUMBAI BENCH “F” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI SUNIL KUMAR SINGH
PER OM PRAKASH KANT, AM
This appeal has been preferred by the assessee against order dated 14.11.2023 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2016-17, raising following grounds:
The Commissioner of Income-tax (Appeals), Income Tax Department, National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] erred in
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confirming the addition of Rs.81,60,000/ confirming the addition of Rs.81,60,000/-made by the AO by treating made by the AO by treating corpus donation as non corpus donation as non-corpus on the ground that letters of the donors of the donors did not mention the word "corpus". The appellant submits that although did not mention the word "corpus". The appellant submits that although did not mention the word "corpus". The appellant submits that although in the direction letters the word "corpus" was not mentioned, the said in the direction letters the word "corpus" was not mentioned, the said in the direction letters the word "corpus" was not mentioned, the said donations have been given to the institution with a specific direction for donations have been given to the institution with a specific direction for donations have been given to the institution with a specific direction for utilizing the same for i utilizing the same for infrastructure development needs of the nfrastructure development needs of the institution. Therefore, the same shall not be deemed to be income institution. Therefore, the same shall not be deemed to be income institution. Therefore, the same shall not be deemed to be income chargeable to tax in clear terms of Sec11(1)(a) of the Act. chargeable to tax in clear terms of Sec11(1)(a) of the Act. 2. The CIT(A) erred in confirming the disallowance of claim of statutory 2. The CIT(A) erred in confirming the disallowance of claim of statutory 2. The CIT(A) erred in confirming the disallowance of claim of statutory deduction of Rs. 1 deduction of Rs. 13,39,074/- being 30% of annual value from house being 30% of annual value from house property income u/s.24 of the Act made by the AO on the ground that property income u/s.24 of the Act made by the AO on the ground that property income u/s.24 of the Act made by the AO on the ground that provisions of Sections 23 and 24 are not applicable in the case of trust. provisions of Sections 23 and 24 are not applicable in the case of trust. provisions of Sections 23 and 24 are not applicable in the case of trust. The CIT(A) also erred in confirming the stand taken by the AO that The CIT(A) also erred in confirming the stand taken by the AO that The CIT(A) also erred in confirming the stand taken by the AO that provisions of section 24(a) are on account of repairs and maintenance of provisions of section 24(a) are on account of repairs and maintenance of provisions of section 24(a) are on account of repairs and maintenance of the property which are already allowed as application of income u/s 11 the property which are already allowed as application of income u/s 11 the property which are already allowed as application of income u/s 11 of the Act, thus resulting in double deduction. The appellant submits of the Act, thus resulting in double deduction. The appellant submits of the Act, thus resulting in double deduction. The appellant submits that the appellant is entitled to all the that the appellant is entitled to all the permissible statutory deductions permissible statutory deductions which are available from house property income u/s.24 of the Act. which are available from house property income u/s.24 of the Act. which are available from house property income u/s.24 of the Act. 2. Briefly stated, facts of the case are that the assessee filed Briefly stated, facts of the case are that the assessee filed Briefly stated, facts of the case are that the assessee filed return of income on 12.10.2016 declaring Nil income. The assessee return of income on 12.10.2016 declaring Nil income. The assessee return of income on 12.10.2016 declaring Nil income. The assessee is a charitable organizat is a charitable organization registered with Director of Income ion registered with Director of Income-tax (Exemption), Mumbai. The return of income filed by the assessee (Exemption), Mumbai. The return of income filed by the assessee (Exemption), Mumbai. The return of income filed by the assessee was selected for scrutiny and statutory notices under the Income- was selected for scrutiny and statutory notices under the Income was selected for scrutiny and statutory notices under the Income tax Act, 1961 (in short ‘the Act’) were issued and complied with. In tax Act, 1961 (in short ‘the Act’) were issued and complied with. tax Act, 1961 (in short ‘the Act’) were issued and complied with. assessment completed u/s 143(3) of the Act on 16.12.2018, the leted u/s 143(3) of the Act on 16.12.2018, the leted u/s 143(3) of the Act on 16.12.2018, the Assessing Officer made disallowances for two items. Firstly, he Assessing Officer made disallowances for two items. Assessing Officer made disallowances for two items. observed that corpus donation observed that corpus donations claimed by the assessee were not claimed by the assessee were not having specific mention having specific mention of purpose in consent letter for which in consent letter for which the corpus donation was made, as required under section 11(1)(d) of the n was made, as required under section 11(1)(d) of the n was made, as required under section 11(1)(d) of the Act, therefore, he considered considered the same out of corpus and added to out of corpus and added to total income an amount of Rs.81,60,000/-. Secondly Secondly, he denied total income an amount of the claim of the assessee the claim of the assessee for deduction u/s 24(1) of the Act in deduction u/s 24(1) of the Act in respect of rental income claimed under the head ‘income from respect of rental income claimed under the head ‘income from respect of rental income claimed under the head ‘income from
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house property’ on the ground that assessee is not eligible for such n the ground that assessee is not eligible for such n the ground that assessee is not eligible for such deduction under the provisions of section 11 of the Act. deduction under the provisions of section 11 of the Act. deduction under the provisions of section 11 of the Act.
On further appeal, the Ld. CIT On further appeal, the Ld. CIT(A) also upheld the finding of the the finding of the Assessing Officer.
In respect of Ground No. 1 of the appeal before us, the Ld. In respect of Ground No. 1 of the appeal before us, the Ld. In respect of Ground No. 1 of the appeal before us, the Ld. counsel for the assessee submitted that assessee has obtained counsel for the assessee submitted that assessee has obtained counsel for the assessee submitted that assessee has obtained revised letter from the donors specifying that said contribution was revised letter from the donors specifying that said contribution was revised letter from the donors specifying that said contribution was towards the corpus fund. The Ld. counsel for the assessee the corpus fund. The Ld. counsel for the assessee the corpus fund. The Ld. counsel for the assessee submitted that additional evidence submitted that additional evidences filed by the assessee should be filed by the assessee should be admitted and the issue in dispute may be restored back to the file of admitted and the issue in dispute may be restored back to the file of admitted and the issue in dispute may be restored back to the file of the Ld. Assessing Officer for deciding the issue in dispute afresh. the Ld. Assessing Officer for deciding the issue in dispute afresh. the Ld. Assessing Officer for deciding the issue in dispute afresh. We are of opinion that We are of opinion that the additional evidence filed by the assessee the additional evidence filed by the assessee are crucial for determination of the issue in dispute, wherein, the are crucial for determination of the issue in dispute are crucial for determination of the issue in dispute donors have clearly specified their intent for giving donation to the donors have clearly specified their intent for giving donation to the donors have clearly specified their intent for giving donation to the assessee ,therefore it is therefore it is important to examine whether the assessee hether the assessee fulfills the condition of the corpus donation the condition of the corpus donation, therefore, we feel it therefore, we feel it appropriate to restore this issue back to the file of the Assessing appropriate to restore this issue back to the file of the Assessing appropriate to restore this issue back to the file of the Assessing Officer for examining whether the assessee Officer for examining whether the assessee has has satisfied the conditions under section 11(1)(d) of t s under section 11(1)(d) of the Act for corpus donation. for corpus donation. The Ground No. 1 of the appeal is accordingly for statistical Ground No. 1 of the appeal is accordingly for statistical Ground No. 1 of the appeal is accordingly for statistical purposes.
4.1 As far as ground No. 2 of the appeal is concerned the Ld. As far as ground No. 2 of the appeal is concerned the Ld. As far as ground No. 2 of the appeal is concerned the Ld. counsel for the assessee referred to the decision of the Co-ordinate counsel for the assessee referred to the decision of the Co counsel for the assessee referred to the decision of the Co
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Bench of the Tribunal in Bench of the Tribunal in the case of ADIT(E) v. Shri Sathya Sai the case of ADIT(E) v. Shri Sathya Sai Trust in ITA No. 7350/Mum/2011 for assessment year 2007-08 Trust in ITA No. 7350/Mum/2011 for assessment year 2007 Trust in ITA No. 7350/Mum/2011 for assessment year 2007 and submitted that while computing the income, the assessee is and submitted that while computing the income, the assessee is and submitted that while computing the income, the assessee is eligible for deduction u/s 24(3) of the Act. The Ld. Departmental eligible for deduction u/s 24(3) of the Act. The Ld. Departmental eligible for deduction u/s 24(3) of the Act. The Ld. Departmental Representative (DR) on the o Representative (DR) on the other hand submitted that assessee has ther hand submitted that assessee has also availed repair and maintenance expenses towards property also availed repair and maintenance expenses towards property also availed repair and maintenance expenses towards property while computing application of income. The Ld. counsel for the while computing application of income. The Ld. counsel for the while computing application of income. The Ld. counsel for the assessee also admitted the facts of taking benefit of the repair and assessee also admitted the facts of taking benefit of the repair and assessee also admitted the facts of taking benefit of the repair and maintenance against appl maintenance against application of the details of which are ication of the details of which are available on paper book page 7. The assessee cannot be entitled to available on paper book page 7. The assessee cannot be entitled available on paper book page 7. The assessee cannot be entitled double benefit of deduction double benefit of deduction, firstly, while calculating income from while calculating income from house property and, secondly, while considering application of the while considering application of the funds. In the circumstances , the umstances , the issue needs verification verification as how much benefit the assessee has taken for repair and maintenance assessee has taken for repair and maintenance assessee has taken for repair and maintenance expenses while application of the funds expenses while application of the funds ,therefore, therefore, we feel it appropriate to restore this issue appropriate to restore this issue also to the file of the Assessing to the file of the Assessing Officer for adjudicating judicating in accordance with law.
In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on nounced in the open Court on 24/07/2024. /07/2024. Sd/- - Sd/ Sd/- (SUNIL KUMAR SINGH (SUNIL KUMAR SINGH) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai;
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Dated: 24/07/2024 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file.
BY ORDER, BY ORDER, //True Copy// (Assistant Registrar) (Assistant Registrar) ITAT, Mumbai ITAT, Mumbai