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Facts
The assessee trust, registered under Section 12AA, incurred 'bhandara expenses' and 'relief of the poor' expenses. The AO disallowed both, stating they were not part of the trust's objects. The CIT(A) allowed the 'relief of the poor' expenses but confirmed the disallowance of 'bhandara expenses', arguing a lack of evidence that they were solely for the poor and not general religious gatherings.
Held
The tribunal held that 'bhandara expenses' representing food distribution to the needy fall under 'relief of the poor', which is a charitable activity. It found the CIT(A)'s suspicion of religious/cultural flavor to be a surmise and directed the AO to treat these expenses as an application of income for charitable purposes.
Key Issues
Whether 'bhandara expenses' incurred by a charitable trust constitute an application of income for charitable purposes under the Income-tax Act, 1961, specifically falling under 'relief of the poor'.
Sections Cited
Section 12AA, Section 143(3), Section 143(3A), Section 143(3B), Section 2(15)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AGRA BENCH “SMC”: AGRA
The appeal in ITA No. 527/AGR/2025 for AY 2018-19, arises out of the order of the ld National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘ld. CIT(A)’, in short] dated 25.09.2025 against the order of assessment passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 08.03.2021 by the Assessing Officer, NeAC, Delhi (hereinafter referred to as ‘ld. AO’).
None appeared on behalf of the assessee despite issuance of notice. Hence I proceed to dispose of this appeal on hearing the Learned DR and based on materials available on record.
The only issue to be decided in this appeal is as to whether the bhandara expenses incurred by the Assessee could be construed as
ITA No.527/AGR/2025 International Society of Divine Love Jagadguru Dham Raman Reti
application of income for charitable purposes in the facts and circumstances of the instant case.
I have heard the Learned DR and perused the materials available on record. The Assessee Trust is duly registered under Section 12AA of the Act. The Assessee Trust had filed its return of income for assessment year 18-19 declaring total income of Rs. Nil on 08-09-2018. From the details filed by the Assessee Trust, the learned AO noted that Assessee Trust had debited expenses for Bhandara expenses in the sum of Rs. 7,47,203 and relief of the poor to the tune of Rs. 24,10,611. The learned AO on perusal of the objects of the Trust noted that these two activities were not part of the objects of the Trust and accordingly proceeded to deny both the items as application of funds for objects of the Trust. The learned AO accordingly re-computed the income of the Trust by ignoring these two items as application of income for charitable purposes and completed the assessment under Section 143(3) read with Sections 143(3A) and 143(3B) of the Act on 08-03-2021. The Assessee Trust challenged the assessment order before the learned NFAC.
The learned NFAC observed that the Assessee Trust had incurred expenditure of Rs. 24,10,611 on account of relief to the poor which falls in the definition of charitable purpose under Section 2(15) of the Act and accordingly deleted the addition to that extent. However, as far as Bhandara expenses in the sum of Rs. 7,47,203 is concerned, the learned NFAC observed that though distribution of food to the needy can be part of charitable activity, the Assessee Trust had failed to furnish cogent evidence showing that these expenses were incurred solely for the poor and not for general religious gatherings. The learned NFAC observed that these were organized as Bhandara programs which have more of religious / cultural
ITA No.527/AGR/2025 International Society of Divine Love Jagadguru Dham Raman Reti
flavour rather than targeted relief activity. Accordingly, the learned NFAC concluded that this activity was not spelt out in the Trust Deed and accordingly would be outside the ambit of charitable activity and confirmed the addition made by the learned AO.
I directed the learned DR to furnish the full copy of the Trust Deed on 21-1-2026 and the same was duly furnished by him on 23-1-2026. I find that the nature of Bhandara expenses represent distribution of food to the needy. This fact is not disputed by the lower authorities. Once it is accepted that food is distributed to the needy, it automatically falls within the ambit of ‘relief of the poor’ which is an accepted charitable activity even as per the learned NFAC. I find that the learned NFAC had merely suspected that the Assessee Trust had organized Bhandara programs which has religious / cultural flavour. This is purely a surmise and once it is accepted that food has been distributed only to the needy people, it does not matter where the said activity was done by the Assessee Trust. Hence I direct the learned AO to treat the amounts incurred on account of bhandara expenses in the sum of Rs 7,47,203 as an application of income for charitable purposes. Accordingly, the grounds raised by the Assessee are allowed.
In the result, the appeal of the Assessee is allowed.
Order pronounced in the open court on 03/02/2026.
-Sd/- (M. BALAGANESH) ACCOUNTANT MEMBER Dated: 03/02/2026 A K Keot
ITA No.527/AGR/2025 International Society of Divine Love Jagadguru Dham Raman Reti