GURDWARA SRI GURU HARGOBIND SAHIB,CHANDIGARH vs. INCOME TAX OFFICER, WARD 5(5), CHANDIGARH , CHANDIGARH

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ITA 583/CHANDI/2024Status: DisposedITAT Chandigarh04 December 2024AY 2019-20Bench: SHRI SANJAY GARG (Judicial Member)4 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that income tax is levied on net income after deducting expenditure. Therefore, denying the deduction of expenditure was incorrect. The Assessing Officer was directed to tax only the net total income after allowing admissible expenditure.

What were the facts?

The assessee, a Gurdwara, claimed deduction under Section 11 of the Income Tax Act without being registered as a charitable trust. The Assessing Officer denied the deduction and added the entire receipts to the taxable income. The CIT(A) condoned the delay in appeal but denied the deduction of expenditure.

What were the issues?

Whether the assessee is entitled to deduction of expenditure for computing taxable income when not registered as a charitable trust, and whether income tax should be levied on gross receipts or net income.

Which sections of the Income-tax Act were involved?

Section 11,Section 12A

AI-generated summary — verify with the full judgment below

(PHYSICAL HEARING) िनधा�रतीक�ओरसे/Assessee by : Shri. B.M. Monga, Adv. & Shri.Rohit Kohra, Adv. राज�वक�ओरसे/ Revenue by : Shri. Vivek Vardhan, J.C.I.T सुनवाईक�तारीख/Date of Hearing : 13.11.2024 उदघोषणाक�तारीख/Date of Pronouncement : 04.12.2024 आदेश/Order The captioned appeals have been preferred by the assessee against the separate orderspassed by the ld. Commissioner of Income Tax, Appeal Addl./JCIT (A)-1, Hyderabad [hereinafter referred to as the “Ld. CIT(A)”]of evendate22.03.2024for the Assessment Years:2019-20 & 2021-22.Since the facts involved in both the appeals are the identical, hence, the same are being disposed of with this common order.

& 584/CHD/2024 Gurdawar Sri Guru Hargobind Sahib v. ITO 2 2. is taken as a lead case for the purpose of narration of facts.

3.

The brief facts of the case are that during the year under consideration, the assessee was not registered as charitable trust u/s 12A of the Income Tax Act. The assessee claimed deduction u/s 11 of the Income Tax Act, however, the same was denied by the Assessing Officer. However, while the computingthe taxable income of the assessee, the Assessing Officer added the entire receipts without deduction of the claim of expenditure.

4.

Being aggrieved, the assessee preferred the appeal before the ld. CIT(A) which was delayed by 105 days.It was pleaded before the ld. CIT(A) that the delay had occurred due to change of the management of the assessee trust. The ld. CIT(A) admitted the said appeal and condoned the delay. However, on merits, he declined the plea of the assessee that assessee is entitled to the deduction of expenditure for the purpose of computation/assessment of its income.

5.

I have heard the rival contention and gone through the record. It is the basic principle for the levy of income tax that the taxes are to be leviedon the net income after deduction of expenditure from & 584/CHD/2024 Gurdawar Sri Guru Hargobind Sahib v. ITO 3 the total receipts. Therefore, the denial of deduction of expenditure on the part of the lower authorities is wrong and illegal. I, therefore, set aside the impugned order of the ld. CIT(A) and direct the Assessing Officer to duly consider the contention of the assessee to examine the records and ensure that only the net total income of the assessee is taxed after deduction of the admissible expenditure.

The appeal of the assessee stands allowed.

ITA No. 583/CHD/2024:

6.

The facts and issue involved in this appeal are identical to that have been discussed above in ITA No. 584/CHD/2024. The only distinction is that the Ld. CIT(A), in this case, has not condoned the delay in filing the appeal. Considering the facts and circumstances of the case, the delay in filing the appeal before the ld. CIT(A) is condoned. In view of my findings given above, the impugned order of the ld. CIT(A) is set aside and the matter is restored to the file of the Assessing Officer with a direction to pass a fresh assessment order in terms as indicated above while adjudicating ITA No. 584/CHD/2024.

7.

In the result, both the appeals filed by the assessees are treated as allowed for statistical purposes.

& 584/CHD/2024 Gurdawar Sri Guru Hargobind Sahib v. ITO 4 Order pronounced on 04.12.2024.

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