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Income Tax Appellate Tribunal, BENCH : COCHIN
Before: SMT. BEENA PILLAI & Ms. PADMAVATHY S.
Date of hearing : 12.01.2023 Date of Pronouncement : 20.01.2023 O R D E R
Per Padmavathy S, Accountant Member:
This appeal is against the order of CIT(Appeals), National Faceless Assessment Centre, Delhi [NFAC], Delhi dated 21.6.2021 for the assessment year 2013-14.
The assessee raised the following grounds of appeal:-
“1. Return of income for A.Y. 2013-14 was filed on 31-10- 2013 declaring total income as NIL. 2. In the intimation order U/S 143(1), the deduction for the amount applied to charitable purpose in India of Rs.11,12,752/- is disallowed and the A.O computed a sum of Rs.7,07,340/- as total income. Accordingly A.O calculated tax liability of Rs.2,18,568/- and an interest of Rs.56,155/- thereon. Even though the assesse is a trust having 12A registration and is eligible to be taxed at normal rates, A.O computed the tax liability at Maximum Marginal Rate which is inequitable.
Hence an appeal was filed to CIT (Appeals) on 24/04/2015 against the assessment order dated 22.01.2015, passed u/s. 143(1) of income tax act,1961.
4. As per the Order u/s 250 of Income Tax Act received from CIT(Appeals), taxable income is assessed as Rs. 7,07,3401- and order giving effect to the order u/s 250 of CIT (Appeals) shows tax liability of Rs.2,18,568/- and an interest of Rs.48,155/- thereon. In the above order CIT(A) also calculated tax liability at Maximum Marginal Rate which is unfair and not as per the Act. As the assessee being an AOP(Trust) having 12A registration ,tax liability should be calculated at normal rates.
In a similar order passed for AY 2018-19 tax liability is calculated at normal rates. As the assessee being an AOP(Trust) having 12A registration tax liability should be calculated at normal rates. We are also attaching the rectification order and computation sheet for the AY 2018-19, for evidencing our request.
6. The order of the CIT(A) is opposed to law, equity, facts and circumstances of the case.
Levy interest under sec. 234A, 234B and 234C are not lawful and needs to be cancelled.
For the above and other grounds that may be urged at the time of hearing of appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered.”
3. The assessee is a charitable trust registered u/s. 12A of the Income-tax Act [the Act]. The main purpose of the assessee is relief of the poor and spreading the messages of Sri Narayana Guru and the trust is also doing advancement of general public utility by conducting chits. The return for the AY 2013-14 was filed on 31.10.2013 declaring a loss of Rs. 4,05,410. An order u/s. 143(1)(a) dated 22.1.2015 was passed whereby a disallowance of Rs.11,12,752 is made and the tax was charged @ maximum marginal rate. Aggrieved, the assessee preferred an appeal before the CIT(A) and contended that the amount disallowed have been spent for charitable purposes and therefore no disallowance is warranted. The CIT(A) dismissed the appeal by holding that the assessee failed to give detailed explanation with regard to the expenses were made for charitable purposes and that the assessee did not produce any documentary evidence with regard to the nature of expenses. Accordingly, the CIT(A) upheld the disallowance.
Before us the ld. AR submitted that the assessee is a trust having registration u/s. 12A and therefore cannot be taxed at maximum marginal rate by treating the same as AOP.
5. The ld. DR relied on the order of the lower authorities. We notice that the assessee is a registered charitable trust u/s. 12A of the Act. It is also noticed that the impugned additions are made for the reason that no proper documentary evidence supporting the claim that expenses are incurred for charitable purposes is filed before the lower authorities. It is also noticed that the assessee has not contended the issue of treating the assessee as an AOP and accordingly charging tax at marginal rate before the lower authorities. We therefore remit the issue back to the AO to examine whether the impugned disallowance is spent for charitable purpose and decide in accordance with law. The assessee is directed to submit the necessary documents and evidence in support of the claim that the amount disallowed is actually spent for charitable purposes and cooperate with the proceedings. It is ordered accordingly.
In the result, the appeal is allowed for statistical purposes.
Pronounced in the open court on this 20th day of January, 2023.