2014 (7) TMI 1318 - AT - Income Tax

Exemption u/s 11(1)(a) - CIT(A) in not allowing standard deduction of 30% from rental income as available u/s 24(a) - HELD THAT - The issue is squarely covered against the assessee by the order of the Tribunal in the assessee s own case for the A.Y. 2004-05 2013 (10) TMI 875 - ITAT MUMBAI wherein similar claim of the assessee has been rejected by the Tribunal on the reason that the income of a charitable trust is exempt from tax under chapter III of the Act and the said income does not form part of the total income of the entity. It is only the income forming part of the total income us/ 2(45) of the Act which is to be classified under various heads of income u/s 14. Accordingly, the Tribunal denied the claim of the assessee made u/s 24 of the Act. In the said decision, the Tribunal has analysed various decisions of the Apex Court and the Tribunal. Since, similar issue of allowability of the claim made u/s 24 has been denied by the Tribunal in the assessee s own case for the AY 2004-05, we are of the considered view that the present appeal filed by the assessee deserves to be dismissed and thus the order of the Ld.CIT(A) is upheld. Appeal filed by the Assessee is dismissed.

Summary

Issues:
Disallowance of standard deduction from rental income for a charitable trust under section 24(a) of the Income Tax Act.

Analysis:

Issue 1: Disallowance of standard deduction under section 24(a) for a charitable trust
The appellant, a charitable trust, contested the decision of the Ld.CIT(A) disallowing the standard deduction of 30% from rental income as per section 24(a) of the Income Tax Act. The Tribunal referred to a previous decision related to the appellant's case for the AY 2004-05 where a similar claim was rejected. The Tribunal emphasized that the income of a charitable trust is exempt from tax under Chapter III of the Act and does not form part of the total income of the entity. It clarified that only income forming part of the total income under section 2(45) of the Act is to be classified under various heads of income under section 14. Given the previous denial of the claim under section 24 in the appellant's case for AY 2004-05, the Tribunal upheld the decision of the Ld.CIT(A) and dismissed the appeal. The Tribunal's decision was based on a thorough analysis of relevant decisions of the Apex Court and the Tribunal, establishing a consistent stance on the issue.

In conclusion, the Appellate Tribunal ITAT Mumbai, in its judgment dated July 25, 2014, upheld the decision of the Ld.CIT(A) to disallow the standard deduction of 30% from rental income for a charitable trust under section 24(a) of the Income Tax Act. The Tribunal's ruling was based on the exemption of income for charitable trusts under Chapter III of the Act and the classification of income forming part of the total income under section 2(45) of the Act. The Tribunal's decision was supported by a previous ruling related to the appellant's case for AY 2004-05, where a similar claim was rejected. The judgment provided a detailed analysis of relevant legal precedents, leading to the dismissal of the appeal filed by the Assessee.