2019 (12) TMI 1040 - AT - Income Tax

Exemption u/s 11 - addition of corpus donation - registration u/s 12AA is granted in the subsequent year then exemption refused in the earlier years - HELD THAT - In view of the order of the Kolkata Benches of ITAT in the case of Sree Sree Ramkrishna Sanity vs. DCIT 2015 (11) TMI 119 - ITAT KOLKATA it is of view that addition of corpus donation has already been decided in favour of the assessee by the ITAT Delhi Bench (supra) by holding that even if there was a non compliance of section 12A(b) of the Act by the assessee then the corpus donation received by the assessee is not taxable in the hands of assessee. Registration under section 12AA is granted in the subsequent year then exemption cannot be refused in the earlier years merely for non registration under section 12A in terms of amended under section 12A of the Act. Keeping in view of the aforesaid discussion and respectfully following the precedents as aforesaid, the addition on account of corpus donation is deleted. Disallowance on account of repair and maintenance - After considering the arguments advanced by the learned counsel for the assessee and the learned DR alongwith the documentary evidences filed by the assessee in support of his contention, books of accounts of the assessee are audited and bill and vouchers in support of the expenses has been produced by the assessee and examined by the Assessing Officer. Assessing Officer has not pointed out any defect and has also not rejected the same by applying the provisions of section 145 of the I.T. Act. Even otherwise, all the payments were through bank channel and TDS deducted, against building repair and maintenance amount. Therefore, keeping in view the facts and circumstances of the present case and the non rejection of books of accounts the addition in dispute is not sustainable in the eyes of law, therefore, the same is deleted by allowing the ground no. 2. Impugned order is set aside and the additions involved in the grounds of appeal are deleted by accepting the appeal filed by the assessee.

Summary

Issues Involved:
1. Addition of corpus donations under sections 2(24) and 56(1).
2. Addition on account of repair and maintenance expenses.

Issue 1: Addition of Corpus Donations
The appeal was filed against the order of the Ld. CIT(A) sustaining the addition of corpus donations. The assessee argued that the donations should not be considered as business income due to the nature of the receipts. The assessee, a society running educational institutions, received corpus donations but was not registered under section 12AA at the time of receipt. The counsel cited various ITAT decisions supporting the non-taxability of corpus donations. The ITAT, after considering the arguments and precedents, concluded that the addition of corpus donation was not justified and deleted the same based on the decisions of the ITAT Delhi Bench and Kolkata Benches.

Issue 2: Addition on Account of Repair and Maintenance Expenses
The Assessing Officer made an addition on account of repair and maintenance expenses. The assessee contended that the books of accounts were audited, and all expenses were supported by bill vouchers. The Assessing Officer did not find any defects in the expenses or reject them under section 145 of the Income Tax Act. The payments were made through banking channels with TDS deducted. The ITAT, after reviewing the evidence and arguments, concluded that the addition of repair and maintenance expenses was not sustainable in law. Therefore, the ITAT deleted the addition based on the non-rejection of the books of accounts and the supporting evidence.

In conclusion, the ITAT allowed the appeal filed by the assessee, setting aside the impugned order and deleting the additions made in the grounds of appeal. The judgment was pronounced on 20/12/2019.