2022 (7) TMI 392 - AT - Income Tax

Exemption u/s 11 - whether the assessee being charitable trust which has not claimed benefits of Section 11 12 of the Act with effect from Assessment Year 2009 - 2010 onwards, having filed return as AOP, is eligible for deductions under Chapter VI-A of Income Tax Act, 1961 or not? - HELD THAT - The identical issue involved in the present Appeal has been dealt and decided against the Revenue by the Mumbai Bench of the Tribunal in the case of Bhoopati Shikshan Pratisthan 2022 (2) TMI 694 - ITAT MUMBAI wherein it is held that, the assessee being a charitable trust registered u/s 12A of the Income Tax Act is entitled to claim deduction u/s 80G/80GGA. As following the order made in the case of Bhoopati Shikshan Pratisthan, (supra) we hold that, the assessee is entitled for deduction claimed under VI-A/80GGA read with Section 35AC of the Act and further we direct the A.O to grant benefit of the deduction claimed by the assessee under Chapter VI-A of the Act in accordance with law. Appeal of assessee allowed.

Summary

Issues:
1. Denial of deduction under Chapter VI-A/Section 80-G/80GGA read with Section 35AC of the Act.

Analysis:
The case involved an appeal by the assessee against the order passed by CIT (A)-40, Delhi for Assessment Year 2014-15. The assessee, a Public Charitable Trust, received shares of Bajaj Auto Ltd. and Bajaj Electrical Ltd. in 1972, which were later demerged as per a Scheme of Arrangement. The assessee did not disinvest the shares within the prescribed period, leading to the denial of benefits under Sections 11 and 12 of the Act from 2009-2010 onwards. The dispute arose when the Centralized Processing Centre (CPC) denied the deduction claimed under Chapter VI-A for Rs. 24,66,037, resulting in an increased assessment and demand. The assessee's rectification application was rejected, leading to appeals before CIT(A) and subsequently before the ITAT Delhi.

The primary issue was whether a charitable trust not claiming benefits under Sections 11 and 12 of the Act could be eligible for deductions under Chapter VI-A. The ITAT Delhi referred to a similar case decided by the Mumbai Bench of the Tribunal, where it was held that a charitable trust registered under Section 12A of the Act could claim deductions under Section 80G/80GGA. Citing this precedent, the ITAT Delhi allowed the appeal, directing the Assessing Officer to grant the deduction claimed by the assessee under Chapter VI-A of the Act.

The ITAT Delhi noted that the denial of the deduction under Chapter VI-A was a computational error, as evidenced by the acceptance of similar claims in preceding and succeeding assessment years. The ITAT emphasized that the assessee had provided relevant documents supporting the deductions claimed, which were not disputed by the department. Therefore, the ITAT found the denial of the deduction unsustainable, set aside the impugned order, and allowed the assessee's appeal.

In conclusion, the ITAT Delhi allowed the appeal filed by the assessee, holding that the assessee was entitled to the deduction claimed under Chapter VI-A/80GGA read with Section 35AC of the Act. The ITAT directed the Assessing Officer to grant the benefit of the deduction in accordance with the law.