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2019 (1) TMI 1402 - AT - Income TaxAssessment of trust - Anonymous donations to be taxed in certain cases u/s 115BBC - assessee is a charitable Trust duly registered u/s.12A - Held that - CIT(A) in his order has noted that the Trust is totally religious charitable trust, hence, the provision of section 115BBC(1) shall not apply. Still he has proceeded to invoke the provision of section 115BBC(1). We find that this is quite contradictory when the ld. CIT(A) has found that the assessee is falling under section 115BBC(2), then the provision of section 115BBC(1) are not applicable. Hence, the impugned amount cannot be subject to tax u/s. 115BBC. Hence, we set aside the orders of the authorities below and decide the issue in favour of the assessee.
Issues Involved:
1. Taxability of anonymous donations under Section 115BBC. 2. Delay in filing the appeal. 3. Disallowance of depreciation. 4. Carry forward of deficit to subsequent years. 5. Levy of interest under Sections 234A, 234B, and 234D. Detailed Analysis: 1. Taxability of Anonymous Donations under Section 115BBC: The primary issue was whether the anonymous donations received by the assessee, a charitable trust registered under Section 12A, were taxable under Section 115BBC of the Income Tax Act. The assessee argued that the donations received through "Dabbi Kanike" (box collections) were not taxable as per the provisions of Section 115BBC(2), which exempts anonymous donations received by a trust established for religious and charitable purposes unless specifically directed for any educational or medical institution. The Assessing Officer (AO) treated the anonymous donations amounting to ?5,98,814 as taxable under Section 115BBC(1) since the assessee did not furnish details of the donors. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the AO’s decision, stating that the assessee did not maintain records of the donors, thus making the donations taxable under Section 115BBC(1). However, the Appellate Tribunal noted that the CIT(A) had acknowledged the trust as a religious charitable trust, which should be exempt under Section 115BBC(2). The Tribunal found this contradictory and ruled that the provisions of Section 115BBC(1) were not applicable, thereby setting aside the orders of the lower authorities and deciding in favor of the assessee. 2. Delay in Filing the Appeal: The assessee filed the appeal with a delay of 626 days. The delay was attributed to the assessee pursuing a rectification application under Section 154 based on professional advice, which was later dismissed. The Tribunal considered the delay reasonable as the assessee was seeking an alternative remedy in good faith. Citing substantial interest of justice, the Tribunal condoned the delay. 3. Disallowance of Depreciation: The assessee contested the disallowance of depreciation amounting to ?350. However, the Tribunal's order did not specifically address this issue in detail, implying that the primary focus was on the taxability of anonymous donations. 4. Carry Forward of Deficit to Subsequent Years: The assessee argued that the authorities below should have allowed the carry forward of the deficit to subsequent years to be set off against future income. This issue was not explicitly addressed in the Tribunal's final decision, as the main contention revolved around the applicability of Section 115BBC. 5. Levy of Interest under Sections 234A, 234B, and 234D: The assessee challenged the levy of interest under Sections 234A, 234B, and 234D, arguing that the period, rate, quantum, and method of calculation were incorrect. The Tribunal's decision did not delve into this issue in detail, focusing instead on the primary issue of the anonymous donations' taxability. Conclusion: The Tribunal ruled in favor of the assessee, concluding that the anonymous donations were not taxable under Section 115BBC(1) as the trust was established for religious and charitable purposes, thus falling under the exemption provided by Section 115BBC(2). The delay in filing the appeal was condoned, and the Tribunal set aside the orders of the lower authorities. The appeal was allowed, and the assessee's contentions were upheld.
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