2022 (5) TMI 523 - AT - Income Tax

Addition towards donation given by the assessee - assessee has not claimed the said expenditure in the profit and loss account but claimed deduction u/s 80G(5) - CIT(A) has given a finding that the assessee has failed to furnish the necessary documents in support of its claim and finally confirmed the addition justifying the order of AO - HELD THAT - We note that the authorities below have miserably failed to appreciate the facts of the case correctly that the donation given by the assessee of Rs. 5,00,000/- was never claimed as expenditure by the assessee in the profit and loss account and therefore there is no question of making addition of the same as expenditure on donation as has been done by the AO and confirmed by the Ld. CIT(A). We note that though the Ld. CIT(A) noted that the assessee has not claimed any deduction as expenditure in the profit and loss account but confirmed the addition by giving contradictory findings. Under these circumstances, we are not in a position to concur with the conclusion reached by the Ld. CIT(A) and accordingly we set aside the order of Ld. CIT(A) by directing the AO to delete the disallowance - Decided in favour of assessee.

Summary

Issues:
Appeal against addition of donation as expenditure.

Analysis:
The appeal was filed against the Commissioner of Income Tax(Appeals) order confirming the addition of Rs. 5,00,000/- as a donation made by the assessee. The assessment under section 143(3) of the Income Tax Act, 1961 was framed, and subsequently, a notice under section 154 of the Act was issued to add the donation amount to the assessee's income. The assessee contended that since no expenditure was claimed in the profit and loss account, the addition was incorrect. However, the Commissioner upheld the addition, noting that the assessee had claimed a deduction under section 80G(5) but failed to provide supporting documents. The Appellate Tribunal observed that the donation was never claimed as an expenditure in the profit and loss account, and thus, there was no basis for the addition. The Tribunal disagreed with the Commissioner's conclusion and directed the Assessing Officer to delete the disallowance of Rs. 5,00,000/-.

In conclusion, the appeal of the assessee was allowed, and the order of the Commissioner was set aside. The Appellate Tribunal found that the donation amount was not claimed as an expenditure in the profit and loss account, making the addition unjustified. The Tribunal emphasized the importance of correctly appreciating the facts of the case and overturned the decision to confirm the addition.