2022 (8) TMI 1034 - AT - Income Tax

Taxability of amount received for specific purpose - contributions received treated as income u/s. 2(24)(iia) as assessee is not registered u/s. 12A - HELD THAT - The admitted facts are that the assessee has received voluntary contribution towards corpus for the construction of building and for plantation expenses - Disclosure was also rightly made while filing the return of income for the AY 2019-20. Revenue Authorities have not disputed the contributions received but denied the exemption only due to the fact that the assessee is not registered u/s. 12A - observation of the CIT(A) that the assessee is not registered under any Law either as a Society or as a Trust is not factually correct - AR has produced a copy of the Registration Certificate duly registering the assessee-society under the Societies Registration Act vide Registration No.464 of 1995 - contributions received for a specific purpose cannot be treated as income u/s. 2(24)(iia) of the Act. Accordingly, we set-aside the order of the Ld. CIT(A) on Grounds no.3 and 4 raised by the assessee and these grounds raised by the assessee are allowed. Depreciation and bank charges on the basis that the assessee is not entitled to the benefit of section 32 - We find that since the asset has not been claimed as a deduction or exemption in the same year or in any previous year, the depreciation claimed by the assessee should be allowed as expenditure u/s. 32 of the Act. Therefore, we are of the considered view that the assessee is eligible to claim depreciation and bank charges as revenue expenditure and allow the same. Accordingly, Ground raised by the assessee is allowed.

Summary

Issues Involved:
Appeal against summary assessment disallowing exemption u/s. 11 of the Income Tax Act for AY 2019-20.

Detailed Analysis:
1. The appellant, a registered society under the Societies Registration Act, filed an appeal against the order of the Ld. Commissioner of Income Tax (Appeals) regarding the summary assessment u/s. 143(1) of the Income Tax Act for AY 2019-20.
2. The appellant disclosed voluntary contributions towards corpus amounting to Rs. 52,70,000, which were disallowed in the summary assessment. The Ld. CIT(A) dismissed the appeal, leading to the appellant's appeal before the Appellate Tribunal.
3. The appellant raised several grounds of appeal challenging the adjustments made by the CPC during the processing of the return of income under section 143(1) of the Act. The key issues included the disallowance of exemption claimed for voluntary contributions forming corpus and specific purposes, along with the disallowance of expenditure.
4. The appellant's Authorized Representative argued that the contributions received were for specific purposes and should not be treated as income, citing a relevant decision by the jurisdictional Bench. The Revenue Authorities, however, relied on their orders.
5. After hearing both sides, the Tribunal noted that the contributions were received for specific purposes and should not be treated as income, as established by previous decisions. The Tribunal also found discrepancies in the Ld. CIT(A)'s observation regarding the appellant's registration status, leading to the allowance of the grounds raised by the appellant related to specific purpose contributions.
6. Regarding the disallowed depreciation and bank charges, the Tribunal allowed the appellant's claim, stating that since the assets were not claimed as a deduction or allowance in any year, the depreciation should be allowed as revenue expenditure.
7. The Tribunal disposed of Ground No.2 since the appeal was adjudicated on merits, while Grounds No.1 and 6 were considered general in nature and not adjudicated.
8. Ultimately, the Tribunal allowed the appeal filed by the appellant, pronouncing the decision on 23rd August 2022.

This detailed analysis covers the key issues raised in the appeal, the arguments presented by both parties, and the Tribunal's decision on each ground of appeal.