2022 (11) TMI 824 - AT - Income Tax

Assessment of trust - Deduction claimed under Chapter VI-A / Section 80G/80GGA r.w.s. 35AC in respect of donation paid to eligible trusts - application for rectification before the CPC was rejected - HELD THAT - It is found that the Co-ordinate Bench of the Tribunal in the case of Parijat Trust vs. DCIT 2022 (7) TMI 633 - ITAT DELHI has also followed the above order made in Sun Flower Trust 2022 (7) TMI 392 - ITAT DELHI . Therefore, by respectfully following the above orders, we hold that the assessee is entitled for deduction claimed under Chapter VI-A/Section 80GGA read with Section 35AC of the Act and further we direct the A.O. to grant the benefit of deduction claimed by the assessee under Chapter VI-A of the Act in accordance with law. Appeal filed by the assessee is allowed.

Summary

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

Analysis:
1. The appeal was filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals) for the assessment year 2014-15. The primary issue raised by the assessee was the denial of deduction claimed under Chapter VI-A/Section 80GGA read with Section 35AC of the Act in respect of donations made to eligible trusts.

2. The Central Processing Centre (CPC) rejected the deduction claimed by the assessee, leading to a rectification application being filed by the assessee, which was also rejected. Subsequently, the CIT (A) upheld the rejection, prompting the assessee to file the current appeal.

3. The assessee argued that as an Association of Persons (AOP), it had not claimed any exemption under section 11 of the Act. The denial of deduction based on the assumption that the entity claimed exemption under section 11 was deemed incorrect.

4. The assessee cited precedents where similar issues were decided in favor of the assessee by different Tribunals. The Co-ordinate Bench had ruled in favor of the assessee in cases such as Parijat Trust Vs. DCIT and Sun Flower Trust Vs. ITO, emphasizing the entitlement of charitable trusts to claim deductions under relevant sections of the Act.

5. The Ld. CIT (A) had based the denial of deduction on the premise that entities claiming exemption under section 11 do not need to include income in total income for deduction under Chapter VI-A. However, the Tribunal found merit in the assessee's arguments and cited legal precedents to support the allowance of the claimed deduction.

6. Ultimately, the Tribunal allowed the appeal, directing the Assessing Officer to grant the deduction claimed by the assessee under Chapter VI-A/Section 80GGA read with Section 35AC of the Act. The decision was based on the interpretation of relevant provisions and consistent application of legal principles established in prior judgments.

7. The judgment highlighted the importance of correct application of tax laws and the need for thorough consideration of factual and legal aspects in determining the eligibility of deductions claimed by taxpayers. The decision provided clarity on the interpretation of provisions related to deductions for charitable trusts under the Income Tax Act, 1961.