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2023 (12) TMI 980 - AT - Income TaxDeduction u/s 11(1) denied - corpus donation received - contention of the assessee is that the Trust received donation of Rs. 4,69,603/- and credited the same in the income and expenditure account under the head donation in cash or kind and specifically it was transferred to the Milan Mandir Building Fund, as the said donation was received for Milan Mandir Building Fund - HELD THAT - Considering assessee submission that this is not case of transferring the funds to other funds and in fact the assessee trust have transferred the donation in the event for which it was received in respect of directly credited the fund in the balance sheet, the assessee has first credited it to income and expenditure account and subsequently transferred the said fund to the fund account for which it has received the said amount. In the balance sheet also, the same is reflected in the specific fund i.e. fund related to Milan Mandir Building Fund. Such donation received for the specific purpose i.e. Milan Mandir Building Fund and also invested for the said purpose/said fund as per the provisions of section 11(1)(d) r.w.s. 11(5) in the schedule bank for which the assessee has submitted the bank account therefore this aspect was not taken into consideration by the CIT(A). CIT(A) is doubting that there is a signature only one trust of income and expenditure account and no signature of any trustee on balance sheet is not justifiable for disallowing the genuineness of the funds. Thus, the Assessing Officer as well as the CIT(A) was not justified in making the addition. Appeal of the assessee is allowed.
Issues:
1. Delay in filing the appeal due to pandemic and demise of the Authorized Representative. 2. Disallowance of donation received by the Trust under Section 11(1) of the IT Act. Issue 1: Delay in filing the appeal The appeal was filed against the order dated 01-09-2021 passed by National Appeal Centre (NFAC), Delhi for assessment year 2016-17. The grounds of appeal included a request to condone the delay in filing the appeal due to the global COVID-19 pandemic during the period 15.03.2020 to 28.02.2022. The Authorized Representative of the Trust handling the audit and income tax matters had passed away, leading to a lack of awareness about the order passed by the Hon'ble Commissioner of Income Tax (Appeals)- NFAC. The delay was explained as genuine and not willful, with a plea to condone it in the interest of justice. The Tribunal found the reasons for delay to be genuine and therefore condoned the delay of 550 days. Issue 2: Disallowance of donation received by the Trust The assessee trust had e-filed its return of income for assessment year 2016-17, declaring total income at Rs. 1,27,541/-. The Assessing Officer observed that the trust had received interest income, Wadi rent income, and donations, showing a gross receipt of Rs. 23,12,660/ and applying Rs. 13,17,418/- for the trust's objectives. However, the Assessing Officer noted a difference amount of income of Rs. 20,73,572/- in respect of rent, donations in cash or kind, and income from other sources, which had not been declared. This resulted in the addition of the difference amount to the total income of the assessee. The CIT(A) confirmed this addition. The appeal before the Tribunal focused on the disallowance of a specific donation received by the Trust of Rs 469613. The Trust had received this donation and credited it in the Income & Expenditure Account under "Donation in cash or kind," subsequently transferring it to the Milan Mandir Building Fund, as the donation was earmarked for this fund. The Trust argued that this was not a case of transferring funds to other accounts but a direct transfer to the specific fund for which the donation was received. The Trust had invested the donation in the Milan Mandir Building Fund as per the provisions of Section 11(1)(d) r.w.s. 11(5) in the Schedule Bank. The Tribunal noted that the donation was received for a specific purpose, invested accordingly, and therefore should not be included in the total income of the Trust as per the provisions of Section 11(1)(d). The Tribunal found the CIT(A) had not considered these aspects and allowed the appeal, directing the deletion of the addition made by the Assessing Officer. Conclusion: The Tribunal allowed the appeal, emphasizing the genuine reasons for the delay in filing the appeal and the correct treatment of the donation received by the Trust for a specific purpose. The Tribunal directed the deletion of the addition made by the Assessing Officer, ruling in favor of the assessee Trust.
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