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TMI Blog2025 (4) TMI 1563X X X X Extracts X X X X X X X X Extracts X X X X ..... er, which is unlawful, unjustified and against the principles of natural justice. 2. The Ld. Commissioner of Income-tax (Appeal) has erred in law and on facts in passing the order without giving adequate opportunity of being heard. 3. The Ld. Commissioner of Income-tax (Appeal) has erred in law and on facts in upholding ad hoc disallowance of expense of Rs. 1,54,57,795/- against the order passed u/s 143(1) of Income-tax Act without following the procedure laid down in sub-section (1) of section 143 of Income-tax Act, 1961. 4. The Ld. Commissioner of Income-tax (Appeal) has erred in law and on facts in not granting exemption u/s 11 and 12 of the I. T. Act, 1961. 5. The Ld. Commissioner of Income-tax (Appeals) has erred in law and on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he tax counsel, who had been engaged to file the said return, the aforementioned addition had been made. It was submitted that the assessee society was not well versed with Income Tax provisions and hence it had engaged a tax counsel for filing the income tax returns electronically. However, while filing the returns, the tax counsel had inadvertently shown the amount applied to charitable purposes in India as Nil when it should actually have been Rs. 2,17,56,279/-. It was submitted that the application of funds amounting to Rs. 2,17,56,279/-, as per the provisions of section 11 of the Income Tax Act, was correctly reflected in Form 10 B, which had been filed electronically by the auditor before the filing of the income tax return by the tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition of Rs. 2,17,56,280/- deserve to be deleted. The ld. CIT(A) after considering the arguments of the assessee, opined that the issue for consideration was whether income, expenditure can be set off under income derived from charitable trust, which is a fee collected from a student falling under the head, "income from other sources" i.e. whether capital expenditure could be set off against income from other sources under which the receipts on account of fees had been shown in the income tax return. The ld. CIT(A) opined that when the income is not from business but from other sources, expenses have to have a direct nexus with the income earned. There has to be a one to one co-relation between the income earned and the expenditure earned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng on behalf of the assessee pointed out that the assessee society enjoyed exemption under section 12AA of the Income Tax Act, 1961 which had been granted to by the Commissioner on 15.09.1999. She invited our attention to the copy of the audited balance-sheet and income and expenditure account alongwith with its annexures and the original Form 10-B that were placed in the paper book and submitted that the audited report, which had been duly filed showed that the assessee had applied all but Rs. 4,77,354/- of its receipts towards charitable purposes during the year as per the duly audited income and expenditure account. Therefore, it was entitled for the exemption. However, the society had not been well-versed in income tax matters and had e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of the totality of facts. 6. We have duly considered the facts and circumstances of the case. It appears that while filing the return of income, the said counsel did not fill in the column 6(i) relating to the amount applied to charitable purposes in India during the previous year. While he had correctly filled the amount of exempt income claimed and the amount that have been accumulated or set apart for application to charitable or religious purposes to the extent it did not exceed 15% of the receipts, he had left the column relating the amount applied to charitable purposes as blank. Therefore, the addition had been made during the course of assessment and the ld. CIT(A) instead of appreciating that the exemption could not be deni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ete the addition sustained by the ld. CIT(A). In making this decision, we rely upon the orders of the Hon'ble Gujarat High Court in Sh. Gujarat Bhavsar Samaj vs. CIT(Exemptions) (2024) 168 taxman.com 125 (Gujarat), which has been placed by the ld. AR in her paper book, which lays down that where the assessee trust filed its return claiming application of income for charitable purposes, but due to a technical glitch, the income applied by the assessee was not reflected in the return and consequently revision application filed under section 264 was rejected, the Hon'ble High Court held that since the assessee had incurred expenditure and applied income / donation received by it for charitable purposes, the assessee was entitled to benefit of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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