ACIT(EXEMPTION), CIRCLE-2, AHMEDABAD, AHMEDABAD V. SHREE RAMKRISHNA SEVA MANDAL ANAND , ANAND

ITA 2237/AHD/2025

AI Insights

The case involves an appeal by the Revenue against the order of the Commissioner of Income Tax (Appeals), which had allowed the appeal of Shree Ramkrishna Seva Mandal Anand, a trust managing various educational institutions. The primary issue was the deletion of an addition of Rs. 3,96,94,712 to the income of the trust, which represented 10% of its total expenses claimed. The Assessing Officer had disallowed this amount due to alleged insufficient details provided about the nature and purpose of the expenses. However, the CIT(A) found that the trust had provided substantial evidence supporting its claims, including audited financial statements and detailed expenditure ledgers. The Tribunal agreed with the CIT(A)'s decision, noting that the Assessing Officer had not pointed out any specific defects in the evidence provided by the trust.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 831176 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2026
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: misc
• Appeal Filed On: 25-11-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MEHUL THAKKER
• Assessee Lawyers: RIGNESH DAS
• Keywords: Capital expenditure; Charitable institution
• Section: 12A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE: SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER आयकर अपील सं./I.T.A. No. 2237/Ahd/2025 (िनधा[रण वष[ / Assessment Year : 2023-24) ACIT(Exemption) Circle-2, Ahmedabad बनाम/ Vs. Shree Ramkrishna Seva Mandal Anand O, RKSM Campus, Opp. Town Hall, Anand, Gujarat - 388001 Öथायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAATS8733Q (Appellant) .. (Respondent) अपीलाथȸ ओर से /Appellant by : Shri Mehul Thakker, A.R. Ĥ×यथȸ कȧ ओर से/Respondent by : Shri Rignesh Das, CIT.DR Date of Hearing 13/01/2026 Date of Pronouncement 20/01/2026 (आदेश)/ORDER PER ANNAPURNA GUPTA, AM: The present appeal has been filed by the Revenue against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (hereinafter referred to as “NFAC”), Delhi (hereinafter referred to as “CIT(A)”) dated 16.09.2025 passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) and relates to Assessment Year (A.Y.) 2023-24. 2. The grounds of appeal raised by the Revenue are as under: Printed from counselvise.com ITA No. 2237/Ahd/2025 [ACIT (Exemption) vs. Shree Ramkrishna Seva Mandal Anand] A.Y. 2023-24 - 2 – “1. Whether on the facts and in circumstances of the case, Ld.CIT(A), NFAC is justified in deleting the addition of Rs. 3,96,94,712/-, being 10% of total expenses of Rs. 39,69,47,124/-.” 3. The solitary issue in the present appeal relates to the deletion of addition of Rs.3,96,94,712/- being 10% of the total expenses of Rs.39,69,47,124/-. 4. We have gone through the order of the Ld. CIT(A) who has dealt with the issue at para 5 of his order as under: “5. Decision: Grounds of appeal no. 1, 2 and 3: In these grounds, the appellant has challenged the addition made by the AO of Rs. 3,96,94,712/-. 5.1 The appellant had submitted that it is a Trust registered under the Bombay Public Trust Act and also u/s 12A of the Act. It is involved in major educational activities and managing various educational entities from pre-primary to post graduate level. Institutes managed by it are affiliated with GSEV, Sardar Patel University and AICTE. It has given the list of 35 institutes which are under its management. Vide filing its ITR the appellant discloses consolidated income for all 35 educational units under it and similarly claims consolidated expenditure incurred for all such units. Its books of accounts are duly audited by statutory auditors and contrary to the remark of the AO in para 4.4 of his Order that 'The summary of expenditure made in cash is also not attached with the reply', copy of cash book was made available during the assessment. Main expenses of units under management of the appellant were in the form of salary to teaching and non-teaching staff. The break-up of total expenditure at macro level was submitted by the appellant as under: Particular Amount Amount 1. Expense in respect of property 2. Misc. Expense of trust 3. Expenses for the object of trust 829597.00 987079.00 303127966.00 304944642.00 Capital Expenditure 92002482.00 Total Expenditure 396947124.00 Details of expenditure of each unit and details for payment of salary on test check basis was provided to the AO during the assessment proceedings. It is to be noted that out of total expenditure of Rs. 39,69,47,124/-, there was capital expenditure of Rs. 9,20,02,482/-, leaving behind balance expenditure of Rs.30,49,44,642/-, out of which Printed from counselvise.com ITA No. 2237/Ahd/2025 [ACIT (Exemption) vs. Shree Ramkrishna Seva Mandal Anand] A.Y. 2023-24 - 3 – expenditure in the form of salary to teaching and non-teaching staff of all the units amounted to Rs. 23,59,03,194/-, for which copy of ledger of various units were enclosed in support of its claim. It is evident that such expenditure was done for the object of the Trust and no lapses therein have been pointed out by the AO at all. It is further claimed by the appellant that with regard to capital expenditure of Rs.9,20,02,482/-, the AO no has made detailed enquires during the assessment proceedings and adverse inference was drawn with regard to the same vide para 4.5.2 of the Order. The appellant contends that the AO without considering the documents submitted by it during the course of assessment proceedings for his perusal, had proceeded to disallow 10% of total expenses claimed by it without recording any adverse finding and making lump- sum disallowance, which is bad in law. 5.1.2 The facts of the case, contentions of the appellant and submissions filed by it have been duly taken into consideration. It is found that out of total expenditure of Rs. 39,69,47,124/-, there was capital expenditure of Rs. 9,20,02,482/- with regard to which no adverse inference was drawn by the AO vide para 4.5.2 of his Order. Further, out of balance expenditure of Rs. 30,49,44,642/-, expenditure in the form of salary to teaching and non-teaching staff of all the units amounted to Rs.23,59,03,194/-, for which the appellant has submitted unit-wise break- up as under: Printed from counselvise.com ITA No. 2237/Ahd/2025 [ACIT (Exemption) vs. Shree Ramkrishna Seva Mandal Anand] A.Y. 2023-24 - 4 – Printed from counselvise.com ITA No. 2237/Ahd/2025 [ACIT (Exemption) vs. Shree Ramkrishna Seva Mandal Anand] A.Y. 2023-24 - 5 – It has also filed details of its entire educational expenses of all the units which included salary expenses in it. For ready reference such details for few of its units are reproduced hereunder: It has provided its salary sheet on test check basis which is reproduced hereunder: Printed from counselvise.com ITA No. 2237/Ahd/2025 [ACIT (Exemption) vs. Shree Ramkrishna Seva Mandal Anand] A.Y. 2023-24 - 6 – It has also copy provided of copies of various ledgers concerning salary payments, copy of cash book and copy of its bank book evidencing payments of salaries as well as other expenditure incurred by it. The appellant also has brought on record the evidences about grants-in-aid received by it and utilized towards salary payments. One such evidence in this regard is reproduced hereunder: Printed from counselvise.com ITA No. 2237/Ahd/2025 [ACIT (Exemption) vs. Shree Ramkrishna Seva Mandal Anand] A.Y. 2023-24 - 7 – The appellant has also submitted various other expenditure ledgers such as electricity expenses, campus development expenses, advance salary grants account etc. It has also provided audited copies of Income and Expenditure Accounts of all its units separately. One such Income and Expenditure Account is reproduced hereunder: Printed from counselvise.com ITA No. 2237/Ahd/2025 [ACIT (Exemption) vs. Shree Ramkrishna Seva Mandal Anand] A.Y. 2023-24 - 8 – In the documentary evidences filed by the appellant to substantiate its claim of application of income, instead he has proceeded to disallow 10% of total expenses on adhoc basis without specifying any particular reason for the same. It is felt that with the details filed by the appellant before the AO during the course of assessment proceedings, the initial onus which was casted upon it to substantiate its claim of application of income was duly discharged and the onus, then, shifted to the AO to point out any specific defect in the claim of expenditure made by the appellant. However, the same was found wanting in the Order of the AO. Therefore, I do not find any merits in the addition made by him to the Total Income of the appellant and consequently the grounds of appeal raised by it are allowed.” 5. A perusal of the above reveals that the assessee is a trust involved in major educational activities and managing various education entities from pre-primary to post-graduate levels. Institutes managed by it are affiliated with GSEV, Sardar Patel University and AICTE. There are 35 Institutes which are under its management. Income of all the 35 education institutes were consolidately disclosed in the return of income filed by the assessee along with the expenditure consolidately incurred in all the units. The AO noted that the assessee did not submit the details as required about the nature and purpose of application of its income to the tune of Rs.39,69,47,124/-, as also mode of payment of such payment, whether electronic or non-electronic. He, therefore, held that it cannot be verified whether the assessee’s claim of having applied its income for charitable purposes was true or not. The AO, therefore, disallowed 10% of the expenses claimed by the assessee and treated the said amount as income liable to tax, resulting in addition of Rs.3,96,94,712/- being made to the income of the assessee. Printed from counselvise.com ITA No. 2237/Ahd/2025 [ACIT (Exemption) vs. Shree Ramkrishna Seva Mandal Anand] A.Y. 2023-24 - 9 – 6. The order of the Ld. CIT(A) reveals that he found the contention of the AO to the effect that no evidences and explanation were filed by the assessee regarding its claim having made application of its income to the tune of Rs.39.69 Crores towards charitable activity to be incorrect. He noted that out of total expenditure of Rs.39.69 Crores claimed by the assessee, there was capital expenditure of Rs.9.20 Crores with regard to which, he noted no adverse inference .Of the remaining Rs.30.49 Crores, he found the same to include salary paid to teaching and non-teaching staffs of all the 35 Institutes amounting to Rs.23.59 Cores for which he noted the appellant to have submitted; (i) Unit-wise break up, (ii) Salary sheet on test check basis, (iii) copies of various ledgers of concerned salary payment & (iv) copy of cash book and bank book evidencing payment of salary. He further noted the assessee to have submitted details, unit-wise of expenditure incurred therein and ledgers of various expenditure accounts, such as, electricity expenses, development expenses, salary grant account etc. He noted the assessee to have been provided copies of audited income and expenditure account. Noting the voluminous evidences produced by the assessee as above with respect to its claim of expenses, the Ld. CIT(A) further noted that the AO had not brought on record any lapses or lacunae in the evidences filed by the assessee. He noted the AO to have disallowed 10% of the total expenses on ad hoc basis without specifying any particular reason for the same. The Ld. CIT(A), thereafter, went on to hold that the assessee discharged its onus of proving its claim of expenses by filing all documentary evidences Printed from counselvise.com ITA No. 2237/Ahd/2025 [ACIT (Exemption) vs. Shree Ramkrishna Seva Mandal Anand] A.Y. 2023-24 - 10 – and onus, therefore, shifted on the AO to point any specific defects therein before proceeding to make any disallowance of the expenses. And in the absence of any defect noted by the AO in the claim of the assessee, he, therefore, held the disallowance of 10% of the expenses to be without any merits. 7. Before us, the Ld. DR has not been able to dispute the fact of the assessee having produced all evidences, as noted by the Ld. CIT(A), substantiating its claim of expenses. More Particularly, we have noted that out of the total expenses of Rs.35.69 crores, Rs.9.2 Crores was in relation to capital expenses in respect to which no adverse inference was found by the Ld.CIT(A) to have been drawn by the AO. Out of the remaining expense of Rs.30.49 Crore, the majority of the expense i.e. Rs.23.59 Crores, was incurred in relation to salary of staff with respect to which the assessee, he noted, had filed all possible evidences including salary register, salary ledger, cash book, bank book, payment of salary etc. With respect to the remaining expenses claimed by the assessee also all ledger accounts were furnished and the fact noted by the Ld. CIT(A) that no infirmity was pointed out by the AO in the evidences filed by the assessee. All the above facts have remained uncontroverted before us by the Ld. DR. 8. In view of the above, we find the Ld. CIT(A) to have passed a detailed and well-reasoned order, after appreciating all evidences filed by the assessee, while holding that the assessee’s claim of expenses to the tune of Rs.35.69 Crores was duly Printed from counselvise.com ITA No. 2237/Ahd/2025 [ACIT (Exemption) vs. Shree Ramkrishna Seva Mandal Anand] A.Y. 2023-24 - 11 – substantiated with evidences and the AO had given no basis for disallowing 10% of the same. We see no reason, therefore, to interfere in the order of the Ld. CIT(A). The ground of appeal of the Revenue is, therefore, dismissed. 9. In the result, appeal filed by the Revenue is dismissed. This Order pronounced on 20/01/2026 Sd/- Sd/- (T.R. SENTHIL KUMAR) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 20/01/2026 S. K. SINHA True Copy आदेश कȧ Ĥितिलǒप अĒेǒषत/Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant 2. Ĥ×यथȸ / The Respondent. 3. संबंिधत आयकर आयुƠ / Concerned CIT 4. आयकर आयुƠ(अपील) / The CIT(A)- 5. ǒवभागीय Ĥितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड[ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad Printed from counselvise.com "