INTAZAMIYA KAMETI V. INCOME TAX OFFICER WARD 1(1)(3) MEERUT (UTTAR PRADESH)

ITA 5893/DEL/2025

AI Insights

The case involves appeals by Intazamiya Kameti Shri Hastinapur Teerth against the orders of the CIT(A)/NFAC, Delhi, which disallowed a portion of the expenses claimed under Section 57(iii) for the Assessment Years 2022-23 and 2023-24. The primary legal issue was whether the expenses claimed were wholly and exclusively incurred for the purpose of earning income, and whether the voluntary contributions received by the appellant constituted income under the Income Tax Act. The Tribunal found that the lower authorities had not adequately considered the evidence provided by the appellant and had arbitrarily disallowed the expenses without proper reasoning or rejection of the books of account.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 839230 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2026
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2023-2024
• Appeal Filed On: 22-09-2025
• Other Referred Cases: DCIT, Central Circle v. Bright Point India Pvt. Ltd., ACIT v. Merchant Agri Global Pvt. Ltd., Pr. CIT v. Forum Sales Pvt. Ltd., CIT v. Rajendra Prasad Moody, PCIT v. R.G. Buildwell Engineers Ltd, Shri Sanatan Dharam Mandir Sabha v. ITO, DDIT (E) v. Petroleum Sports Promotion Board
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Charitable institution
• Section: 143(3); 11; 12A; 12; 80G

Judgement Text

"5892/5893/DEL/2025(AY 2022-23) Intazamiya Kameti Shri Hastinapur Teerth Page 1 of 10 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘G’, NEW DELHI BEFORE MS. MADHUMITA ROY, HON’BLE JUDICIAL MEMBER & SHRI NAVEEN CHANDRA, HON’BLE ACCOUNTANT MEMBER ITA No. 5892/DEL/2025 AY 2022-23 ITA No. 5893/DEL/2025 AY 2023-24 Intazamiya Kameti Shri Hastinapur Teerth Shetra Prachin Bada Jain Mandir Hastinapur, Meerut- 250404 Uttar Pradesh Vs ITO Ward 1(1)(3) (APPELLANT) (RESPONDENT) PAN No. AAAA11799R Assessee Represented by : Sh. Praveen Jain, Adv. Sh. Anubhav Joshi, Adv. Revenue/Department Represented by : Sh. Muneesh Rajani, Sr. DR Date of Hearing: 21.01.2026 Date of Pronouncement:18.02.2026 ORDER PER NAVEEN CHANDRA [A. M]: The above captioned appeals are preferred by the assessee against the orders dated 09.09.2025, passed by Ld. CIT(A)/NFAC, Delhi u/s 250 of the Income Tax Act, 1961 [hereinafter referred to as, “Act”] for A.Y. 2022-23 and 2023-24 respectively. The assessment was framed by the Assessing Officer [for short, AO] u/s 143(3) of the Act. 2. The assessee has raised following grounds of appeal: Printed from counselvise.com 5892/5893/DEL/2025(AY 2022-23) Intazamiya Kameti Shri Hastinapur Teerth Page 2 of 10 “1. Because the learned CIT(A) has committed a manifest error in disposing of appeals pertaining to two distinct assessment years through a single consolidated order, without adjudicating each ground of appeal separately. This approach violates the mandatory requirements under Section 250(6) of the Income Tax Act, 1961, which obligates the appellate authority to pass a speaking order containing reasoned findings on each issue raised. The impugned order is non-speaking, lacks independent reasoning, and thereby infringes the principles of natural justice, rendering it legally unsustainable. 2. Because both the learned Assessing Officer and the learned CIT(A), NFAC, failed to appreciate the settled legal position that Section 57(iii) of the Income Tax Act, 1961 requires only that the expenditure be incurred wholly and exclusively for the purpose of making or earning income, and does not mandate that such income must actually be \"earned\" in the conventional sense. The authorities erred in law and on facts by ignoring this well-established principle and arbitrarily disallowing the claim, resulting in an unjustified addition of 1,44,62,230.00, which is liable to be deleted in toto. 3. Because the appellant had duly submitted a detailed reply dated 24.02.2024 before the learned Assessing Officer and reiterated the same before the learned CIT(A), NFAC, enclosing binding judicial precedents that clarified the correct legal position. However, both authorities failed to consider or even refer to these precedents, and passed non-speaking, mechanical orders without reasoned findings, thereby violating the principles of natural justice and rendering the assessment and appellate orders legally unsustainable. 4. The appellant craves leave to add, amend, modify, or withdraw any of the above grounds of appeal at any time before or during the course of hearing of this appeal. ADDITIONAL GROUND 5. Because the learned Assessing Officer erred in issuing notice under Section 143(2) vide DIN ITBA/AST/S/143(2)/2023- 24/1053520648(1) dated 02.06.2023 in violation of CBDT Instruction F.No.225/157/2017/ITA-II dated 23.06.2017. The said notice is invalid and the assessment framed pursuant thereto stands vitiated in law. 3. The brief facts of the case are that the assessee is a 120-year-old, wholly religious, registered society under the Societies Registration Act, 1860 (See PB 2022-23, Page 10). The society maintains ancient and Printed from counselvise.com 5892/5893/DEL/2025(AY 2022-23) Intazamiya Kameti Shri Hastinapur Teerth Page 3 of 10 renowned Mandirs (temples), namely two major temple complexes at Hastinapur, District Meerut, known as \"Prachin Bada Mandir\" and \"Shri Kailash Parvat Rachna\", along with a Dharamshala, in accordance with its objects. (Objects: PB 2022-23, Pages 11-14; List of Temples: Pages 15-18).To fulfil its objects, society required financial resources, in accordance with the objects of society, Therefore, in view to earn the same, assessee maintains temples and Dharamshala (accommodation for pilgrims), arranges puja by appointing priests (Pujari ji) and supplying worship material (samgri), provides regular mess facilities, on payment coupons, makes holy books available on payment for worship, and also supplies milk and medicines on payment. From time to time, the assessee organizes religious festivals to attract pilgrims and devotees, thereby generating income in the form of voluntary donations. 4. For AY 2022-23, the assessee filed its return of income under Section 139(1). The case was selected for scrutiny. The learned CIT(A) decided the appeals for AYs 2022-23 and 2023-24 by a common order. In AY 2022-23, 30% of the deduction claimed under Section 57(iii) was disallowed, whereas in AY 2023-24, 100% of the deduction was disallowed. Both appeals involve the same legal issue. 5. With respect to Ground No. 2 of AY 2022-23 and Ground No. 2 to 5 of AY 2023-24 of the appeal involve common issue of disallowance of Printed from counselvise.com 5892/5893/DEL/2025(AY 2022-23) Intazamiya Kameti Shri Hastinapur Teerth Page 4 of 10 expense u/s 57(iii). For brevity sake, we take up the AY 2022-23 where the assessee declared the following income:  Interest on FDRs: 39,15,074  Voluntary Contributions: 4,30,90,568  Total Income: ₹4,70,05,642 Against the total income of Rs 4,70,05,642/-, expenses amounting to Rs. 4,82,07,434 were claimed under Section 57(iii), resulting in Nil income (See PB 2022-23, Pages 19-21). The learned Assessing Officer disallowed 30% of the expenses claimed under Section 57 (iii) and accordingly added Rs. 1,44,62,230 to the income of the assessee vide assessment order dated 11-03-2024 under Section 143(3) read with Section 144B. 6. The said disallowance was sustained by the CIT(A) who held that the assessee, being an AOP, cannot collect donations, and donations are not income earned by it. Further, since the assessee is not registered under Sections 12A and 80G, deduction under Section 57 is not allowable. Further, Voluntary contributions amounting to 4,30,90,568 for AY 2022-23 and ₹4,92,49,603 for AY 2023-24 were not \"earned\" income but donations. The CIT(A) held that the assessee failed to substantiate the claim under Section 57; therefore, 30% of expenses amounting to 1,44,62,230 were disallowed in AY 2022-23 and 100% of Expenses amounting to 5,27,71,177 in AY 2023-24 were disallowed. 7. The aggrieved assessee is now before us. Printed from counselvise.com 5892/5893/DEL/2025(AY 2022-23) Intazamiya Kameti Shri Hastinapur Teerth Page 5 of 10 8. The ld counsel of the assessee submitted that without rejecting the books of account and without pointing out any defect or deficiency, an ad hoc disallowance is not permissible in law. Blanket disallowance without specific findings or opportunity of verification violates the principles of natural justice and reasoned decision-making. The assessee submitted audited Income & Expenditure Accounts and supporting documents to substantiate its claim. Moreover, assessment orders for AY 2015-16, wherein similar expenses were allowed, are also on record. 9. The ld AR relied upon the following judicial precedents: 1. ITAT Delhi \"A\" Bench-DCIT, Central Circle v. Bright Point India Pvt. Ltd., ITA No. 1697/2023, Order dated 18-08-2025. 2. ITAT Mumbai \"D\" Bench - ACIT v. Merchant Agri Global Pvt. Ltd., ITA No. 1697/2023, Order dated 27-03-2025. 3. Hon'ble Delhi High Court - Pr. CIT v. Forum Sales Pvt. Ltd., ITA No. 862/2019, dated 01-03-2024 reported IN 468 ITR 392(Delhi) (HC) 10. The ld AR vehemently submitted that voluntary Contributions are Income under section 2(24) of the Income-tax Act, 1961 and that the voluntary nature of donations does not negate their character as income. It is the say of the ld AR that the absence of registration under Sections 12A or 80G does not prohibit an AOP or religious society from receiving donations, nor does it bar deduction under Section 57. The ld AR further submitted that Sections 11 and 12 govern exemption of charitable trusts; they do not restrict religious societies or AOPs-without Printed from counselvise.com 5892/5893/DEL/2025(AY 2022-23) Intazamiya Kameti Shri Hastinapur Teerth Page 6 of 10 such registration-from receiving donations or claiming deductions under Section 57. 11. The ld AR submitted that the Donations are Earned in the Course of Activities as they were received in consideration of puja, food, accommodation, and religious services, for which corresponding expenditure was incurred strictly in accordance with the objects of the society. Hence, the disallowance is legally unsustainable. Further, these expense are fully substantiated from its Audited Income & Expenditure Account; Donation receipt lists; Food coupon lists; Deepak Jyoti receipt lists; Pujan Samagri details and Fund book, donation register, cash book, ledger, and vouchers (See PB 2022-23, Pages 15-38, 45-46 & 63-65) 12. The ld AR stated that for AY 2023-24, the assessee in addition to above, also submitted Audited Books of Accounts; All bank Accounts detail and Statements with Bank Flow Statements; Detail of All FDR; Donor List who donated through Bank transfer; List of few supplies paid through Banking Channel; Reconciliation with 26AS and Explanation of queries of A.O. regarding different Funds and temples (See PB-1 2023- 24, Pages 25-112, and PB-2-All Bank Statements). 13. It is further submitted that all expenses were wholly and exclusively incurred for generating voluntary contributions, which constitute the sole source of income. Importantly, the assessment order is silent as to which 70% of expenses were substantiated and which 30% Printed from counselvise.com 5892/5893/DEL/2025(AY 2022-23) Intazamiya Kameti Shri Hastinapur Teerth Page 7 of 10 were not, rendering the disallowance arbitrary. Finally, it was stated that there no prohibition on cash donations and there is no provision under the Income-tax Act prohibiting the collection of donations in cash. The ld AR relied on the ITAT decision in Shri Sanatan Dharam Mandir Sabha v. ITO, reported in (2022) 95 ITR 64 (Delhi) (Trib); DDIT (E) v. Petroleum Sports Promotion Board [2014] 362 ITR 235 (Del.); CIT v. Rajendra Prasad Moody (1978) 115 ITR 519 (SC). 14. Per contra , the ld DR heavily relied on the orders of the AO and the CIT(A). 15. We have heard the rival submissions and perused the relevant materials on record. We find that the assessee had received a voluntary contribution of Rs. 4.30 Crore and had claimed deduction u/s 57(iii) of Rs. 4.82 Crores. The AO had disallowed 30% of the expenses claimed u/s 57(3) and has not disclosed the reasons for such disallowance. There is no description in the assessment order that the voluntary contribution was not genuine or was not received in the course of its activity or that the expenses made by the assessee was not substantiated by any evidence. 16. We are of the considered view that that section 57 (iii) requires that the expenditure must be laid out or expended wholly and exclusively for the purpose of making or earning income. It does not say that the expenditure shall be deductible only if any income is made or Printed from counselvise.com 5892/5893/DEL/2025(AY 2022-23) Intazamiya Kameti Shri Hastinapur Teerth Page 8 of 10 earned. The Supreme Court in the case of CIT v. Rajendra Prasad Moody (supra) held that deduction under Section 57(iii) depends on the purpose of expenditure, not on whether income is actually earned. It is sufficient that the expenditure was incurred for earning income. Further, the hon’ble Delhi High Court in the case of DDIT (E) v. Petroleum Sports Promotion Board (supra) held that where expenses are supported by books and documents and incurred wholly for the object of the assessee, disallowance under Section 57(iii) is impermissible. Denial would result in taxation of gross receipts, which is contrary to law. In the instant case, the assessee has submitted before the AO all the necessary documents/evidence to substantiate the claim of expense which has never been rebutted by the AO. In fact, we feel that the AO has arbitrarily disallowed the expenses claimed without providing any cogent reasons or rejecting the books of account, an act impermissible in law as held by the hon’ble Delhi High Court in the case of PCIT v. R.G. Buildwell Engineers Ltd [99 taxmann.com 283], wherein it was held that ad-hoc disallowance of expenditures by the Assessing Officer (AO) without rejecting the books of accounts is invalid. 17. The questions which prompted the CIT(A)/NFAC to sustain the disallowance, is aptly answered by the SMC Bench of Delhi ITAT in the case of Shri Sanatan Dharam Mandir Sabha v. ITO (supra) which had an identical set of facts. There the assessee was registered under the Printed from counselvise.com 5892/5893/DEL/2025(AY 2022-23) Intazamiya Kameti Shri Hastinapur Teerth Page 9 of 10 Societies Registration Act; was Running a temple and was not registered under Sections 12A/80G. The Income was assessed under \"Income from Other Sources\" but deduction under Section 57(iii) was disallowed. The ITAT held that even if exemption under Sections 11 & 12 is denied, all relevant expenses under Section 57(iii) must be allowed and that the lack of registration under Sections 12A/80G does not bar Section 57 deduction. It held that the voluntary contributions are taxable under \"Income from Other Sources\" and related expenses are deductible. 18. Respectfully following the aforesaid ITAT decision, we hold that the Assessing Officer could not fathom the scope of Section 57(iii) and the ad-hoc disallowance made u/s 57(iii) was arbitrary, without specifying any defects in the books of account and any documents/evidence submitted before the AO. The voluntary contributions are income u/s 2(24) of the Act and are taxable under \"Income from Other Sources. We also hold that for claiming deduction u/s 57(iii) of the Act, there is no requirement to have registration u/s 12A/80G of the Act. From the factual matrix of the instant case, we have arrived at the view that the expenses, in the instant case, were wholly and exclusively incurred for the purpose of earning the voluntary contribution and therefore, we consider the same as allowable u/s 57(iii) of the Act. We accordingly direct the AO to delete the said disallowance in both the AYs. The grounds are allowed. Printed from counselvise.com 5892/5893/DEL/2025(AY 2022-23) Intazamiya Kameti Shri Hastinapur Teerth Page 10 of 10 19. The additional ground on DIN was not pressed, hence the same is dismissed. 20. In the result, the appeal of the assessee in ITA 5892/DEL/2025 and 5893/Del/2025 are partly allowed. Order pronounced in the Open Court on 18.02.2026. Sd/- Sd/- (MADHUMITA ROY) (NAVEEN CHANDRA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated:18.02.2026 Pooja Mittal Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asstt. Registrar, ITAT, New Delhi 1. Date of dictation of Tribunal Order 02.02.2026 2. Date on which the typed draft Tribunal Order is placed before the Dictating Member. 03.02.2026 3. Date on which typed draft order is placed before the other member (in the case of DB) 4. Date on which the approved draft Tribunal Order comes to the Sr. P.S. /P.S. 5. Date on which the fair Order is placed before the dictating Member for sign 6. Date on which the fair order is placed before the other Member for sign (in case of DB) 7. Date on which the order comes back to PS/ Sr. PS for uploading on ITAT website. 8. Date of uploading, if not, reason for not uploading. 9. Date on which the file goes to the Bench Clerk 10. Date on which order goes for Xerox 11. Date on which order goes for endorsement 12. Date on which the file goes to the Superintendent/OS for checking 13. Date on which the file goes to the Assistant Registrar for signature on the order. 14 Date on which the file goes to dispatch section for dispatch the Tribunal order. 15 Date of dispatch of order. 16 Date on which file goes to Record Room after dispatch the order Printed from counselvise.com "