Sree Narayana Gurudeva Trust., Thrissur V. The ACIT ,CPC, , Thrissur

ITA 31/COCH/2022

AI Insights

The case involves Sree Narayana Gurudeva Trust, a charitable trust registered under section 12A of the Income Tax Act, which appealed against the order of the CIT(Appeals), National Faceless Assessment Centre, Delhi. The dispute centered on the disallowance of a deduction for an amount applied to charitable purposes in India, which was initially disallowed by the AO and upheld by the CIT(A). The trust argued that it should not be taxed at the maximum marginal rate but at normal rates applicable to trusts with 12A registration. The tribunal noted the lack of documentary evidence in the lower proceedings to support the trust's claims and remitted the issue back to the AO for a detailed examination.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 115278 (ITAT-COCHIN)
• Duration Of Justice: 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 23-01-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Keywords: Charitable institution; Maximum Marginal Rate
• Section: 234B; 12A; 143(1); 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH : COCHIN BEFORE SMT. BEENA PILLAI, JUDICIAL MEMBER AND Ms. PADMAVATHY S., ACCOUNTANT MEMBER ITA No.31/Coch/2022 Assessment Year : 2013-14 Sree Narayana Gurudeva Trust, 22/7, Minerva Building, South Chalakudy, Thrissur District. PAN : AABTS 2459N Vs. The Assistant Commissioner of Income Tax, CPC, Thrissur. APPELLANT RESPONDENT Assessee by : Shri Jojo, CA Revenue by : Smt. J M Jamuna Devi, Sr. AR Date of hearing : 12.01.2023 Date of Pronouncement : 20.01.2023 O R D E R Per Padmavathy S, Accountant Member: This appeal is against the order of CIT(Appeals), National Faceless Assessment Centre, Delhi [NFAC], Delhi dated 21.6.2021 for the assessment year 2013-14. 2. The assessee raised the following grounds of appeal:- “1. Return of income for A.Y. 2013-14 was filed on 31-10- 2013 declaring total income as NIL. 2. In the intimation order U/S 143(1), the deduction for the amount applied to charitable purpose in India of Rs.11,12,752/- is disallowed and the A.O computed a sum of Rs.7,07,340/- as total ITA No.31/Coch/2022 Page 2 of 4 income. Accordingly A.O calculated tax liability of Rs.2,18,568/- and an interest of Rs.56,155/- thereon. Even though the assesse is a trust having 12A registration and is eligible to be taxed at normal rates, A.O computed the tax liability at Maximum Marginal Rate which is inequitable. 3. Hence an appeal was filed to CIT (Appeals) on 24/04/2015 against the assessment order dated 22.01.2015, passed u/s. 143(1) of income tax act,1961. 4. As per the Order u/s 250 of Income Tax Act received from CIT(Appeals), taxable income is assessed as Rs. 7,07,3401- and order giving effect to the order u/s 250 of CIT (Appeals) shows tax liability of Rs.2,18,568/- and an interest of Rs.48,155/- thereon. In the above order CIT(A) also calculated tax liability at Maximum Marginal Rate which is unfair and not as per the Act. As the assessee being an AOP(Trust) having 12A registration ,tax liability should be calculated at normal rates. 5. In a similar order passed for AY 2018-19 tax liability is calculated at normal rates. As the assessee being an AOP(Trust) having 12A registration tax liability should be calculated at normal rates. We are also attaching the rectification order and computation sheet for the AY 2018-19, for evidencing our request. 6. The order of the CIT(A) is opposed to law, equity, facts and circumstances of the case. 7. Levy interest under sec. 234A, 234B and 234C are not lawful and needs to be cancelled. 8. For the above and other grounds that may be urged at the time of hearing of appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered.” 3. The assessee is a charitable trust registered u/s. 12A of the Income-tax Act [the Act]. The main purpose of the assessee is relief of the poor and spreading the messages of Sri Narayana Guru and the trust is also doing advancement of general public utility by conducting ITA No.31/Coch/2022 Page 3 of 4 chits. The return for the AY 2013-14 was filed on 31.10.2013 declaring a loss of Rs. 4,05,410. An order u/s. 143(1)(a) dated 22.1.2015 was passed whereby a disallowance of Rs.11,12,752 is made and the tax was charged @ maximum marginal rate. Aggrieved, the assessee preferred an appeal before the CIT(A) and contended that the amount disallowed have been spent for charitable purposes and therefore no disallowance is warranted. The CIT(A) dismissed the appeal by holding that the assessee failed to give detailed explanation with regard to the expenses were made for charitable purposes and that the assessee did not produce any documentary evidence with regard to the nature of expenses. Accordingly, the CIT(A) upheld the disallowance. 4. Before us the ld. AR submitted that the assessee is a trust having registration u/s. 12A and therefore cannot be taxed at maximum marginal rate by treating the same as AOP. 5. The ld. DR relied on the order of the lower authorities. We notice that the assessee is a registered charitable trust u/s. 12A of the Act. It is also noticed that the impugned additions are made for the reason that no proper documentary evidence supporting the claim that expenses are incurred for charitable purposes is filed before the lower authorities. It is also noticed that the assessee has not contended the issue of treating the assessee as an AOP and accordingly charging tax at marginal rate before the lower authorities. We therefore remit the issue back to the AO to examine whether the impugned disallowance is ITA No.31/Coch/2022 Page 4 of 4 spent for charitable purpose and decide in accordance with law. The assessee is directed to submit the necessary documents and evidence in support of the claim that the amount disallowed is actually spent for charitable purposes and cooperate with the proceedings. It is ordered accordingly. 6. In the result, the appeal is allowed for statistical purposes. Pronounced in the open court on this 20 th day of January, 2023. Sd/- Sd/- ( BEENA PILLAI ) ( PADMAVATHY S ) JUDICIAL MEMBER ACCOUNTANT MEMBER Bangalore, Dated, the 20 th January, 2023. /Desai S Murthy / Copy to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. By order Assistant Registrar, ITAT, Bangalore/Cochin.