KOWSHIKA SANKETHI SANGHA ,BANGALORE V. INCOME TAX OFFICER, WARD-1, EXEMPTIONS, BANGALORE

ITA 880/BANG/2025

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Kowshika Sankethi Sangha, a charitable trust, appealed against the order of the Joint Commissioner of Income Tax (Appeals)-2, Ludhiana, which dismissed their appeal against the intimation under section 143(1) of the Income Tax Act, 1961. The primary contention was the incorrect treatment of a corpus donation and the denial of accumulation of 15% of gross receipts. The CPC had treated a voluntary contribution as a general donation, leading to an adjustment of Rs.80,26,057 to the total income. The Tribunal found that the CPC's application of Rule 17 of the Income Tax Rules, requiring the filing of Form 9A for claiming exemptions, was incorrect for the corpus donation under section 11(1)(d). The Tribunal directed the Assessing Officer to verify the correct computation of total income with evidence provided by the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 711330 (ITAT-BANGALORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2018-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S C R KRISHNA; SACHIN MEHTA
• Keywords: Charitable institution
• Section: 11; 12A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH : BANGALORE BEFORE SHRI PRASHANT MAHARISHI, VICE PRESIDENT AND SHRI SOUNDARARAJAN K., JUDICIAL MEMBER ITA No.880/Bang/2025 Assessment year : 2018-19 Kowshika Sankethi Sangha, 848, 5th Main Road, M.C. Layout, Vijayanagar, Bengaluru – 560 040. PAN: AAATK 2360D Vs. The Income Tax Officer (Exemptions) Ward (1), Bengaluru. APPELLANT RESPONDENT Appellant by : S/Shri C R Krishna & Sachin Mehta, CAs Respondent by : Shri Shivanand H Kalakeri, CIT(DR)(ITAT), Bengaluru. Date of hearing : 21.07.2025 Date of Pronouncement : 25.07.2025 O R D E R Per Prashant Maharishi, Vice President 1. This appeal is filed by the Kowshika Sankethi Sangha [assessee/appellant] for the assessment year 2018-19 against the appellate order passed by the Jt.CIT(Appeals)-2, Ludhiana [ld. CIT(A)] Printed from counselvise.com ITA No.880 /Bang/2025 Page 2 of 5 dated 21.02.2025 wherein the appeal filed by the assessee against the order issued u/s. 143(1) of the Income Tax Act, 1961 [the Act] dated 31.1.2020 was dismissed. Therefore assessee is in appeal before us. 2. The issue involved in this appeal is that income of the assessee trust is determined at Rs 80,26,057/- by not allowing the claim of corpus donation u/s 11 (1) (d) of the Act of Rs. 72,14,721/- and not allowing accumulation to the extent of 15 % of the gross receipt restricted to Rs. 811336/- to the assessee. 3. The brief facts of the case show that assessee is a charitable trust, who filed its return of income on 9.10.2018 whereas the due date of filing of return was 31.8.2018. In the original return, assessee has claimed deduction of Rs.80,26,057 being amount due as per clause (2) to Explanation to section 11(1) which was denied by the CPC. Intimation u/s. 143(1) was passed on 31.1.2020. 4. The amount of Rs.80,26,057 is comprising of corpus donation u/s. 11(1)(d) of Rs.72,14,721 and further a sum of Rs.8,11,336 is amount accumulated u/s. 11(1)(a) of the act being 15% of the total receipts. While processing the return, CPC has treated the voluntary contribution forming part of the corpus as general donation and therefore adjustment of Rs.80,26,057 to the total income was made. 5. On appeal before the ld. CIT(A), assessee has explained the above error. However, the ld. CIT(A) cited various judicial precedents and held that the claim of assessee is not allowable, as assessee has not Printed from counselvise.com ITA No.880 /Bang/2025 Page 3 of 5 filed Form 9A of the Act and delay in filing such Form is not within his purview. Thus, appeal of the assessee was dismissed. 6. The ld. AR had submitted a paperbook containing 60 pages being the copy of return of income, audited financial statement and also rectification application filed with the AO on 2.3.2021. The ld. AR submitted that it is a 7. mistake by the assessee at the time of filing of return of income and for which the assessee has also filed a rectification application which is pending before the AO. He submits that the income of the assessee being voluntary contribution received with the specific direction were not allowed as deduction from the gross receipts. 8. The ld. CIT(DR) vehemently submitted that there is an error in the return of income filed by the assessee and therefore no fault can be found with the processing of the return and the order of the ld. CIT(A). 9. We have carefully considered the rival contentions and perused the orders of the ld. lower authorities. The assessee is a charitable trust registered u/s. 12A of the Act and also granted recognition u/s. 80G(5) of the Act. At the time of filing of return of income, assessee submitted that a sum of Rs.72,14,721 is the voluntary contribution forming part of the corpus fund and therefore it is exempt under the provisions of section 11(1)(d) of the Act. While processing the return, the CPC has considered it as a general contribution. Further in the return of income, assessee has claimed accumulation u/s. 11(1)(a) of Printed from counselvise.com ITA No.880 /Bang/2025 Page 4 of 5 Rs.8,11,336 which was denied by the CPC. Thus total sum of Rs.80,26,057 was adjusted. The claim was made by the assessee u/s. 11(1)(d) and section 11(1)(a), but CPC stated that according to Rule 17 of the I.T. Rules, exemption is allowed only if assessee has exercised option by filing Form 9A before the due date. Since assessee has not filed Form 9A, the exemption claimed is not allowed. We do not find that provisions of Rule 17 applies for claim of deduction u/s. 11(1)(d) of the Act of the corpus donation. Further accumulation of Rs.8,11,336 is only 15% to the extent of gross income. Therefore, there is accumulation of total income for any specified purposes. Even in appeal before the ld. CIT(A), the issue before him was misunderstood and Form 9A is also for the purposes of exercising option of accumulation. This is the not the case and therefore the adjustment made by the CPC as well as confirmed by the ld. CIT(A) is not sustainable. However, the claim of the assessee that a sum of Rs.72,14,721 is the corpus donation and further an amount of claim of 15% of the gross income of Rs.8,11,336 is correct, but verification needs to be made by the ld. AO. 10. Accordingly, allowing ground No.2 of the appeal of the assessee, we direct the assessee to substantiate before the ld. AO the correct computation of total income with evidence. The ld. AO may verify and decide the issue in accordance with law that assessee has received the corpus donation and the claim of 15% of gross receipt, is in order. Printed from counselvise.com ITA No.880 /Bang/2025 Page 5 of 5 11. Accordingly the appeal filed by the assessee is allowed for statistical purposes. Pronounced in the open court on this 25th day of July, 2025. Sd/- Sd/- ( SOUNDARARAJAN K. ) ( PRASHANT MAHARISHI ) JUDICIAL MEMBER VICE PRESIDENT Bangalore, Dated, the 25th July, 2025. /Desai S Murthy / Copy to: 1. Appellant 2. Respondent 3. Pr. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. By order Assistant Registrar ITAT, Bangalore. Printed from counselvise.com "