M/S. ROTARY CLUB OF WORLI BOMBAY TRUST ,MUMBAI V. ITO EXEMPTION WARD 2(2), MUMBAI

ITA 258/MUM/2025

AI Insights

The case involves the M/s. Rotary Club of Worli Bombay Trust appealing against the addition of Rs. 6,53,743 to their income under section 11(3) of the Income Tax Act, 1961, which was deemed as excess income applied in comparison to the amount accumulated for specific charitable purposes. The Assessing Officer (AO) had made this addition after observing that the trust spent Rs. 10,53,743 on supporting the physically challenged, whereas only Rs. 4 lakh was accumulated for this purpose. The CIT(A) upheld the AO's decision after the appellant failed to respond to multiple notices. The ITAT, after hearing the arguments, decided to remand the case back to the CIT(A) for a fresh evaluation, providing the appellant another opportunity to present their case.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 668703 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASIF KAR MALI
• Assessee Lawyers: HITESH JAIN

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL Mumbai “J(SMC)” Bench, Mumbai. Before Shri Rahul Chaudhary (JM) & Shri Omkareshwar Chidara (AM) ITA No. 258/MUM/2025 (Assessment Year : 2017-18) M/s. Rotary Club of Worli Bombay Trust 450-451, Kewal Industrial Estate, Senapati Bapat Marg Lower Parel, Mumbai-400013. Vs. ITO(Exemption)-2(2) Mumbai PAN : AAATR0491C Appellant Respondent Assessee by : Shri Hitesh Jain Revenue by : Shri Asif Karmali Date of Hearing : 18/06/2025 Date of pronouncement : 27/06/2025 O R D E R Per Omkareshwar Chidara (AM) :- The only ground of appeal raised by the appellant trust is that the Ld. CIT(A) erred in confirming the action of Ld. AO in making the addition of Rs. 6,53,743/-under section 11(3) of the I.T. Act. The Ld. AO made this addition as excess income applied in comparison to amount accumulated for the relevant objects in Form 10. From the assessment order, it is observed that the appellant has accumulated a sum of Rs. 4 lakh towards the object to support the physically challenged by giving prosthesis, wheel chair, Jaipur Foot etc. But, the appellant trust has incurred an expenditure of Rs. 10,53,743/- and hence the Ld. AO added Rs. 6,53,743/- as excess application of fund for this purpose. 2. Aggrieved by the addition, the appellant filed an appeal before Ld. CIT(A) who gave three opportunities and the appellant did not respond to these notices. Hence, based on the assessment order available record and the grounds of appeal raised by appellant, the Ld. CIT(A) gave a detailed reasoning and confirmed the action done by Ld. AO. M/s. Rotary Club of Worli Bombay Trust 2 Aggrieved by this order of first appellate authority, the appellant filed an appeal before the ITAT with the ground of appeal mentioned in page No.1 of this order. During the hearing proceedings before the ITAT, the Ld. AR of the appellant has argued that the amounts were spent towards charitable activities only as per the Trust Deed. Section 11(2) of the Act does not envisage the position that, if the amount set apart for a particular object, then only that particular amount has to be spent which was accumulated for that purpose. As long as the amounts are spent for charitable activities as per Trust Deed, no disallowance can be made, it was argued. Certain cases- law were also filed by Ld. AR of appellant for the above proposition. 3. Ld. DR relied on the orders of the lower authorities. 4. After hearing both sides, it is decided to send the matter back to the file of Ld. CIT(A) as the appellant has not responded to the notices sent by him and also all the submissions made before the Bench were not made available before Ld. CIT(A). The Ld. CIT(A) is directed to give one more opportunity and pass the order as per law. 5. The appeal of appellant is allowed for statistical purposes. Order pronounced in the open Court on 27/06/2025. Sd/- Sd/- (RAHUL CHAUDHARY) (OMKARESHWAR CHIDARA) JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, //True Copy// (Assistant Registrar) PS ITAT, Mumbai "