SAURASHTRA RACHNATMAK SAMITI SEVA TRUST,RAJKOT, GUJARAT V. ADIT, CPC, BENGALURU, JURISDICTION - RAJKOT

ITA 124/RJT/2024

AI Insights

The case involves the Saurashtra Rachnatmak Samiti Seva Trust, a public charitable trust, which appealed against the order of the Commissioner of Income Tax (Appeals) confirming the addition of a corpus donation of Rs. 3,00,00,000 as income under section 143(1) of the Income Tax Act, 1961. The trust argued that the donation was a corpus donation and should be exempt under section 11(1)(d) of the Act. The Assessing Officer had treated the donation as a regular voluntary contribution, leading to its inclusion in taxable income. The Tribunal found the issue of the nature of the donation debatable and remanded it back to the Assessing Officer for a detailed examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 473465 (ITAT-RAJKOT)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2019-2020
• Other Referred Cases: Bajaj Auto Finance Ltd v/s CIT, CIT V/s Smt Premlata Jalani, Tata Yadogawa Ltd v/s CIT, God Granites v/s CBDT, DCIT V/s Raghuvir Synthetics, CIT V/s Malabar Building Products Ltd
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY PUNGLIA; LD
• Assessee Lawyers: G.R. SANGHVI; LD
• Keywords: Set aside; Charitable institution
• Section: 143(1); 12AA; 12A; 264

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER AND SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER आयकर अपीलसं./ITA No.124/RJT/2024 Assessment Year: (2019-20) (Hybrid Hearing) Saurashtra Rachnatmak Samiti Seva Trust. Rashtriya Shala Compound, Rajkot- 360001 Vs. ADIT, CPC, Bengaluru. Jurisdiction Rajkot. ˕ायीलेखासं./जीआइआरसं./PAN/GIR No.: AAATS9227M (Appellant) (Respondent) Appellant by : Shri G.R. Sanghvi, Ld. A.R. Respondent by : Shri Sanjay Punglia, Ld. CIT(DR) Date of Hearing : 01/01/2025 Date of Pronouncement : 28/03/2025 Per Dr. A.L Saini, AM Captioned appeal filed by assessee, pertaining to Assessment Year (AY) 2019-20, is directed against the order passed by the Commissioner of Income Tax (Appeal), vide order dated 25.01.2024, which in turn arises out of an order passed by the Assessing Officer u/s 143(1) of the Income Tax Act, 1961, vide order dated 27.05.2020. 2. Grounds of appeal raised by the assessee, are as follows: 1. That the Hon'ble CIT(A) has grievously erred in confirming the ADIT-CPC's contention of bringing to tax corpus donation of 3,00,00,000/-. 2. That the Hon'ble CIT(A) has grievously erred in confirming the adjustments u/s 143(1) of the Act, made by the Ld. ADIT, CPC, which are contrary to jurisdiction and unjustified in law. 3.That the Hon'ble CIT(A) has grievously erred in failing to appreciate the true import of the submissions preferred by the assessee. ITA NO. 124/Rjt/24 (AY 2019-20) Saurastra Rachnatmak Samiti Seva Trust 4. That the Ld. ACIT-CPC has grievously erred in making the said adjustment so made without providing the assessee an intimation in accordance with the first proviso to Section 143(1) of the Act. 5. That the assessee craves for leave to add, amend and or modify the grounds of appeal. 3. Succinctly, the factual panorama of the case is that assessee before us, is a public charitable trust and duly registered u/s 12AA of the Act and is regularly assessed to tax at Rajkot. The assessee e-filed its return of income on 10.10.2019, declaring therein net taxable income of Rs. 1,45,250/- after setting off the expenses incurred for the object of the trust and the allowable accumulation u/s 11(1)(a) of the Income Tax Act. The assessee also duly declared the corpus donation of Rs. 3,00,00,000/- and claimed the same as exempt u/s 11(1)(d) of the Act. However, Learned assessing officer (CPC) whilst processing the return u/s 143(1) of the Act, has treated the corpus donation, as the income of the assessee and brought the same to tax accordingly. 4. Aggrieved, by the order of the assessing officer (AO-CPC), the assessee carried the matter in appeal before the ld. CIT (A), who has confirmed the action of the assessing officer. On verification of Return of Income filed by the assessee, the ld CIT(A) noticed that Schedule VC: Voluntary Contributions, Corpus fund donation was shown at Rs.3,00,00,000/-. However, in Part-B, Tl of Return of Income, STATEMENT OF INCOME FOR THE PERIOD ENDED ON 31ST MARCH 2019, the following details were present. Voluntary Contributions other than Corpus fund of Schedule VC Rs. 3,00,00,000/- Voluntary contribution forming part of corpus [(Ai + Bi) of schedule VC] Rs. NIL ITA NO. 124/Rjt/24 (AY 2019-20) Saurastra Rachnatmak Samiti Seva Trust Therefore, the AO (CPC) has accordingly, made adjustment/addition of Rs.3,00,00,000/-. Based, on these facts, the ld. CIT (A) noted that the claim of the assessee is incorrect and therefore ld. CIT (A) confirmed the addition made by the assessing officer. 5. Aggrieved by the order of Commissioner of Income Tax (Appeal), the Assessee is in further appeal before us. 6. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. We note that assessee is a public charitable trust duly registered under the provisions of section 12A of the Income Tax Act, 1961.The assessee filed an appeal before the ld. CIT(A) against the intimation u/s 143(1) of the Act. The assessee-trust stated before us that it had received a corpus donation of Rs. 3,00,00,000/-during the course of assessment year under consideration, which was claimed, as exemption u/s 11(1)(d) of the Act. However, the CPC-AO, whilst processing the return of income has considered the said corpus donation, as regular voluntary donation and thus assessed the returned income of Rs. 1,45,247/- at Rs. 3,01,45,247/-. The CPC-AO has not provided any reason for the same. The Ld. CIT(A) has confirmed the said adjustment done by CPC-AO, therefore, assessee is in further appeal before us. 7. Learned Counsel for the assessee, vehemently submitted that it is evident that the adjustment made by the CPC-AO, is clearly debatable in nature and hence on this count the said adjustment cannot fall within the ambit of Section 143(1) of the Act. Reliance is placed by the ld Counsel, on the following decisions: (1) Bajaj Auto Finance Ltd v/s CIT ( Tax Reference 25 of 2000 Mumbai HC) ITA NO. 124/Rjt/24 (AY 2019-20) Saurastra Rachnatmak Samiti Seva Trust (2) CIT V/s Smt Premlata Jalani ( 264 ITR 744-Rajasthan) (3) Tata Yadogawa Ltd v/s CIT (335 ITR 53-Jharkhand) (4) God Granites v/s CBDT ( 281 ITR 298-Karnataka ) (5) DCIT V/s Raghuvir Synthetics ( Tax Appeal 333 of 2004-Gujarat) (6) CIT V/s Malabar Building Products Ltd ( 248 ITR 72-Kerala) 8. The ld. Counsel also invited our attention towards the 1st proviso of section 143(1) of the Act, which reads as under: \"Provided that no such adjustments shall be made unless an intimation is given to the assessee of such adjustments either in writing or in electronic mode\" It is not under dispute that no such prior intimation, as mandated in accordance with the first proviso to section 143(1) of the Act was sent by the CPC-AO, to the assessee before making the impugned adjustment. The Ld. Counsel placed reliance on the decision of ITAT-Ahmedabad, in the case of Arham Pumps vs. DCIT (ITA 206/Ahd/2021) wherein the Ld. ITAT Ahmedabad Bench on facts identical to that of the assessee has directed that where adjustments were made by the CPC, in transgression of the 1st proviso of section 143(1), then the said adjustments need to be quashed. 9. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. ITA NO. 124/Rjt/24 (AY 2019-20) Saurastra Rachnatmak Samiti Seva Trust 10. We have considered the submission of both the parties. We find that the main grievance of the assessee is that the CPC-AO has considered the corpus donation claimed by the assessees, exempt under section 11(1)(d) of the Act, as a regular voluntary contribution. If this be the case then the assessee would be entitled to the basic exemption of 15% under section 11(1) (a) of the Act, which has not been given by the CPC-AO. 11. The Ld Counsel for the assessee also submitted that now the main grievance of the assessee is to decide the nature of donation, whether it is corpus donation or regular donation. Considering these facts, we are of the view that nature of donation is to be decided, therefore, we find appropriate to remit this issue back to the file of the assessing officer with the direction to the assessing officer to examine whether the donation is a corpus donation or regular donation and assessee should be given liberty to file relevant documents and evidences before the assessing officer to substantiate its claim, therefore, issue pertaining to nature of donation, should be remitted back to the file of the assessing officer for examination and adjudication. The Ld. DR has no objection, if the matter is remitted back to the file of AO for the examination of the nature of the donation. The Ld. Counsel for the assessee, also does not have any objection, if the case is remitted back to the file of assessing officer to examine the nature of the donation, whether it is a corpus donation or regular donation. 12. We accept the prayer of the ld. Counsel for the assessee and ld DR for the Revenue and therefore, we set aside the order of CIT(A) and remand the various issues raised by the assessee in the grounds of appeal before CIT(A) for fresh consideration by the jurisdictional assessing officer with a liberty to the assessee to prove his case by producing sufficient evidence/material to the ITA NO. 124/Rjt/24 (AY 2019-20) Saurastra Rachnatmak Samiti Seva Trust satisfaction of the assessing officer, about the nature of donation, whether it is a corpus donation or regular donation. For statistical purposes the appeal of the assessee is allowed. 13. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 28/03/2025 Sd/- Sd/- (DINESH MOHAN SINHA) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Rajkot (True Copy) िदनांक/ Date: 28/03/2025 Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. Pr. CIT 5. DR/AR, ITAT, Rajkot 6. Guard File By Order Assistant Registrar/Sr. PS/PS ITAT, Rajkot "