VINDHYA TRUST,DELHI V. DEPUTY COMMISSIONER OF INCOME-TAX, DELHI

ITA 4328/DEL/2025

AI Insights

The case involves Vindhya Trust, which appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi, which had denied a deduction of Rs. 66,63,833 under Section 57(iii) of the Income Tax Act. The deduction was claimed for donations made to eligible trusts and institutions, which the trust argued were expenditures on the objects of the trust. The Assessing Officer had initially disallowed the deduction, leading to an appeal to the CIT(A), which upheld the disallowance. The Tribunal, however, found merit in the trust's arguments, referencing similar cases where deductions were allowed under similar circumstances.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 840106 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2018-2019
• Appeal Filed On: 08-07-2025
• Other Referred Cases: Mahakalp Arogya vs. ITO, DDIT(EXEMPTION) vs PETROLEUM SPORTS PROMOTION BOARD
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY KUMAR ARORA
• Assessee Lawyers: VASANTI B. PATEL
• Keywords: Question of law; Charitable institution
• Section: 143(3); 142(1); 11; 12A; 12; 37(1); 80G

Judgement Text

"P a g e | 1 ITA No.4328/Del/2025 A.Y.2018-19 Vindhya Trust vs. DCIT IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “A” BEFORE SHRI SUDHIR KUMAR, JUDICIAL MEMBER & MRS. RENU JAUHRI, ACCOUNTANT MEMBER ITA No. 4328/DEL/2025 (A.Y.2018-19) VINDHYA TRUST, B 60/61, C/O BAJAJ AUTO LIMITED, NARAINA INDUSTRIAL AREA, PHASE-II, NARAINA INDUSTRIAL ESTATE, SOUTH WEST DELHI, NEW DELHI – 110 028 Vs. DCIT, CIRCLE 49(1), CIVIC CENTRE, NEW DELHI \u0001थायीलेखासं./जीआइआरसं./PAN/GIR No:AAATV0303K Appellant .. Respondent Appellant by : Ms.Vasanti B. Patel, Adv. And Sh. M.A. Gohel, CA Respondent by : Sh. Ajay Kumar Arora, Sr. DR. Date of Hearing 29.1.2026 Date of Pronouncement 25.02.2026 आदेश / O R D E R Per Sudhir Kumar, (JM): The present appeal filed by the assessee is directed against the order passed by the NFAC, Delhi dated 19.5.2025 for A.Y. 2018-19. The assessee has raised the following grounds before us: “1. DENIAL OF DEDUCTION UNDER SECTION 57(iii) OF THE ACT OF RS.66,63,833/- Printed from counselvise.com P a g e | 2 ITA No.4328/Del/2025 A.Y.2018-19 Vindhya Trust vs. DCIT On the facts and in the circumstance of the case and in law, the learned Commissioner of Income-tax (Appeals) [CIT(Appeals)] erred in upholding the denial of the deduction by the learned Assessing Officer for a sum of Rs.66,63,833/- under Section 57(iii) of the Act for the donations of Rs.71,00,000/- paid by the appellant to the eligible trusts and Institutions as \"Expenditure on the objects of Trust. The learned CIT(Appeals) erred in not considering the claims and contentions of the Appellant as contained in the written submissions furnished by the appellant in justification of the claim for the deduction for donations paid and also considering the various case laws cited and referred to in the said submissions. The Appellant prays that the learned Assessing Officer be directed to grantdeduction under Section 57 (iii) of the Act for a sum of Rs.66,63,833/- and reduce the total income of the Appellant accordingly.” 2. Brief facts of the case are that the assesse Trust/AOP filed its return of income for the assessment year 2018-19 online on 21.7.2018 declaring total income at Rs. 3,53,51,770/-. This case was selected under CASs (Computer Aided Scrutiny Selection) for Limited Scrutiny for the reason “Large deduction claimed u/s. 57 (Business ITR). Accordingly, notice u/s. 143(2) of the Act dated 22.9.2019 was issued and served upon the assessee. Subsequently, a notice u/s. 142(1) of the Act dated 10.11.2020 was also issued requiring the assessee to furnish information, detail and documents as called for. In response to the same, details and documents were filed. AO upon perusal of the records furnished by the assessee noted that assessee has declared income under the head income from other sources of Rs. 3,53,51,773/- (From Dividends). He further noted that the assessee has shown interest income on FDRs Rs. 65,65,486/-, income from saving bank account interest of Rs. 20,016/- and interest on income tax refund of Rs. 78,331, totaling to Rs. 66,63,833/- (from interest) and against this interest income, the assessee has claimed deduction u/s. 57 of the Act amounting to Rs. 66,63,833/-. AO held that the claim of Printed from counselvise.com P a g e | 3 ITA No.4328/Del/2025 A.Y.2018-19 Vindhya Trust vs. DCIT assessee for allowing deduction of expenses claimed against interest income shown under the head income fromother sources is not allowable because the assessee has not established that the expenses are allowable u/s. 57(iii) of the Act. Therefore, the deduction claimed by the assessee u/s. 57 was disallowed and addition of Rs. 66,63,833/- was made to the total income of the assessee by assessing the total income at Rs. 4,20,15,610/- u/s. 143(3) of the Act vide order dated 2.2.2021. Aggrieved, assessee appealed before the Ld. CIT(A) who vide impugned order dated 19.5.2025 has upheld action of AO in denying the deduction u/s. 57(iii) of the Act and with regard to claim of deduction u/s. 80G, the AO was directed to verify the claim of deduction u/s. 80G of the Act and if the necessary conditions are satisfied the same shall be allowed by partly allowed the appeal of the assessee. Aggrieved, assessee is in appeal before us. 3. Ld. AR for the assessee has submitted that he has not claimed benefit u/s. 11 and 12 of the Act, therefore, the assessee has rightly claimed deduction u/s. 57(iii) of the Act. However, as per Income Tax Return exemption was claimed at Rs. 66,63,833/- and the donation has been shown at Rs. 71,00,000/-. He further stated that ITAT, -D- Bench, Mumbai in the case of MahakalpArogya vs. ITO in ITA No. 2368/Mum/2022 (AY 2018-19) vide order dated 10.1.2023 on identical facts has adjudicated the exactly similar issue in favour of the assessee. Therefore, he requested to follow the aforesaid ratio and allow the appeal of the assessee. 4. Per contra, Ld. DR has submitted that the assessee has claimed the benefit u/s. 57(iii) of the Act which was denied by the CIT(A) and in alternate the exemption u/s. 80G of the Act was allowed. Ld. DR further submitted that assessee has claimed both the benefits viz. u/s. 80G and u/s. 57(iii) of the Act which was not permissible, as per the Income Tax Act. It is also submitted that the trust has not claimed any exemption u/s. 11 and 12 of the Act. He further submitted that the donation has been shown about Rs. 71 lacs while the interest Printed from counselvise.com P a g e | 4 ITA No.4328/Del/2025 A.Y.2018-19 Vindhya Trust vs. DCIT income from other sources has been shown at Rs. 66,63,833/-. Accordingly, he prayed that the appeal of the assessee be dismissed. 5. We have heard both the parties and perused the records. The assessee is a public charitable trust engaged in pursing various charitable objects and activities contained in the Memorandum of Association i.e. education, medical relief and advancement of any other object of general public utility and relief to the poor persons. The assessee has not claimed any benefit u/s. 11 and 12 of the Act in the return of income filed for the assessment year 2018-19. The assessee claimed deduction u/s. 57(iii) of the Act stating that donation paid in the nature of expenditure and the object of the trust. To support our view, we refer the judgement of the Hon’ble Delhi High Court in the case of DDIT(EXEMPTION) VS PETROLEUM SPORTS PROMOTION BOARD (2014) 111 DTR (DEL) 55 wherein, it has been held as under:- “7. The learned standing counsel for the Revenue submitted that the order of the Tribunal is untenable since it indirectly confers the benefit of s. 11 upon the assessee. We are, however, not inclined to accept the contention. The CIT(A) has actually not held so. He never examined the question whether the assessee was eligible for the exemption under s. 11 since there was no ground before him, taken by the assessee, to that effect All that the assessee claimed before the CIT(A) was that the entire expenditure should be allowed as a deduction since it was incurred for the very objects for which the assessee was established in 1979 1.c. promotion of sports and. therefore, the AO was not justified in restricting the allowance of expenditure to Rs.1,20,000 only for all the three years. It was this claim that was accepted by the CIT(A). The objection of the learned standing counsel for the Revenue that since the grants were assessed under the residual head. there was no scope for allowing the expenditure incurred on the promotion of the sports activities is not acceptable since even under s. 57(iii), any expenditure incurred for thepurpose of making or earning the income is allowable as a deduction. It is open to the IT authorities to deny the exemption under s. 11 of the Printed from counselvise.com P a g e | 5 ITA No.4328/Del/2025 A.Y.2018-19 Vindhya Trust vs. DCIT Act in the absence of registration under s. 12A and if they do so, then the assessment has to be completed in accordance with the provisions of the IT Act; if the income is assessed under the residual head full play must be allowed to s. 57(1). Though prima facie it would appear that the phraseology employed in s. 57(1) is different from s. 37(1). It has been held by the Supreme Court in CIT us. Rajendra Prasad Moody 1978 CTR (SC) 141: (1978) 115 ITR 519 (SC) that s. 57(1) must be construed broadly and the somewhat wider language of s. 37(1) should not affect the interpretation of s. 57(111). The assessee in the present case was created in 1979 with the object of promoting sports; there was no other object and all its constituents were giving grants/funds only for that purpose. In truth and reality the assessee was merely acting as a custodian or conduit to the constituents for the purpose of promoting sports activity inside and outside the country. The expenditure incurred by the assessee is only for the purpose of promoting the sports events and activities and in this respect there is no challenge to the finding of fact recorded by the Tribunal. If such expenditure is not allowed, it may amount to taxing the gross receipts of the assessee and not the income, which is not permissible under the income-tax law. Moreover, upto the asst. yr. 2002-03 the assessee was exempt from tax under s. 10(23); from the asst. yr. 2006-07 It has been granted registration as a charitable institution under s. 12A making it eligible for the exemption under s. 11. 8. For the aforesaid reasons we do not find any infirmity or error of law in the decision of the Tribunal. There is no challenge to the findings of fact recorded by it. In the circumstances, no substantial question of law arises for our consideration. The appeals are accordingly dismissed with no order as to costs.” 6. Similar view has been taken by the ITAT, D-Bench, Mumbai in the case of Mahakalp Arogya Pratisthanvs vs ITO in ITA No. 2368/Mum/2022 (AY 2018- 19) vide order dated 10.1.2023. Printed from counselvise.com P a g e | 6 ITA No.4328/Del/2025 A.Y.2018-19 Vindhya Trust vs. DCIT 7. Respectfully following the aforesaid precedents, we direct the AO to allow the claim of deduction made by the assessee, accordingly, the ground raised by the assessee is allowed. 8. In the result, the appeal of the assessee is allowed. Order pronounced in the open court 25.02.2026. Sd/- Sd/- ( RENU JAUHRI ) ( SUDHIR KUMAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER SR Bhatanaggar Date:-25.02.2026 Copy forwarded to: 1.Appellant 2.Respondent 3.CIT 4.CIT(Appeals) ` 5.DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI Printed from counselvise.com "