2019 (3) TMI 723 - AT - Income Tax

Tribunal upholds CIT(A) relief on Income Tax Act Section 14A & 80G challenges

The Tribunal partially allowed the Revenue's appeal for statistical purposes but dismissed the challenges related to the disallowance under section 14A of ... Disallowance u/s.14A - restricting claim proportionate to exempt income as Rule 8D has no such provision for proportionate disallowance - HELD THAT:- CIT(Appeals) was of the view that the total expenditure debited to profit and loss account is incurred by the assessee in relation to exempt income and also taxable income as well. Therefore, it is more appropriate to restrict the disallowance u/s.14A of the Act proportionate to the exempt income. Thus, disallowance on this account would be the expenditure already disallowed by the assessee in the return of income which is directly relatable to the exempt income and the disallowance out of the balance expenditure in proportion of the exempt income to the total income. The Assessing Officer was directed to work out the disallowance accordingly. This issue needs further verification and therefore, we set aside the order of Ld.CIT(Appeals) and restore this issue back to his file to adjudicate this issue afresh Disallowance u/s.80G - renewal application unanswered - Ahwini Rural Cancer Research & Relief Society had received its earlier recognitions u/s.80G from time to time and the last recognition granted was for the period 01.04.2006 to 31.03.2009 - HELD THAT:- We find that in the assessment order dated 03.03.2014 passed u/s.143(3) of the Act in the case of the Trust i.e. Ashwani Rural Cancer Research & Relief Society, it is clearly stated that the trust is registered u/s.12A of the Act and also have obtained its exemption u/s.80G of the Act. In view of the aforesaid facts and circumstances, relief granted to the assessee by the Ld. CIT(Appeals) is sustained Issues:1. Disallowance under section 14A of the Income Tax Act.2. Claim of deduction under section 80G for donation made.3. Renewal of approval under section 80G for a charitable trust.Issue 1: Disallowance under section 14A of the Income Tax Act:The appellant Revenue challenged the disallowance under section 14A of the Act, contending that Rule 8D does not provide for proportionate disallowance. The Assessing Officer had initially disallowed &8377; 97,49,662, but later restricted it to &8377; 52,26,096. The CIT(A) directed the disallowance to be the amount already disallowed by the assessee plus a proportionate share of the balance amount. The Tribunal set aside the CIT(A)'s order for further verification, allowing the Revenue's appeal for statistical purposes.Issue 2: Claim of deduction under section 80G for donation made:The appeal also questioned the CIT(A)'s decision to allow the deduction under section 80G for a donation of &8377; 1,50,00,000 to a charitable trust. The CIT(A) based the relief on a legal precedent regarding approval timelines for charitable trusts. The Tribunal examined the trust's renewal application under section 80G, noting that despite no formal response, the trust's approvals under sections 12A and 80G were valid as per the assessment order. Consequently, the relief granted by the CIT(A) was upheld, and the Revenue's appeal on this issue was dismissed.Issue 3: Renewal of approval under section 80G for a charitable trust:The Tribunal's analysis of the trust's renewal application under section 80G revealed that the trust had valid approvals under sections 12A and 80G as per the assessment order. The Tribunal sustained the relief granted by the CIT(A) concerning the deduction claimed under section 80G for the donation made to the trust. Therefore, the Revenue's appeal on this issue was also dismissed.In conclusion, the Tribunal partly allowed the Revenue's appeal for statistical purposes, while dismissing the grounds of appeal related to the disallowance under section 14A and the deduction claimed under section 80G for the donation made to the charitable trust.