ITAT rules in favor of assessee, overturns additions for corpus donations and expenses

The ITAT allowed the appeal, setting aside the addition of corpus donations and repair and maintenance expenses. The ITAT held that corpus donations were not taxable business income, citing relevant precedents. Additionally, as the expenses were duly supported, audited, and made through proper channels, the ITAT found no justification for their addition. Consequently, the ITAT ruled in favor of the assessee, deleting the additions and overturning the lower authority's decision.

---

---

Issues Involved:
1. Addition of corpus donations under sections 2(24) and 56(1).
2. Addition on account of repair and maintenance expenses.

Issue 1: Addition of Corpus Donations
The appeal was filed against the order of the Ld. CIT(A) sustaining the addition of corpus donations. The assessee argued that the donations should not be considered as business income due to the nature of the receipts. The assessee, a society running educational institutions, received corpus donations but was not registered under section 12AA at the time of receipt. The counsel cited various ITAT decisions supporting the non-taxability of corpus donations. The ITAT, after considering the arguments and precedents, concluded that the addition of corpus donation was not justified and deleted the same based on the decisions of the ITAT Delhi Bench and Kolkata Benches.

Issue 2: Addition on Account of Repair and Maintenance Expenses
The Assessing Officer made an addition on account of repair and maintenance expenses. The assessee contended that the books of accounts were audited, and all expenses were supported by bill vouchers. The Assessing Officer did not find any defects in the expenses or reject them under section 145 of the Income Tax Act. The payments were made through banking channels with TDS deducted. The ITAT, after reviewing the evidence and arguments, concluded that the addition of repair and maintenance expenses was not sustainable in law. Therefore, the ITAT deleted the addition based on the non-rejection of the books of accounts and the supporting evidence.

In conclusion, the ITAT allowed the appeal filed by the assessee, setting aside the impugned order and deleting the additions made in the grounds of appeal. The judgment was pronounced on 20/12/2019.

---