TaxTMI 
TaxTMI 
2022 (4) TMI 1603
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....aram Mandir at Ambica Vihar, Delhi and thus a religious society. It has neither applied nor received any registration u/s 12A of the Income Tax Act, 1961 (hereinafter 'the Act') for AYs 2013-14 to 2016-17. For the impugned Assessment Year, the assessee filed its income tax return in ITR-7 on 26.07.2021 showing taxable income at Rs. 2,18,060/-, after reducing the application of income of Rs. 4,85,564/- from the gross receipt of Rs. 7,03,624/-. The income was shown under the head "Income from Other Sources". The CPC Bangalore processed the return u/s 143(1) and disallowed the expenses of Rs. 4,85,564/- claimed in the return. Further the CPC, Bangalore denied the benefit of threshold limit and charged the income tax at maximum marginal rate on the gross receipt. 3. The assessee filed an application u/s 154 before the AO on 31.05.2018. The AO, however, rejected the application of the assessee by holding that since the status of the assessee is AOP (Trust) on which there is no threshold limit, therefore, the calculation of the tax rate at maximum marginal rate is correct. However, the AO did not elaborate regarding the disallowance of entire expenditure claimed by the assessee i.e. 1....
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....PC while processing the return u/sl43(l) of the I.T. Act, disallowed the entire expenditure of Rs. 4,85,464/- and assessed the income from other sources at Rs. 7,03,624/-. This was subject to tax at maximum marginal rate without giving effect to any threshold limit. As per section 2(24)(iia)of Income Tax Act, 1961, "income includes (iia) voluntary contributions received by a trust created wholly or partly for charitable or religious purposes or by an institution established wholly or partly for such purposes8 or by an association or institution referred to in clause (21) or clause (23), or by a fund or trust or institution referred to in sub clause (iv) or sub- clause (v) of clause (23C) of section 10]. Explanation.- For the purposes of this sub- clause," trust" includes any other legal obligation;]" This section, therefore, implies that the entire voluntary contribution received by a trust is income and no allowance will be made for deduction from such income. Also, when the income received in the form of voluntary contribution has been shown and assessed under the head 'Income from Other Sources', then the relevant section i.e. section ....
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....f the appellant of the appellant and I therefore, uphold the action of the ACIT, CPC. 7.1. In view of the above ground No.4 is dismissed." 5. Aggrieved with such order of the Ld. CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds. i. That the Hon. CIT (Appeals) has erred on facts and in law in confirming the disallowances of the entire expenditure incurred by it amounting to Rs. 485,564/-. ii. That the Hon. CIT (Appeals) has erred on facts and in law in confirming the disallowance of entire expenditure incurred amounting to Rs. 485,564/- since it is beyond the scope of section 143(1) of the Income Tax Act 1961. 6. The ld. Counsel for the assessee referring to the provisions of section 143(1) of the Act submitted that the adjustment made by the CPC Bangalore does not fall under any of the limbs prescribed u/s 143(1) of the Act. Further, there is no such adjustment made in earlier Assessment Years and there is no change in facts during the year under consideration. Referring to the decision of the Hon'ble Delhi High Court in the case of Deputy Director of Income Tax (E) Inv. Vs Petroleum Sports Promotion Board, repo....
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.... dismissed the appeal filed by the assessee, the reasons of which have already been reproduced in the preceding paragraph. It is the submission of the ld. Counsel for the assessee that the adjustment so made by the CPC, Bangalore without assigning any reason is contrary to provisions of section 143(1) of the Act It is also his contention that in case of charitable society, even if benefit u/s 11 and 12 of the Act is denied and its income was brought to tax as "Income from Other Sources", all relevant expenditures are also to be allowed under section 57(iii) of the Act. 9.1. I find sufficient force in the above arguments of the ld. Counsel for the assessee. The provisions of section 143(1) read as under:- "143. (1) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, such return shall be processed in the following manner, namely:- (a) the total income or loss shall be computed after making the following adjustments, namely:- (i) any arithmetical error in the return; (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; (b)------- ....
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....enue 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 Section 57(iii), any expenditure incurred for the purpose of making or earning the income is allowable as a deduction. It is open to the income-tax authorities to deny the exemption under Section 11 of the Act in the absence of registration under Section 12A and if they do so, then the assessment has to be completed in accordance with the provisions of the Income Tax Act; if the income is assessed under the residual head full play must be allowed to Section 57(iii). Though prima facie it would appear that the phraseology employed in Section 57(iii) is different from Section 37(1), it has been held by the Supreme Court in CIT vs. Rajendra Prasad Moody, 115 ITR 519 that Section 57(iii) must be construed broadly and the somewhat wider language of Section 37(i) should not affect the interpretation of Section 57(iii). 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....
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....bank interest, membership fees etc. which is the same as that being considered in appeal. No new source of income is being considered here. In fact the income is same as already brought out in the Income Expenditure account of the appellant. It is only the expenses that are now to be disallowed as the same do not pertain to the earning of those income. Therefore issue of new source of income does not arise in this case. Hence the facts of the cases relied upon by the appellant are different from this case, and are not applicable here. In the case of CIT vs. Union Tyres 240 ITR 556 on which the case of CIT vs. Sardari Lai & Co. 251 ITR 864 relies, Hon'ble Delhi High Court has held that - "The first appellate authority is invested with very wide powers under section 251(l)(a) and once an assessment order is brought before the authority, his competence is not restricted to examining only those aspects of the assessment about which the assessee makes a grievance and ranges over the whole assessment to correct the Assessing Officer not only with regard to a matter raised by the assessee in appeal but also with regard to any other matter which has been considered by....
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....nd fast rule can be laid down for this purpose." In the case of CIT vs. Nirbheram Deluram 224 ITR 610 the Hon'ble Supreme Court has held that the Supreme Court has held in Jute Corpn. of India Ltd. v. CIT [1991] 187 ITR 688 that the declaration of law is clear that the power of the AAC is coterminous with that of the ITO and if that is so, there appears to be no reason as to why the appellate authority cannot modify the assessment order on an additional ground even if not raised before the ITO. The scope of his power is coterminous with the ITO. He can do what the ITO can do and also direct him to do what he has failed to do. Having regard to the aforesaid decision it must be held that the High Court was in error in holding that the appellate power conferred on the AAC under section 251 was confined to the matter which had been considered by the ITO and that the AAC exceeded his jurisdiction in making an addition of Rs. 2,30,000 on the basis of the other 10 items of hundies which had not been explained by the assessee. Therefore, even if it was not held that the sum of Rs. 2,30,000 was added by the AAC as new sources of income, not considered by the ITO from t....
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.... taxable income of the assesse, is computed as Rs. 9,25,773/- (931251-5478). Thus the enhancement of taxable income is to the extent of Rs. 7,24,623/- after allowing for the taxable income of Rs. 201150 already declared in the ITR of appellant. 6. Now, coming to the taxability of the income, it is seen that the appellants' return was filed reflecting the status as AOP. It is also an undisputable fact that it is not registered under section 12A of the I.T. Act. Therefore, it is necessary to see the applicability of rates of tax, at which the unregistered AOP will be taxed. As the appellant is a charitable trust (the Society and other institutions are treated as trust under the relevant provisions of Income Tax Act) which is registered under the Societies Registration Act, 1890, section 167B of the I.T. Act will not be applicable. Hence, the rate at which an unregistered charitable or religious trust or institution is taxed will be the rate that is applicable to individual assesse except for those that are covered u/s 13(1) of the I.T. Act. 6.1 In view of the above, the rate applicable in case of the appellant will be same as that of an individual hence the slab....