Case Number: ITA 954/DEL/2021
Appellant: DCIT, Central Circle-27, New Delhi
Respondent: Gian Sagar Educational & Charitable Trust, Chandigarh
Assessment Year: 2016-17
Result: 2016-17
Case Filed on: 2021-08-10
Order Type: Final Tribunal Order
Date of Order: 2023-05-10
Pronounced on: 2023-05-10
Tribunal: IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH : C : DELHI
Before: Shri Saktijit Dey, Judicial Member and Shri M. Balaganesh, Accountant Member
Introduction
This appeal was filed by the DCIT, Central Circle-27, New Delhi, challenging the order of the Commissioner of Income Tax (Appeals)-29, New Delhi, dated 17.02.2021, pertaining to the assessment year 2016-17. The case involves the disallowance of deductions claimed by Gian Sagar Educational & Charitable Trust under Sections 11(1)(a) and 11(1)(b) of the Income Tax Act, 1961.
Background
Gian Sagar Educational & Charitable Trust, a charitable organization running educational institutions and a 500-bed hospital in Ram Nagar (Banur), Punjab, filed its return of income for AY 2016-17 on 17.10.2016, declaring a total income of Rs. Nil. The trust was registered under Section 12AA on 02.04.2005 and had approval under Section 80G since 07.05.2007. The trust claimed exemption under Section 11 while filing its return.
However, the Principal Commissioner of Income-tax withdrew the trust’s registration under Section 12AA on 01.03.2016. Based on this, the Assessing Officer (AO) disallowed the exemption claimed under Section 11 and added Rs. 2,84,33,532 to the trust’s income.
Key Issues and Arguments
The Revenue raised several grounds of appeal, primarily challenging the deletion of the addition made by the AO:
Tribunal’s Analysis and Findings
The tribunal analyzed the case based on the following points:
1. Deletion of Addition Under Section 11:
The trust argued that the withdrawal of registration under Section 12AA was appealed before the tribunal, which restored the registration vide ITA No. 6054/Del/2018 dated 03.09.2020. The CIT(A) relied on this order to grant the trust exemption under Section 11(1)(a) and 11(1)(b). The tribunal found no infirmity in this decision, dismissing the Revenue’s ground.
2. Deletion of Addition Amounting to Rs. 25,57,389:
The trust submitted that the amount was erroneously booked as income for the year under consideration, having already been recorded in the previous year. The CIT(A), after reviewing bank statements and ledger accounts, concluded that the income was booked twice by mistake. This finding was not contested by the Revenue, leading to the tribunal’s dismissal of this ground.
3. General Grounds:
The tribunal deemed the remaining grounds raised by the Revenue as general and not requiring specific adjudication.
Conclusion
The tribunal upheld the CIT(A)’s decision, granting relief to Gian Sagar Educational & Charitable Trust and dismissing the Revenue’s appeal. The tribunal found that the trust was entitled to exemption under Section 11 following the restoration of its registration under Section 12AA and correctly identified and rectified the duplicate income booking.
Final Judgment
Order pronounced in the open court on 10.05.2023.
Signed:
Shri Saktijit Dey, Judicial Member
Shri M. Balaganesh, Accountant Member
Dated: 10.05.2023
Copy forwarded to:
Assistant Registrar, ITAT, New Delhi
Relevant Legal Provisions and Precedents
The case centered around Sections 11, 12AA, and 40A(3) of the Income Tax Act, 1961, dealing with exemptions for charitable trusts, the process of registration and withdrawal of registration, and the disallowance of expenses paid in cash exceeding a specified limit, respectively.
Impact of the Judgment
This judgment underscores the importance of proper procedural adherence in the registration and exemption processes for charitable trusts. It also highlights the tribunal’s role in ensuring that assessments are based on accurate and just application of the law, particularly when prior judicial decisions (like the restoration of registration) impact the assessment outcomes.
Key Takeaways
The case illustrates the necessity of clear evidence, proper registration procedures, and accurate income recording for charitable trusts. It emphasizes the tribunal’s role in rectifying procedural errors and ensuring fair assessments based on judicial precedents.
DCIT vs Gian Sagar Educational & Charitable Trust: Dispute Over Charitable Exemption for AY 2016-17
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