Trust cannot be denied from benefit u/s 11 just because details of registration were not furnished in ITR: ITAT

The facts in brief are that the assessee in the present case is a Trust and filed its return of income dated 10/12/2014, declaring income at Nil. The assessee in the return of income has shown income under head from the other sources by way of interest for Rs. 3,92,669/- against which it claimed to have applied the amount of Rs. 1,91,366/- for charitable purposes in India. The assessee also claim the deduction against gross income for Rs.58,900/- being 15% of Rs.3,92,669/- accumulated under the provision of section 11(1) of the Act. Thus, the assessee for the balance amount of Rs.1,42,401/- claimed that the same is below the exemption limit. However, the CPC in the intimation generated u/s 143(1) of the Act, did not give any benefit of the amount applied for charitable purposes and accumulated u/s 11(1) of the Act for Rs. 1,91,368/- and Rs. 58,900/- respectively. As such, the CPC has treated the entire gross amount shown by the assessee for Rs. 3,92,669/- and charged to tax at Maximum Marginal Rate i.e. 30% by raising a demand of Rs. 1,44,976/- along with the interest.

The Ld. AR before us contended that the assesse has not been given benefit for the application of income and amount accumulated u/s 11(1) of the Act for Rs. 191,368/- and Rs. 58,900/- respectively for which it was entitled. The Ld. AR further contended that the assessee is registered u/s 12A of the Act and therefore the income cannot be made subject to tax at the Maximum Marginal Rate. The Ld. AR also contended that the assessee has made investments in the Scheduled/Nationalized Bank as per the provision of section 11(5) of the Act.

On the other hand the Ld. DR contended that the assessee in the return of income has neither specified mode of investment nor has furnished the details for the registration u/s 12A of the Act. Thus, in the absence of such information the Ld. CIT(A), rightly upheld the findings of the AO.

ITAT Comments:

10. We have heard the rival contentions of both the parties and perused the materials available on record. From the proceedings discussion, we note that the benefit of deduction u/s 11 of the Act has been denied by the authorities below primarily on the reasoning that the trust was not registered under the provision of section 12A of the Act. However, on perusal the submission filed by the assessee we note that the trust was registered u/s 12A of the Act bearing No. CIT-R/65-7- H/84-85. Thus, we find there is a contrary finding between the finding of authorities below vis-à-vis the submissions made by the assessee. On confrontation to the Ld. AR and the DR about the mismatch in the facts as discussed above, both of them prayed to restore the issue to the file of the AO for fresh adjudication as per the provision of law.

11. Without prejudice to the above, we also note that the even the assessee inadvertently has not furnished the details about the registration u/s 12A of the Act, the assessee cannot be deprived of the benefit granted under the provisions of section 11 of the Act. With this observation, we are inclined to set aside the issue to the file of the AO for fresh adjudication as per the provision of law and in the light of the discussion stated above. Hence, the ground of appeal of the assessee is allowed for the statistical purposes.

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