ITAT: Donations by Trust for Charitable and Educational Purposes Deductible

Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT), the donations and investments incurred for the charity via the taxpayer’s trust for charitable and educational purposes concerning the operation of the trust and has the deductible nature and deleted the impugned additions by the Assessing Officer (AO).

A bench consisting of Ms. Annapurna Gupta, an Accountant Member, and T.R. Senthil Kumar, Judicial Member has refused the appeal via revenue on discovering the additions which have been incurred by AO do not hold as the transactions are bonafide, also for the further actives of the taxpayer’s trust performed for the educational activities like running schools and colleges of distinct streams.

As per the Balance Sheet perusal, the Assessing Officer revealed, the taxpayer trust had paid Rs. 10 Lakhs as advance to Kapila Infratech Pvt. Ltd. and indeed invested a sum of Rs. 82,518 in 50 Grams of Gold. As both these assets were not investments as defined under Section 11(5) of the Income Tax Act,1961, the issuance of the show cause notice was called for proof.

The taxpayer furnished that the payments were given for the construction work that has not been finished as there are various issues. He added that they brought gold to make the medals which shall be provided to the students in distinct competitions which the colleges used to conduct.

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Dissatisfied with the same the taxpayer furnished the petition to the Commissioner of Income Tax (Appeals), who sustained the findings of the AO. concerning the donation of Rs. 1,88,500 the taxpayer furnished that it was made to different Governmental and non-Governmental institutions which is one of the purposes of the trust.

Pursuing the facts in the paper book along with the proof at hand, the income tax appellate authority has removed the disallowance along with the foundations asked by the revenue being devoid of merits, which were overlooked.