Disallowance of Donation for Milan Mandir Building Fund u/s 11(i)(d) of Income Tax Act: ITAT quashes addition on difference amount to total Income of assessee [Read Order]

The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) has overturned the disallowance of donations for the Milan Mandir Building Fund under section 11(i)(d) of the Income Tax Act,1961, nullifying the addition made to the total income of the assessee due to discrepancies in income calculation.

The assessee was a public trust and registered under Bombay Public Trust Act as well as registered with Income Tax Department and obtained registration u/s. 12A of the Income Tax Act, dated 30-05- 2016. The object of the trust was medical activity by conducting blood donation camp, helping the poor people and also maintaining Wadi for social activities.

The AO observed that during the year under consideration, the trust received interest income, Wadi rent income and donation. The Trust has shown the gross receipt of Rs. 23,12,660/- and has applied an amount of Rs. 13,17,418/- for the object of the trust.

In addition, it was observed that assessee has shown only interest income of Rs. 2,39,088/- but has not shown difference amount of income of Rs. 20,73,572/- in respect of rent, donation in cash or kind and income from other sources. After taking cognizance of the reply, the Assessing Officer added a different amount of income of Rs. 20,73,572/- to the total income of the assessee.

The assessee asserted that the trust in question received a donation amounting to Rs. 4,69,603/-. This sum was duly recorded in the income and expenditure account under the category of donations, whether in cash or in kind. Importantly, it was explicitly earmarked for the Milan Mandir Building Fund, signifying its intended purpose.

Further More submitted that this was not case of transferring the funds to other funds and in fact the assessee trust have transferred the donation in the event for which it was received in respect of directly credited the fund in the balance sheet, the assessee has first credited it to income and expenditure account and subsequently transferred the said fund to the fund account for which it has received the said amount.

The single member bench of the tribunal comprising Suchithra Kamble ( Judicial member ) observed that donation received for the specific purpose i.e. Milan Mandir Building Fund and also invested for the said purpose/said fund as per the provisions of section 11(i)(d) r.w.s. 11(5) of the Income Tax Act, in the schedule bank for which the assessee has submitted the bank account therefore this aspect was not taken into consideration by the CIT (A).

 Further concluded that the CIT (A) was doubting that there was a signature only one trust of income and expenditure account and no signature of any trustee on the balance sheet was not justifiable for disallowing the genuineness of the funds. Thus, the Assessing Officer as well as the CIT (A) was not justified in making the addition.

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