Donations and Investments made for Charity and Educational Purposes are Deductible: ITAT deletes Additions [Read Order]

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) held that, the donations and investments made for charity by the assessee-trust for charitable purposes and educational purposes in relation to the functioning of the trust are deductible in nature and deleted the impugned additions by the Assessing Officer (AO).

The Bench comprising Ms. Annapurna Gupta, Accountant Member and T.R. Senthil Kumar, Judicial Member dismissed the appeal by revenue, upon finding that the additions made by AO do not hold as the transactions are bonafide and in furtherance of the activities of the assessee’s trust which has carried out educational activities such as running schools and colleges of different streams.

On perusal of the Balance Sheet, the Assessing Officer had found that the assessee trust had paid Rs. 10 Lakhs as advance to Kapila Infratech Pvt. Ltd. and also invested a sum of Rs. 82,518/- in 50 Grams of Gold. Since both these assets were not investments as prescribed under Section 11(5) of the  Income Tax Act,1961,  a show cause notice was issued calling for explanation.

In reply, the assessee had submitted that the payments were made for construction work which could not be completed because of some disputes. It was also submitted that the gold was purchased for making medals that would be given to students in various competitions arranged by the colleges.

Aggrieved against the same, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)], who upheld the findings of the AO.

Regarding the donation of Rs. 1,88,500/- the assessee submitted the same was made to various Governmental and non-Governmental institutions which is also one of the objects of the trust.

Upon perusal of the facts, paper book and evidence at hand, the Income Tax Appellate Authority deleted the disallowances and the grounds raised by the Revenue, being devoid of merits, were thereby dismissed.

To Read the full text of the Order CLICK HERE

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