The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that surplus generated from trust can’t be added to the income of assessee Association Of Person (AOP).
The Revenue challenges the order of CIT(A) deleting the addition made by the AO towards the amount transferred to the society holding the same as the application of income. The AO on perusal of the income and expenditure account submitted by the assessee noted that the total receipt of the assessee was to the tune of Rs.14,55,24,282/- and expenditure incurred was Rs.10,22,95,853/-.
The assessee entity was formed with a specific purpose to conduct the Annual Conference at Chennai during the year under consideration and the organizing secretary, as well as scientific chairman, constituted assessee AOP with the responsibility to conduct the conference as per the bye-laws of the assessee society.
As per the bye-laws the amount of Rs.1,51,29,950/- was transferred to the Cardiological Society of India and an amount of Rs.2,80,98,478/- was transferred to the Cardiological Society of India. The AO was not convinced as there was no rule or control over the AOP, who was having a separate PAN number and was assessed separately to income tax. The treated the amount of Rs.4,32,28,429/- as income of the assessee.
It was observed that the surplus generated from conducting the conference of the CSI would not become income in the hands of the assessee because this was a tool created by the CSI society and it in no way can be called the application of income on diversion.
The Tribunal consists of Shri Mahavir Singh, vice president and Shri G Manjunatha, accountant member while confirming the order of CIT(A) observed that the excess amount collected by assessee AOP for organizing a conference can be held as the amount in trust, not to be held as the income of the assessee and dismissed the appeal.
Shri D. Hema Bhupal appeared for the assessee and Shri A.S. Sriraman appeared for the respondent.
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