ITAT Permits Charitable Belief Enchantment: Donations Held Spiritual, Not Enterprise Revenue
ITAT held that donations acquired by the charitable belief have been used for spiritual and cultural actions, not enterprise. Since commercial receipts have been under 20%, the Part 11 and 12 exemption was rightly accessible.
Shri Krishna Janmashtmi Mahotsav Samiti has filed the present attraction within the ITAT Delhi, difficult an order dated Could 24, 2024, handed by the NFAC.
The assessee is a charitable belief registered beneath Part 12A and can also be authorized beneath Part 8-G of the Revenue-tax Act, 1961. For the Evaluation 12 months (AY), the assessee filed his earnings tax return (ITR), declaring taxable earnings at NIL, after claiming exemption beneath Sections 11 and 12 of the Act. The AO began the return evaluation beneath Part 143(3) of the Act and accomplished the evaluation, making an addition of Rs. 50,54,000 to the earnings of the assessee, claiming “enterprise earnings liable to tax on the most marginal price beneath Part 11(4A) of the Act.” Moreover, AO claimed that sure donations have been made to the assessee in the course of the pageant of Janmashtami Mahotsav; they have been really commercial or enterprise promotion receipts, as per replies given by some donors beneath Part 133(6) of the Act.
The aggrieved assessee filed an attraction earlier than CIT(A); nevertheless, the CIT(A) dismissed the attraction of the assessee and allowed the additions made by the AO. Thereafter, the assessee approached ITAT Delhi, difficult the order of the CIT(A) and AO, whereby it claimed that the AO incorrectly handled the donations acquired by them as “corpus” and “enterprise earnings.” Nonetheless, the assessee claimed that the donations in query have been by no means claimed as corpus, and the Revenue & Expenditure Account clearly mentions that the donations acquired have been voluntary contributions for organising Janmashtami Mahotsav and related publicity.
When the tribunal heard the arguments of either side, it famous that the quantity of donation was certainly used for spiritual and cultural functions and not beneath “development of some other object of normal public utility,” as talked about beneath Part 2(15) of the Act. Beneath the mentioned part, a belief doesn’t fall beneath charitable standing if it undertakes commerce beneath “normal public utility.” When examined, it was observed that the alleged commercial donations type was lower than 20% of the overall donation quantity acquired by the belief, which is under the statutory restrict.
The second allegation in opposition to the belief was that the belief used the donation quantity to fulfill its enterprise targets. On this declare, the assessee additionally submitted all of the related paperwork, proving the declare incorrect. Furnished paperwork proved that the belief used the donation receipts to organise Janmashtami Mahotsav, organize free meals (bhandaras), conduct spiritual discourses, pay for publicity materials like banners and posters, and assemble a dharmshala in Vrindavan.
Contemplating all of the aforesaid findings, the tribunal concluded that the Belief by no means used the donation receipts in business or enterprise exercise, and all of the allegations made in opposition to the corporate have been invalid. Therefore, in consequence, it allowed the attraction of the assessee and put aside the addition made by the AO.
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