Even If Organisation Is Not Entitled To Benefit U/s 11, It Is Entitled To Claim Expenses Incurred During Year Against Gross Receipts: Kolkata ITAT
Pankaj Bajpai
15 March 2024 9:00 AM GMT
On perusal of the audited balance sheet and profit and loss account, the Kolkata ITAT opined that if the assessee is given deduction of expenditure incurred during the year, which it is entitled to, then there will be a net loss against gross receipts during the year, which interalia included receipt of membership and donation from members.The Bench of Dr. Manish Borad (Accountant Member)...
On perusal of the audited balance sheet and profit and loss account, the Kolkata ITAT opined that if the assessee is given deduction of expenditure incurred during the year, which it is entitled to, then there will be a net loss against gross receipts during the year, which interalia included receipt of membership and donation from members.
The Bench of Dr. Manish Borad (Accountant Member) and Anikesh Banerjee (Judicial Member) observed that “even if an organisation, is not entitled to benefit u/s 11 of the Act but is certainly entitled to claim expenses incurred during the year against the gross receipts”. (Para 5)
As per the brief facts of the case, the assessee is a mutual association collecting subscription and donation from their members and organising cultural programme for members only. Though the assessee is an association not having any benefit of exemption u/s 11 but still in the return of income filed by it, on one hand it declared income received from fees and others at Rs. 19,23,183/- and then has shown the application of income towards various expenses amounting to Rs. 20,77,537/-. Inadvertently, the assessee has claimed the amount received as membership and donation from its members at Rs.18,61,150/- as exempt income. For this mistake made in the income tax return, the benefit of exemption was denied and the alleged sum of Rs. 18,61,150/- was added.
The Bench noted from perusal of the order of CIT(A) that even though he was having necessary details, he failed to take note of the fact that it was an inadvertent mistake committed by the assessee showing the receipt from members as exempt income.
The Bench found that the CIT(A) ought to have taken note of the audited balance sheet and profit and loss account wherein expenditure of Rs. 20,77,537.46/- has been claimed.
Had the CIT(A) examined the issue in the light of these facts as appearing in the profit and loss account, no addition would have been made in the hands of the assessee, added the Bench.
The ITAT therefore set aside the finding of the CIT(A) and delete the addition of Rs.18,61,150/- made in the hands of assessee.
Counsel for Appellant/ Taxpayer: J.M. Thard
Counsel for Respondent/ Revenue: L.N. Dash
Case Title: Anamika Kala Sangam verses Deputy CIT
Case Number: ITA. No. 1272/Kol/2023
