Gurudeva Seva Samsthe Vs ITO (ITAT Bangalore)
Genuine Application of Income Cannot Be Denied for Mere Reporting Mismatch in Return
The Bangalore ITAT held that a charitable trust’s claim of capital expenditure as application of income cannot be disallowed merely because of a mismatch in figures reported in different schedules of the return of income. The Tribunal observed that when the expenditure is supported by documentary evidence and its genuineness is not disputed, a technical reporting inconsistency cannot be the sole basis for denial of the claim.
In this case, the assessee-trust claimed capital expenditure of ₹29.45 lakh as application of income. While processing the return under section 143(1), CPC noticed that different amounts of capital expenditure were reflected in different parts of the return and consequently disallowed the claim. The subsequent rectification application under section 154 was also rejected, and the CIT(A) upheld the adjustment.
Before the Tribunal, the assessee demonstrated that the expenditure related to acquisition of capital assets, was fully supported by records, and had never been questioned on merits by the Revenue authorities. The Tribunal noted that neither the CPC nor the CIT(A) had disputed the actual incurrence of expenditure, the acquisition of assets, or the eligibility of such expenditure to qualify as application of income. The only basis for disallowance was the mismatch in reporting.
The Tribunal held that while a discrepancy in figures may warrant verification, it cannot justify outright rejection of an otherwise valid claim. Since the assessee had explained the mismatch and furnished supporting evidence during rectification and appellate proceedings, the authorities erred in rejecting the claim on purely technical grounds. Accordingly, the Tribunal set aside the orders of the CPC and CIT(A) and directed that the capital expenditure be allowed as application of income.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
