St. Judes Church Vs ITO (Exemptions) (ITAT Bangalore)
Charitable Trust Had Already Excluded TDS and Cash Payment Defaults: CPC Could Not Disallow Them Again
Bangalore ITAT deletes ₹15.99 lakh adjustment made while processing St. Judes Church’s return
When a charitable trust computes the application of its income, certain payments may have to be excluded because tax was not deducted at source or because they were made in cash beyond the prescribed limit. If the trust has already excluded those amounts from its application claim, can the Central Processing Centre add them again while processing the return? The Bangalore ITAT answered this question in St. Judes Church v. ITO (Exemptions), ITA No. 1830/Bang/2026, order dated 21 September 2026, for AY 2024–25.
The trust had excluded ₹10,80,887 relating to non-deduction of TDS and ₹5,18,678 relating to cash payments while arriving at its eligible application of income. The CPC nevertheless made adjustments for the same two amounts under sections 40(a)(ia) and 40A(3) in its section 143(1) intimation, computing taxable income at ₹15,99,570. The Tribunal held that this amounted to a double disallowance and deleted the adjustments.
How the trust computed its income
St. Judes Church was a public charitable trust registered under section 12A. For AY 2024–25, it filed its return on 23 September 2024, declaring nil taxable income. The order records gross income of ₹1,10,81,190, application of income of ₹94,19,421, and an amount of ₹16,60,769 accumulated or set apart within the permitted 15% under section 11(1).
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