ITAT allows section 11 exemption as payment of Salary & Rent to specified persons was not excessive 

DCIT (Exemption)-1(1) Vs Catholic Education Society (ITAT Mumbai)

Introduction: In a recent decision, the Income Tax Appellate Tribunal (ITAT) Mumbai upheld the allowance of exemptions under Section 11 of the Income Tax Act for the Catholic Education Society. The Revenue’s appeal, which challenged the exemption on grounds of excessive payments of rent and salary to specified persons, was dismissed. This article provides an in-depth analysis of the case and the tribunal’s reasoning behind the decision.

Detailed Analysis: The case under consideration involved the Catholic Education Society, a registered charitable trust under Section 12A of the Income Tax Act. The trust had filed its income tax return for the assessment year 2017–18, claiming exemptions under Section 11. The Revenue, however, challenged these exemptions, citing excessive payments of rent and salary to persons specified under Section 13(3) of the Act.

Revenue’s Grounds for Appeal

The Revenue raised three main grounds in its appeal:

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