Sukanti Educational and Charitable Trust Vs ITO (ITAT Kolkata)
Summary
The trust, which runs three educational institutions, had its gross receipts taxed fully after failing to file certain audit forms and respond to notices. Arguing that only the net surplus after expenses should be taxed—and that some income should be exempt under section 10(23C)(iiiad)—the trust challenged the assessment and order from the Commissioner of Income Tax (Appeals). The ITAT observed that the authorities had not properly considered evidence of expenditure and prior assessments. The case is now to be reassessed, allowing the Trust an opportunity to substantiate its claims and ensuring only the surplus is taxed, in line with previous consistent years.
1. Facts of the Case
Sukanta Educational and Charitable Trust is running three educational institutions in different streams. The trust, however, was not registered under section 12A/12AA or section 10(23C) of the Income Tax Act. In the assessment year 2016-17, the assessee had a gross income from all the institutions at ₹2,52,02,716/- and expenditure incurred towards the object of the Trust is of ₹ 2,38,55,184/-, leaving a surplus of ₹ 13,47,532/-. The assessee claimed deduction u/s 10(23C) and filed its income tax return declaring a nil income. The case was selected for limited scrutiny, however, the trust failed to respond to the notices issued under sections 143(2) and 142(1), leading to the completion of an assessment order under section 144. As against the surplus of ₹ 13,47,532/-, the Assessing Officer taxed the entire gross receipts of ₹ 2,52,02,716/-, denying the exemption u/s 10(23C) as well as denying the deductions for expenses incurred. The trust preferred an appeal before the CIT(A).
