Rajasthan Cricket Association North Block Vs ITO (ITAT Jaipur)
ITAT Jaipur held that trust incurring more expenditure than income doesn’t debar it from benefit of exemption u/s. 11(1)(a) of the Income Tax Act in respect of income admittedly applied for charitable purpose. Accordingly, appeal of assessee allowed.
Facts- The assessee is registered as a society under the Rajasthan Societies Registration Act, 1958. In the return of income filed, association has declared total receipts at Rs. 1,80,34,791/- out of which Rs. 1,53,29,572/-claimed as application of income and claimed income accumulated or set a part u/s. 11(1)(a) of the Act upto 15 % at Rs. 27,05,219 [ 15 % of 1,80,34,791/- ] and thereby assessee trust declared Nil total income.
AO in the assessment proceeding noted that during the year under consideration the assessee has shown receipt at Rs. 1,80,34,791/- against which expenditure of Rs. 4,88,80,927/-resulting in excess of expenditure over income at Rs. 3,08,46,136/-. Based on that observation the claim made by the assessee to the extent of 15 % of income for an amount of Rs. 27,05,219/- was denied as claimed as per provision of section 11(1)(a) of the Act and thereby the assessment order was passed on 12.12.2018.
The appellant-assessee filed an application u/s. 154 of the Act stating that the excess of expenditure claimed by them were out of income of earlier years and therefore 15 % claim against the income of current year is allowable as per provision of section 11(1)(a) of the Act. That application of the assessee-appellant trust was rejected by AO.
