Case Law Details
Gurudwara Godri Sahib Baba Farid Society Vs DCIT (ITAT Chandigarh)
ITAT Chandigarh held that loss incurred on account of embezzlement during the course of day to day carrying out of charitable activities by the trust is revenue loss and duly allowable.
Facts- The Assessee is a Society registered under the Societies Registration Act, 1860. The Society is also registered u/s. 12AA of the Income Tax Act, 1961. As per the Memorandum of the Society, the main object of the society is to spread and propagate the religious and spiritual teachings of ‘Sant Baba Farid’.
The Assessee, herein, challenges the sustenance of addition of Rs. 49,09,290/- by the First Appellate Authority on account of embezzlement of funds by the employees of the assessee-society, out of the addition of Rs.1,05,30,712/- made by the Assessing Officer.
Conclusion- We have also gone through the various judicial precedents cited by the ld. AR on this ground and though the various judgments cited are in the context of the loss incurred on account of embezzlement by the employees in the course of carrying on of business activities, we are of the considered view that the principle as laid down in above said various judgments along with Board Circular No.35D would be squarely applicable to the facts and circumstances of the case inasmuch as even in the present appeal, the embezzlement has occurred during the course of day to day carrying out of charitable activities by the assessee trust.
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