Case Law Details
DCIT Vs Sewa-THDC (ITAT Delhi)
Introduction: In a pivotal ruling, the Income Tax Appellate Tribunal (ITAT) in Delhi adjudicated on a matter involving the Department of Income Tax and Sewa-THDC, concerning the nature of funds received by a charitable trust under the Swachh Bharat Abhiyan initiative. The case, marked by the Revenue’s appeal and the assessee’s cross-objection, hinged on whether funds received in a fiduciary capacity by a charitable trust constitute taxable income.
Background of the Case: The crux of the dispute lay in the addition of Rs. 1,50,00,000 and Rs. 3,31,57,338 by the Assessing Officer (AO) to the income of Sewa-THDC, a society registered under sections 12AA and 80G of the Income Tax Act, 1961. These funds were designated for the Swachh Bharat Abhiyan and for disaster relief and rehabilitation in response to the Uttarakhand floods, respectively. The AO’s contention was that these amounts, having been directly transferred to the balance sheet without routing through the income and expenditure account, constituted income of the society.
The Tribunal’s Findings: The ITAT Delhi, after meticulous examination of the submissions and the legal framework, elucidated several key points leading to its decision:
1. Funds under Swachh Bharat Abhiyan: It was clarified that the Rs. 1.5 crore earmarked for Swachh Bharat Abhiyan had indeed been routed through the income and expenditure account, countering the AO’s claim of direct balance sheet transfer without proper accounting.
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