Case Law Details
DCIT (Exemptions) Vs Cargo Handling Pvt. Workers Pool Trust (ITAT Visakhapatnam)
The issue under consideration is whether the Income-tax payment made by assessee is an application of income and will be eligible for deduction u/s 11?
ITAT states that, the AO disallowed income tax while computing income available for application for charitable purposes. The AO was of the opinion that income tax is not allowable as deduction while computing income available for charitable purpose. It is the contention of the assessee that income tax is allowable as a deduction while computing income in the case of trust claiming exemption u/s. 11 of the Act. ITAT find force in the arguments of the assessee for the reason that income of any trust or society claiming exemption u/s. 11 has to be computed under normal commercial principles. Income tax payable is necessarily an out go from the income of the trust. Therefore, once there is out go towards income tax payment, it has to be allowed as a deduction towards income available for application of income for charitable purpose as held by the Hon’ble AP High Court in the case of CIT AP-1 Vs. Trustee of V.H.E.H. the Nizams Supplemental Trust. The CIT(A) after considering the relevant submissions rightly allowed the claim of the assessee. ITAT do not see any error or infirmity in the order passed by the CIT(A). Hence, ITAT inclined to upheld the order of CIT(A) and reject the grounds raised by the Revenue.
FULL TEXT OF THE ITAT JUDGEMENT
These appeals by the Revenue are directed against the separate orders of Commissioner of Income Tax (Appeals)-2, Visakhapatnam, all dated 13/03/2018 for the Assessment Years 2008-09, 2011-12 & 2012-13. Since facts and issues are common, clubbed and heard together and disposed of by way of this consolidated order.
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