Ekadantha Charitable Trust Vs DCIT (ITAT Bangalore)
No Section 11 Exemption, but Can CPC Tax Every Rupee a Trust Receives?
The Centralised Processing Centre (CPC) denied a charitable trust’s section 11 exemption and treated its entire receipts of ₹31,35,158 as taxable income. The trust could not produce its registration certificate even before the Tribunal, and there was a dispute about the timing of its audit report. At the ITAT, however, it pressed a narrower point: if exemption is unavailable, must tax still be computed after considering allowable expenses?
The Bengaluru ITAT answered that question in the trust’s favour. It held that denial of section 11 exemption does not automatically justify disallowing every legitimate expense. The Tribunal sent the matter to the Assessing Officer (AO) to examine the revenue expenditure claimed and allow expenses found to have been incurred for earning the income. It did not restore section 11 exemption or determine the trust’s final taxable income.
How the entire receipts came to be taxed
Ekadantha Charitable Trust filed its return for assessment year 2023–24 on 31 October 2023, declaring nil taxable income. Its gross receipts were ₹31,35,158. In the return, it claimed ₹29,39,482 as application towards its objects and ₹1,95,676 as accumulation.
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