ACIT Vs Vishakha Builders LLP (ITAT Delhi)
Political Donation Treated as Explained – Section 69A Addition Deleted When Funds Recorded in Books Routed Through Bank
The Delhi ITAT dismissed the Revenue’s appeal and upheld the deletion of addition of ₹3.25 crore made under Section 69A in respect of contribution given by the assessee-LLP to a political party and claimed as deduction under Section 80GGB. The Tribunal noted that the assessee was a real-estate developer, had sold properties held as stock-in-trade during the year, and the entire sale proceeds and subsequent donation were duly recorded in the audited books of account and routed through the same disclosed bank account.
The Tribunal held that the essential pre-conditions for invoking Section 69A were not satisfied since the money was not unrecorded, there was no finding of any undisclosed source, and both the source (property sale receipts) and application (donation) stood fully reflected in the books and financial statements. Merely because 95% of the gross income was donated, the AO could not presume the source to be unexplained or sit in judgment over business decisions.
Affirming the detailed findings of the CIT(A), the Tribunal ruled that once transactions are recorded, supported by bank statements and audited accounts, Section 69A cannot be invoked. Consequently, the Revenue’s appeal was dismissed and the deletion of ₹3.25 crore addition was confirmed in full.
FULL TEXT OF THE ORDER OF ITAT DELHI
