Mahakalp Arogya Vs ITO (ITAT Mumbai)
The appeal was filed by the assessee against the order of the National Faceless Appeal Centre (NFAC), Delhi dated 04.08.2022 for AY 2018-19, challenging the denial of deduction under Section 57(iii) of the Income-tax Act amounting to ₹79,68,873. The assessee contended that the deduction related to donations of ₹85,00,000 paid to eligible trusts and institutions as expenditure incurred towards its charitable objects. It also challenged the failure of the CIT(A) to consider its written submissions and judicial precedents relied upon in support of the claim.
During the assessment, the case was selected for limited scrutiny on the issue of deduction claimed against income from other sources. The assessee, engaged in charitable activities, claimed deduction under Section 57 against interest income and income-tax refund, submitting that the donations made to various charitable trusts and institutions constituted expenditure incurred in furtherance of its charitable objects. The Assessing Officer rejected the claim, holding that the assessee had not established any direct connection between the donations and the interest income earned and was therefore not entitled to deduction under Section 57(iii). The CIT(A) dismissed the appeal, reiterating the findings of the Assessing Officer.
Before the Tribunal, the assessee submitted that it was engaged in charitable activities and had incurred the expenditure by way of donations in accordance with its objects. It pointed out that it had not claimed exemption under Sections 11 and 12 of the Act and had therefore rightly claimed deduction under Section 57(iii). The assessee relied upon the decisions in Director of Income Tax (Exemption) Vs. Petroleum Sports Promotion Board, DCIT (Exemption), Bhopal Vs. Shri Vaishnav Polytechnic College Governed by VSK Market Tech Educational Society, and Shri Sanatan Dharm Mandir Sabha Vs. ITO. It also submitted that similar deductions had been allowed in earlier assessment years by the Assessing Officer and by the CIT(A). The Revenue supported the orders of the lower authorities and relied upon Poona Club Ltd. Vs. ACIT.
