Sampath Vinayagar Temple Trust Vs CIT (Exemptions) (ITAT Visakhapatnam)
No Section 12A Registration, No Capital Expenditure allowed: ITAT Visakhapatnam; Without 12A Registration, Temple Trust Loses 263 Battle on Capital expenditure Claims
Assessee, not registered u/s 12A, claimed exemption u/s 11 in returns. AO completed assessments treating it as an AOP, denying exemption but allowing the entire payments as revenue expenditure without verifying their nature.
CIT(E), in revision, noted that large portions of payments (₹75.83 lakh in AY 2011-12) were capital in nature & not allowable from revenue receipts.
Assessee argued that revision was invalid since appeals against AO’s orders were pending before CIT(A) (merger doctrine) & orders were neither erroneous nor prejudicial to revenue.
Tribunal ruled that appeals before CIT(A) concerned denial of exemption u/s 11 & 10(23BBA), while the 263 issue related to wrong allowance of capital expenditure as revenue expenditure, a distinct matter not in appeal. AO had not examined the nature of payments, making the order erroneous & prejudicial to revenue. Capital expenditure cannot be deducted when exemption u/s 11 is not available.
Tribunal ruled that Doctrine of merger is not applicable to issues not in appeal before CIT(A).CIT(E) rightly invoked section 263 & revision order is upheld.
