9911796707
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Issues involved: Appeal against order confirming addition of income for charitable purposes.
Summary: The appellant, a registered society u/s 12A of the Income Tax Act, appealed against the addition of &8377; 1,16,68,688/- for non-application of income for charitable purposes to the extent of 85% of income derived during the year. The Assessing Officer held that grants directly credited in the balance sheet were not used for charitable purposes, leading to the addition. The appellant argued that the accounting procedure followed was correct and in line with government-prescribed practices. The Ld CIT(A) upheld the addition, prompting the appeal before the ITAT. The ITAT observed that the appellant had received grants for charitable purposes and had disbursed amounts to other charitable societies. The dispute centered around the treatment of such donations, which were shown as advances in the balance sheet. Referring to CBDT Instruction No.1132, the ITAT held that the appellant's accounting practice of crediting grants to the Income & Expenditure A/c only upon receipt of utilization certificates was valid. The ITAT concluded that the appellant had indeed utilized the funds for charitable purposes, overturning the addition made by the Assessing Officer. Therefore, the ITAT allowed the appeal filed by the appellant, emphasizing that the funds were properly utilized for charitable purposes as per government directives and accounting practices. Judges' Names: SMT. DIVA SINGH, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER
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