2023 (3) TMI 410 - AT - Income Tax

Assessment of trust - purchase of luxury car i.e. Audi Car - purchase of care for the benefit of trustess only or not for charitable use - Whether applying of Section 13(3) is also quite arbitrary and unjustified as none of the employee are in relation of the Trustee, Members or board of the society whose used the car? - whether said car is purely used for education and charitable purposes - HELD THAT:- Assessee society was maintaining an Audi car of lower model but replaced it with higher model. Both the cars are luxury cars. CIT(A) has categorically noted the factum of sale of old Audi car in his impugned order. However, the AO disallowed the expenses treating the same as not for charitable purposes.

The expenditure would be allowable if it relates to running of school. The AO has not brought any material to rebut the claim of the assessee that the vehicle was being used for principal and staff of school. Merely because the vehicle happens to be luxury car should not be reason to make disallowance when in earlier years, claim of assessee was accepted - direct the AO to delete the disallowance. The grounds raised in this appeal are allowed.