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2023 (4) TMI 1091 - ITAT DELHIExemption u/s 11 - CIT(E) held that “since exemption under section 11 is not to be allowed to the assessee as per the decision of the Hon’ble Delhi High Court in appellant’s own case, the said income has to be taxed under the head “Income from other sources” and while computing income under the head “Income from other sources” any expenditure (not been in the nature of capital expenditure) laid out or expended for the purpose of making or earning such income is to be allowed as deduction as per the provisions of section 57(iii) - HELD THAT:- As seen that no income has been earned for some of the expenses incurred Sl. Nos. 7 to 15 of the table. Hence, expenditure incurred on these counts cannot be allowed in computing income from other sources. Since income from agricultural activity is exempt from tax, expenditure incurred on such activity is also not be allowed as expenditure. From the details it is also seen that the appellant has received donation against which expenses on account of donation paid have been shown. Since donation is a voluntary contribution, no expenditure can be allowed for earning such income. However, in case of donations paid, the said amount is to be allowed as deduction u/s 80G in case donations paid are to entities which are approved for the purpose of section 80G. Accordingly, the Assessing Officer is directed to- i. assess the income of the assessee with respect to activities categorized as charitable activities in the assessment order as income from other sources after verifying the expenditure incurred against SI. No. 1 to 4; ii. no expenditure is to be allowed with respect to items at Sl. No. 7 to 15 since no income has been earned as per of section 57(iii); iii. allow deduction tinder section 80G for donations paid amounting to Rs. 20,15,171/- after verifying that the entities to whom donations have been given are approved for the purpose of section 80G and to the extent of donations paid to entities approved under section 80G as per the relevant provisions of the Income Tax Act. iv. not allow expenditure on agricultural activity since the said income is exempt from tax; and v. allow set off of business income with loss computed under the held "Income from sources" after examining the applicability of the same as per the provisions of the Income Tax Act. Revenue authorities have duly allowed the depreciation and other expenses as directed to be considered by the Hon’ble High Court. The revenue authorities have also allowed to set off of the business income with loss computed under the head “income from other sources” which is in tune with the provisions of the Income Tax Act. Since, exemption u/s 11 is not to be allowed as per the orders of the Hon’ble High Court, the expenditure on which is unrelated to the earning of the income only has been disallowed. We decline to interfere with the order of the ld. CIT(E). The appeal of the revenue stands dismissed.
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