INCOME TAX ACT, 1961

Section 11

Charitable trust - Exemption under section 11 - Administrative and establishment expenses claimed by assessee-charitable trust, whether necessary to achieve objective of trust -

Assessee was a charitable trust, which was granted registration under section 12A. AO added back administrative and establishment expense by holding that same were excludible for considering application of income for charitable purposes. Held: Whether administrative and establishment expenses can be included as application of fund is no longer res integra, since High Court in CIT v. Birla Janahit Trust held that salaries and miscellaneous expenses which are incurred for carrying out the object and purpose of the trust must be considered as application for charitable purpose. Audit fee is necessary expense likewise bank charges, which assessee has to pay to the bank for running of its activities, and the expenses under the head 'rates and taxes' are in the nature of municipal taxes, etc., which are necessary for the survival and then only it can run the trust, thereby achieve the objective of the trust, so the expenditure incurred by the assessee trust, needed to be allowed. Therefore, total expenses incurred as administrative and establishment expenses were allowable expenses.

Followed:CIT v. Birla Janahit Trust [1994 TaxPub(DT) 79 (Cal-HC)].

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2012-13

INCOME TAX ACT, 1961

Section 11

SUBSCRIBE FOR FULL CONTENT