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February 4, 2022

ITAT Ahmedabad: Charitable Trust are eligible for 30% Standard deduction against House Property Income

ITAT Ahmedabad: Charitable Trust are eligible for 30% Standard deduction against House Property Income

Fact and Issue of the case

Brief facts of the case are, that the assessee is a Charitable Trust, having income under the heads Income from House Property and Income from Other Sources. The assessee has filed its return of income online on 29-09-­2012 showing taxable income as NIL with a refund claim of Rs. 1,11,710. The said return was processed by centralized Processing Center of Income Tax Department, Bangalore. An intimation u/s 143(1) of the Act was issued on 03-03-2017 by Deputy Commissioner of Income Tax CPC, Bangalore and a demand of Rs. 1,24,770/- was imposed on account of disallowance of deduction claimed by the assessee u/s 24 for Rs. 12,61,080/- being 30% of the Income from House property of Rs. 42,03,600/-.

Aggrieved by the order of CPC, the assessee filed an online rectification application u/s 154 to the CPC on 25-03-2017, which was disposed of by the Deputy Commissioner of Income Tax CPC, Bangalore by issuing an order u/s 154 on 15-04-2017 by rejecting the claim of assessee.

Aggrieved by the order U/s 154 of the Act by CPC, assessee carried the matter in appeal before the learned CIT(A) who has decided the appeal by confirming the action of the Assessing Officer by observing as under:-

The appellant has filed return of income claiming income from house property at Rs.29,42,520/-. PC Bangalore in the order u/s. 143(1) has computed the income from house property at Rs.42,03,600/- The PC Bangalore has not allowed the deduction us.24A claimed by the appellant. Appellant has contended that deduction u/s.24A from house property is a statutory deduction and has not been allowed. The Hon ‘ble ITAT Chennai Bench-A, in the case of Anjuman-E-Himayath-E-Islam ITA No. 2271 (MDS) of 2014 for A.Y.2009-10 dated June 2, 2015 has held that in the case of trust Section 22 to 27 of the Act is not applicable. Therefore, CPC has correctly rejected the appellants claim. Appeal is accordingly dismissed. The assessee, dissatisfied with the decision of Ld CIT(A), filed this appeal before the ITAT.

Observation of the Tribunal

The tribunal has heard the rival contentions, perused the material on record and duly considered facts of the case. We note that the learned CIT (A) had confirmed the order of the AO denying the deduction under section 24 of the Act after placing reliance on the order of Chennai tribunal in case of of Anjuman-E-Himayath-E-Islam ITA No. 2271 (MDS) of 2014 for A.Y.2009-10. However we find that the order which has been relied upon by the learned CIT (A) has been challenged before the Hon’ble Madras High Court in T.C.A No. 46 of 2021 reported in 127 com 78, where Hon’ble bench reversed the order of the Tribunal by observing as under:

As per the Income-tax Act, income” means “net income”, which is taxable. Income from property should be computed as per sections 22 to 27 of the Act and the income from business have to be computed under sections 28 and 44 of the Act. Such computed income is exempted from tax under sections 11 and 13, if 85% o f the same is spent on the charitable objects. Once the income is computed and determined 85% of such computed income should be utilized for charitable objects.

In View of the above judgment and following the same we are of the view that, deduction u/s 24(a) is allowable to the assessee. Hence, the ground of appeal of the assessee is allowed. 14. In the result appeal of the assessee is allowed.


The tribunal has disposed off the appeal and ruled in favour of the petitioner.

Read the full order from below


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