Citation: DCIT(E) v. Catholic Education Society
ITAT: Mumbai
ITA No: 3076 of 2023
Assessment Year: 2017-18
Date of Order- June 04, 2024
Brief Facts:
The assessee was a charitable trust registered under section 12A of the Income Tax Act. The Assessing Officer noted that certain large payments of salaries and rent were made to persons specified under section 13(3).
He disallowed these payments on the ground that they were excessive as compared to payments made to others providing similar services and hence, the provisions of section 13(3)(c), 13(2)(c) and 13(2)(g) were attracted.
Consequently, he opined that the assessee was not entitled to exemption under section 11.
Observations of the Tribunal:
The Tribunal examined each payment and made the following observations-
The salaries paid to the specified persons were commensurate with their educational qualifications and experience. Hence, the salaries paid were reasonable.
In case of rent paid, the assessee had furnished Market Rental Report prepared by a Government Approved Registered Valuer. The Assessing Officer had arrived at the amount of reasonable rent on an adhoc basis and the disallowance was without any basis. Hence, it could not be said that the rent paid was excessive.
Hence, the Tribunal held that the payments were not covered under section 13(3)(c), 13(2)(c) read with section 13(2)(g). Consequently, the assessee was entitled to exemption under section 11.
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