29 November 2011
Facts of the Case: The Assessee Company is a Supermarket Company selling FMCG. The assessee company charges 1.5% on its Sale Price as Mahamai/Charity to its customers. The Assessee company collects (charges) the charity from customers and remits the same into a charitable trust. The assessee does not show the ‘Charity collected’ in the Sales Account in Profit & Loss Account. That is, the assessee brings the 1.5% of Charity to Balance Sheet and pays the same to the Charitable Trust.
Proposal of ITO: The ITO has proposed to add the “Charity Collected” to the Total Income of the Assessee. Whether the ITO’s contention is correct ?
I am on the side of Assessee Company. If the assessee accepts the ITO's Demand, the ITO is definitely going to Reopen the last years records. Is there any way out for this ?
30 November 2011
Income tax provisions r clear on charity aspect...1) form a charitable trust 2) claim 80G deduction for donation. If u r case is not falling in any of above case than its difficult to defend.
30 November 2011
Dear CA.Amit, Thanks for your reply.
The Charitable Trust for which the collected charity paid is a 80G registered Trust. Therefore, we can claim 50% of the charity paid as Deduction u/s. 80G.
CAclubindia
