Bank interest income taxable as mutuality breached by third-party banks; 5% expenditure allowed on estimation basis.

आदेश / ORDER

PER ASTHA CHANDRA, JM :

The appeal filed by the assessee is directed against the order dated 08.07.2025 of the Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi [“CIT(A)/NFAC”] pertaining to Assessment Year (“AY”) 2017-18.

2. There is a delay of 03 days in filing of this appeal before the Tribunal for which the assessee has filed an affidavit explaining the reasons for such delay. After hearing both the sides, we are of the view that the delay is attributable to the sufficient cause. We, therefore, in light of the decisions of the Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji & Ors. (1987) 167 ITR 471 (SC) and in the case of Inder Singh Vs. The State of Madhya Pradesh reported in 2025 Live Law (SC) 339, condone the said delay and proceed to decide the appeal.

3. Briefly stated, the facts of the case are that the assessee is a trust registered under the Bombay Public Trust Act, 1950. It is carrying on the charitable activity of bringing all the builders engaged in the business of construction and development of properties etc. under one roof and providing solutions for their peculiar problems with various Government organizations as well as the problems of the public at large. For AY 2017- 18, the assessee filed its return of income electronically on 06.11.2017 declaring total income at Rs. „Nil‟, subsequently, followed by filing of a revised return on 27.03.2019 declaring total income at Rs. Nil. The case of the assessee was selected for scrutiny under CASS for the reason “Large deduction claimed u/s 57 of the Income Tax Act, 1961 (the “Act” (Business ITR)”. Accordingly, statutory notice(s) u/s 143(2) and 142(1) of the Act along with questionnaire were issued and served upon the assessee. In response thereto, the assessee furnished the relevant information as called for online on e-assessment portal along with certain paper submission. After considering the submissions of the assessee, the Ld. Assessing Officer (“AO”) completed the assessment u/s 143(3) of the Act on 16.12.2019 holding that the assessee trust is not entitled for claiming exemption u/s 11 and 12 of the Act and he computed and assessed the income of the trust at Rs.63,80,720/- as under :

4. On appeal, the Ld. CIT(A)/NFAC partly allowed the appeal of the assessee by observing as under :

“5. Decision:

5.1 Grounds no. 2 and 3 are on the claim that the Assessing Officer has not considered the figures declared, as well as the revised computation of income filed by the appellant in the revised return of income. The Assessing Officer has denied the exemption based on the following observations:

"3. In response to the online notices issued during the assessment proceedings, the assessee furnished information online on e-assessment portal as called for vide questionnaire. The submission made through e-filing portal and paper submission has been examined and is placed on record. The assessee vide its submission dated 16.11.2019 has submitted that the assessee is not registered u/s 12A of the I.T. Act. 1961. Since the assessee is not registered u/s 12A, for taxation purpose, the status of the assessee is treated as an AOP.

4. The assessee is a charitable trust with an objective to bring all the builders under one roof and provide solution for their peculiar problems with various government organizations. On verification of Income and expenditure account and computation of total income, it is observed that the assessee has shown gross receipts of Rs. 58,77,205/- and after claiming expenditure of Rs. 48,52,885/-, there is surplus of Rs. 10,24,320/- In original return of income (ITR-7), the assessee has claime