Mahamai/charity charged - is it taxable ??

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CA. Arul Mozhi Varman (Querist)
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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 ?

Thanks in advance
Arul.

CA.Amit Revankar

CA.Amit Revankar (Expert)
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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.

CA. Arul Mozhi Varman

CA. Arul Mozhi Varman (Querist)
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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.

Thanks you very much.
Arul.

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