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2012 (11) TMI 346 - ITAT BANGALORERevision of orders by CIT(A) - computation of LTCG for claiming exemption u/s 11(1A) - AO's order is prejudicial as the investments had been made in the previous year prior to previous year in which the transfer of the capital asset took place - Held that:- The CIT has proceeded to apply the provisions of Sec.11(1A)(a)(ii) to the present case, thus it is clear that the capital asset is property held under trust wholly for charitable or religious purposes. As decided in CIT Vs. East India Charitable Trust [1992 (1) TMI 21 - CALCUTTA HIGH COURT] capital gain is also income of the trust and Sec.11(1A) is not the only way in which capital gain has to be applied for charitable purposes. It is one of the way of applying capital gain for charitable purpose. If capital gain is applied for charitable purpose of the Assessee not by acquiring a new asset but for other charitable purpose, then there is no reason why it should not be considered as application of income for charitable purpose enabling the Assessee to claim exemption u/s.11(1). In the present case there is no question of application for accumulation of income for being spent for charitable purpose in future because such application is already deemed to have been made in the previous year itself. Admittedly, even as per the order of assessment there was application for charitable purpose, even after disallowance of depreciation made by the AO, of a sum of Rs.1,60,23458 over and above the receipts of the Assessee during the previous year. The capital gain considered as not utilized for charitable purposes u/s.11(1A) is only a sum of Rs.1,21,61,909.33 Ps. The surplus utilization of Rs.1,60,23,458 should be sufficient to set off the capital gain not utilized for charitable purpose u/s.11(1A). Thus the net deficit in this AY to be carried forward for set off in the later years would be Rs.1,60,23,458 - Rs.1,21,61,909.33 Ps. Viz., Rs.38,61,909.67 Ps. Thus it can be fairly concluded that though the order of the AO was erroneous, the same was not prejudicial to the interest of the revenue as no part of the capital gain became taxable because of loss of exemption u/s.11(1A). Since the order sought to revised u/s.263 was erroneous but not prejudicial to the interest of the revenue, jurisdiction u/s.263 could not have been invoked by the CIT - direction to quash the order u/s.263 - in favour of assessee.
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