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2014 (6) TMI 806 - AT - Income TaxDenial of exemption u/s 11 of the Act Objectives of Trust - Shortfall in application of income derived from property - Held that:- Following Society of Presentation Sisters Vs. ITO [2009 (9) TMI 75 - ITAT COCHIN] - no distinction is made between charitable and religious purposes in s. 11(1)(a) - a trust which is partly religious and partly charitable is entitled to exemption u/s 11(1)(a) of the Act - even otherwise, maintenance of mosque and church is to be treated as charitable purpose and not purely religious purpose - exemption u/s 11(1)(a) could not be denied to the assessee trusts which exist for various charitable purposes besides maintenance of chapels and mosques, on the ground that they are partly charitable and partly religious trusts, once no case is made out for application of provisions of section 13 the AO was not correct in denying exemption u/s 11 in assessees case and registration granted to assessee u/s 12A is intact - CIT(A) has rightly appreciated the facts and held that the assessee is entitled to exemption u/s 11 Decided against Revenue. Function hall used for commercial purposes Held that:- Following CIT vs. Narayana Guruviah Chetty's Estate & Charities [2008 (9) TMI 528 - MADRAS HIGH COURT] - so long as the dominant object is of general public utility and there is no profit motive, it cannot be said that the trust/institution is not established for charitable purpose, even if there is some profit in the activity carried on by the trust/institution thus, the order of the CIT(A) is upheld Decided against Revenue. Deletion of corpus donations Held that:- Following Sukhdeo Charity Estate vs. ITO [1991 (5) TMI 47 - RAJASTHAN High Court] - voluntary contributions received for 'specific purpose' are not assessable as income - even when the assessee had been assessed as AOP and deprived of Section 11 benefits, the AO could assess only net income of the assessee and not gross receipts thus, the order of the CIT(A) is upheld Decided against Revenue. Original audit report not consulted Held that:- The earlier report showed that amount spent on the objects of the trust as NIL - such a mention was made by mistake - CIT(A) has rightly held that the AO has neither shown that the revised report filed was incorrect or that the assessee not applied its income for charitable or religious purposes - thus, the order of the CIT(A) is upheld Decided against Revenue. Deletion of disallowance of pooja expenses Held that:- The disallowance will not survive once the assessees claim for exemption u/s 11 is allowed - even otherwise, there is no case for the disallowance because once the income from the pooja activity is included, the connected expenditure is to be allowed - the order of the CIT(A) is upheld Decided against Revenue. Addition u/s 40(a)(ia) of the Act Held that:- The disallowance will not survive once the assessee's claim for exemption u/s 11 is allowed - even otherwise, the disallowance was made without affording an opportunity to the assessee to rebut the assumption of the AO that the items of expenditure comprised in the amount are liable for disallowance u/s 40(a)(ia). Disallowance out of Administration expenses Held that:- The disallowance will not survive once the assessee's claim for exemption u/s l1 is allowed - there is no case for separate disallowance because expenditure debited by the assessee is normal administrative expenditure and there is no finding that such expenditure was not incurred or that the same was not vouched etc. the order of the CIT(A) is upheld Decided against Revenue.
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