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2022 (8) TMI 621 - ITAT PUNEExemption u/s. 11 - exemption denied on violation of provisions u/s. 13 - Scope of second proviso to section 13(1)(c)(ii) of the Act - HELD THAT:- As in view of the fact following the order latest being in A.Y. 2013-14 we deem it proper to remand the matter to the file of AO for its fresh consideration to pass order in accordance with the directions rendered by this Tribunal in A.Ys. 2010-11 and 2011-12 [2017 (6) TMI 1369 - ITAT PUNE] Capital expenditure incurred towards Mandir and Vidyalaya - CIT(A) allowing exemption u/s. 11 without appreciating the expenditure on the objects of the trust is negligible as compared to expenditure incurred on maintenance of commercial property - HELD THAT:- We note that the case of the AO is that the expenditure incurred on other than the object is Rs.423.38 lakhs which was incurred for the purpose of commercial adventure. He also found that the said amount is part of total expenditure incurred - contention of ld. AR is that the AO nowhere held the said expenditure incurred into violating the objects of trust and no adverse remark as held by the assessee violated the provisions of section 13 of the Act while incurring the said expenditure. CIT(A) by placing reliance on the decision of St. George Forana Church [1987 (7) TMI 44 - KERALA HIGH COURT] held that where surplus funds were utilized for additions to a building, which was let out and the income thereof applied for charitable or religious purposes, the utilization of such surplus was held to amount to application of income for religious or charitable purposes. CIT(A) placed reliance on the decision of Karimla Trust [2007 (9) TMI 229 - JHARKHAND HIGH COURT]which held that breach of conditions would not disentitle assessee from getting benefits. CIT(A) examined the issue in detail from Page No. 11 of the impugned order and held the assessee is entitled to claim exemption u/s. 11 of the Act. Thus, we agree with the reasons recorded by the CIT(A) and it is justified. Thus, ground No. 6 raised by the Revenue is dismissed. Non-applicability of section 60 - HELD THAT:- The provisions u/s. 60 of the Act explains all the income arising to any person by virtue of a transfer is chargeable to Income Tax as the income of the transferor shall be included in his total income. As we discussed above that the assessee is a trust applying its income towards its objective and other trust Lohia Pratisthan also running school in the said premises. Therefore, we find force in the arguments of ld. AR that the exemption u/s. 11 is to be examined independently and the provisions u/s. 60 is not applicable to the facts on hand. On examination of the reasons recorded by the CIT(A) we note that the assessee in the capacity of owner is not deriving any income from the other trust to which a property has been given to run a school. Therefore, we find no infirmity in the order of CIT(A) in holding the non-applicability of section 60 of the Act. Thus, we agree with the reasons recorded by the CIT(A) - ground raised by the Revenue is dismissed.
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