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2014 (11) TMI 805 - HC - Income TaxViolation of section 13(1)(d) r.w section 11(5) - Effect of amendment – Taxability of income – Held that:- The Tribunal rightly held that the assessee Society had not parked any of their funds in Crédit Industriel et Commercial, Paris, France either as an investment or as deposit - Grants from the Government of France, which were parked in the account - The respondent Centre was earlier exempt u/s 35(1)(ii) of the Act for all years prior to 01.04.2003 - after the said provision was withdrawn and become inapplicable, the grant by the French Government could not be utilized as per the mandate of the French authorities, for insistence and enunciation that the Centre should remain a non-taxable entity/institution. The order by the CBDT affirms and accepts that the objects were charitable and in categorical and positive terms, the order grants exemption from entire income held under trust applied in accordance with the objects of the Centre, without any other stipulation - The exemption is for the period covered by AYs 2005-06 to 2009-10 - It is not averred that the income derived from the property held under trust was not applied in accordance with the objects of the Centre - Application of income is different, from accrual - the interest earned applied for the purpose/objects of the Centre will not form a part of the total income - in respect of the income, there would be no violation of Section 11(5) read with Section 13(1)(d) of the Act. Application of proviso to section 164(2) – Centre to be taxed on maximum marginal rate or not – Held that:- The respondent Centre had excess of expenditure over income in the Profit and Loss Account for the AY 2008-09 - the Centre had suffered a loss - However, the AO held that the interest in the foreign bank account would be taxable at the maximum marginal rate - Because of that finding, benefit of carry forward to the assessment year 2009-10 was denied - In any case, once it has been held that the exemption granted by the order of the CBDT dated 12.10.2010 would apply, Section 164(2) of the Act would not be applicable – Decided against revenue.
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