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2016 (4) TMI 1145 - AT - Income TaxExemption u/s 11 denied - violation of section 13 - whether the entire income of the trust is chargeable to tax at maximum marginal rate as against only that income which has violated section 13 as mandated by provision to section 164(2) of the IT Act, 1961? - Held that:- Where there is violation of section 13, the entire income of the trust is not chargeable to tax at maximum marginal rate and it is only that income which has violated section 13 which shall suffer maximum marginal rate as per proviso to section 164(2) of the Act. Further, the appellant has submitted that the amount of ₹ 20,00,000 with interest of ₹ 2,16,000/- i.e. ₹ 22,16,000/- was received back by the trust and the interest income of ₹ 2,16,000/- was offered in the return for AY 2012-13 and there is no income generated on amount of ₹ 20 lacs advanced to M/s Rajakala Industries Limited during the year. There is nothing on record to controvert the said submissions of the appellant. Thus, there is no income during the year which can be brought to tax at maximum marginal rate in the hands of the trust in a scenario where it is held that there is violation of provisions of section 13. In view of the same, we don’t think it would be relevant to examine whether the appellant trust has violated the provisions of section 13 of the Act as the same has become infructious in the facts and circumstances of the present case. The AO is accordingly, directed to allow exemption to the appellant trust u/s 11 and the addition made by the AO and confirmed by CIT(A) is hereby deleted. - Decided in favour of assessee.
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