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2012 (12) TMI 251 - AT - Income TaxPerson u/s 2(31) - Artificial Judicial Person (AJP) as defined in section 2(31)(vii) - Society - Change of status from AJP to AOP - held that:- After verifying the genuineness of the activities of the society and satisfying about its objects, the registration was granted u/s 12AA(1)(b)(i) with effect from 1.4.2002. The return was also filed in the status of AJP. However, without giving any notice or any reason much less a cogent reason, the Assessing Officer has assessed the same as AOP. We do not find any justification in the action of the Assessing Officer which was confirmed by the Commissioner of Income Tax (Appeals). - the Assessing Officer was not justified in changing the status of the assessee without giving any notice. - Decided in favor of assessee. Disallowance of traveling expense - telephone expenses - held that:- lower authorities were not justified in declining the claim of exemption u/ss 11 and 12 of the Act on the plea of contravention of section 13(2) and 13(3) of the Act. Subsction (2) of section 13 under Clause No. (c) provides the payment of salary and other allowance to the persons referred to in sub-section (3) of section 13 out of the resources of the institution for services rendered by that person to the institution provided the amount paid is not in excess of what may be reasonably paid for such services. The payment of DA for the purpose of travelling for the work of the institution is not at all excessive and the payment of such expenditure is not for the personal benefit of office bearers and, therefore, there is no violation of section 13 of the Act. Application of income in respect of acquisition of fixed assets – Held that:- Assets have been acquired for the purpose of advancement of the objects of the society and, therefore, such investment should be treated as an application of income in terms of the provisions of section 11 of the Act - there is no violation of section 13 and as such the Assessing Officer was not justified in declining the deduction for application of income u/s 11(1)(a) of the Act – in favor of assessee Inclusion of corpus donation – Held that:- Section 11(1)(d) provides that the income the form of corpus donation shall not be included in the total income of the person who is in receipt of such income. The Assessing Officer since held that sections 11 and 12 will not operate and, therefore, he has not taken into consideration the provisions of section 11(1)(d) and included the said amount in the assessed total income - assessee’s eligibility for benefit of sections 11 and 12 of the Act cannot be declined and the corpus donation is required to be excluded from the total income as per the provisions of section 11(1)(d) of the Act Disallowance – alleged that assessee has paid land diversion charges which are in violation of section 40A(3) – Held that:- Land diversion charges were paid by the assessee to State Government which does not violate the provisions of section 40A(3), hence, disallowance made by the Assessing Officer and confirmed by Commissioner of Income Tax (Appeals) is not justified.
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