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2013 (9) TMI 869 - HC - Income TaxExemption under Section 11 of the Income Tax Act, 1961 - fund alleged to used for personal benefit - section 13(3) - Assessee filed the return showing nil income after claiming exemption u/s 11 of the Income Tax Act, 1961. However, the assessment was completed under section 143 (3) of the Act on total income of Rs.65,56,933/- consisted of Rs.63,69,322/- as surplus and Rs.1,87,611/- disallowed as rent and electricity paid for the premises, partly occupied by the founder trustee of the trust and the Secretary of the trust – Held that:- Trust is a registered trust since 1994. Its activities are not doubtful regarding charitable activities - Office premises of the President was taken by the trust on reasonable rent. Perhaps other premises might be more costly - So, the rent is allowable deduction - President and the Secretary of the trust are providing voluntarily services to the trust. They are not charging any fee/remuneration for their services. By keeping the office in the same building where they are residing, the activities can be looked after without making any expenditure on conveyance. As per the tenancy agreement, there is no provision for separate electricity meter. It is not explained whether there was an arrangement of sub meter or not - Perks are higher than salary/remuneration. In the instant case, the President and Secretary are not charging any remuneration or conveyance allowance. They are available round the clock for the activities of the trust. Separate account has been maintained for paying the genuine rent and also the electricity charges – Decided against the Revenue.
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