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2014 (7) TMI 222 - HC - Income TaxJurisdiction u/s 263 – Exemption u/s 11 and 12 of the Act – Assessee charitable Trust or not - treating the assessee as AOP – Held that:- The Tribunal had concluded that the assessment was rightly framed u/s 143(3) of the Act on 21.3.2000 - the donations received by the assessee had been applied for the purpose for which the trust had been created which included the construction of the building and other charitable purposes - the appointment of trustees or the members of the committee was not within the exclusive powers of Shambhu Dayal Shastri as the same was done by the trustees - The plea regarding expenditure having not been incurred for charitable purposes was not accepted as out of the total receipts of ₹ 86 lacs, the trust had incurred ₹ 31 lacs for construction of the building and ₹ 19 lacs for langar expenses - other items of expenditure were those which were incurred by the charitable trust for regular functioning such as salaries, vehicle maintenance and miscellaneous expenses - the trust had also spent on various other items amounting to ₹ 5 lacs. The assessee was a charitable institution and was carrying on activities for charitable purposes - at the relevant time, the assessee trust was required to utilize 75% of its funds for charitable purposes to take benefit u/s 11 and 12 of the Act - more than 75% of the total income during the AY had been applied for charitable purposes as per return - The amounts invested for the construction of immovable property had to be treated as application of income - The requirement of 75% was enhanced to 85% by Finance Act 2002 w.e.f 1.4.2003 - revenue was unable to dislodge the finding of facts recorded by the Tribunal. Relying upon Commissioner Of Income-Tax Versus Barkate Saifiyah Society [1993 (11) TMI 13 - GUJARAT High Court] - the AO was right in framing the assessment on 21.3.2000 and assumption of jurisdiction by CIT u/s 263 of the Act was improper – thus, the registration granted to the assessee u/s 12A of the Act was in accordance with law and the assessee had complied with the requirement of Sections 11 and 12 of the Act, as a necessary corollary, the action of the assessing authority in treating the assessee as an association of persons and also to assess Shri Shambhu Dayal Shastri on protective basis cannot be legally sustained - the action of CIT in invoking provisions of section 263 of the Act cannot be justified – Decided against Revenue.
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