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2014 (11) TMI 256 - AT - Income TaxDenial of exemption u/s 11 Held that:- In CIT vs. Hardeodas Agarwalla Trust [1991 (7) TMI 22 - CALCUTTA High Court] it has been held that a procedural provision, ordinarily, should not be construed as mandatory, if the defect in the act done in pursuance of it can be cured by permitting appropriate rectification to be carried out at a subsequent stage and having regard to the object of section 12A, it cannot be that the legislature intended that even where the trust has got its accounts audited and the certificate obtained in Form No.10B before the assessment is completed, merely because such report could not be filed in the course of assessment proceedings, it would deprive a trust from getting the exemption if it is otherwise entitled to it in law - the CIT (A) was not justified in confirming the denial of exemption u/s 11 of the Act only for the reason that the audited report was not submitted along with the return of income but during the assessment proceedings - the assessee deserves to exemption u/s 11 in the year. Treatment of expenses on dismantling of huts as capital expenditure Held that:- The assessee has incurred this expenditure by dismantling the temporary structure which was constructed during construction of school building at Vasant Kunj - Since the CIT (A) has upheld this addition as capital expenditure but we note that the order is not a speaking order on the issue the matter is remitted back to the CIT(A). Various expenses claimed by the assessee disallowed - Held that:- Simply payment made through cheque shall not justify the claim of the assessee - The expenditure has been debited in the books of account of assessee - It was for assessee to establish that the expenditure was genuine and was spent wholly and exclusively for the business purposes of the assessee - The genuineness of expenditure remains unverified. Depreciation on building at Virendra Gram disallowed Held that:- The assets in the form of building were used for educational purposes - The buildings were shown in the balance sheet of the society while the other assets are shown in the balance sheet of the school - The AO himself has allowed depreciation in respect of the assets which have been shown in the balance sheet of school - It is only because of accounting convenience that the assessee society has chosen to disclose the buildings in its own balance sheet but that does not mean that such buildings are not used for the purpose of business - The claim of the assessee cannot be disallowed merely on the ground that such depreciation is claimed in the income and expenditure account of society the order of the CIT(A) is upheld Decided in favour of assessee. Deletion of addition Held that:- It is not a case of cessation of liabilities which can be covered by section 41(1) of the Act - The company had taken over the liability to refund the caution money as and when required - The AO has accepted the sale of land and building of the school on which the capital gain has been computed - The AO also accepted the sale of movable assets Decided against revenue.
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