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2015 (1) TMI 518 - AT - Income TaxExemption claimed u/s 11 withheld - Whether AO has wrongly added back a sum of ₹ 1,01,06,162/- as capital expenditure incurred during the year which has not been debited to profit and loss account at all? Held that:- It can be said that objects/activities of the assessee are more of commercialized nature and no charity is involved in it. At the time, if these facilities are not provided, then nobody will purchase a plot. It can be said that it is a means of attracting the people so that maximum people may apply for the same and the hidden cost is already added, so no charity is involved. At best, the assessee can be said to be an authority created to help it to achieve certain objects. It can be said that it is the duty of the Government to create / provide all these facilities to public large, which is being done through is agency in a particular area. At the same time, the funds which are provided to the assessee by the Government is again a public money or generated from public itself. The objects of the assessee, though claimed to be charitable, but actually are of purely commercial nature where profit motive is involved. In view of the above discussion, we are inclined to hold that the CIT(A) is justified in rejecting the claim of exemption u/s. 11 of the I.T. Act. The CIT(A) ought to have noted that capital expenditure has not been debited to the Income and Expenditure AI c. for the year of the appellant at all and if for any reason it is ultimately held that the appellant is not entitled to exemption ss] S.ll and 12 of the Act, the addition I disallowance of the capital expenditure should have been directed to be deleted. For the above and other grounds that may be adduced at the time of hearing, the order of the CIT(A) may be modified to the extent prayed for as above. Since the issues raised by the assessee are not adjudicated by the CIT(A) for the reasons that the main claim of exemption u/s 11 has been allowed. Since we have reversed the order of the CIT(A) upholding the exemption u/s 11, the grounds raised by the assessee in the Cross Objection would go back to the file of the CIT(A) for fresh adjudication. - Decided in favour of revenue whereas the Cross Objection of the assessee is allowed for statistical purpose.
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