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2018 (5) TMI 1911 - AT - Income TaxExemption u/s 11 - charitable activity u/s 2(15) - advances made by assessee trust - HELD THAT:- Advances was made for charitable purpose only. AO as well as the CIT(A) has not given any reason for rejecting advances as application of income. The word ‘may’ is used by the CIT(A) which means the CIT(A) has not arrived at the conclusion based on the facts and law. The assessee society paid advance of ₹ 26,87,656/- during the year under consideration to various suppliers/contractors and claimed the same as application of income for charitable purpose only. The evidence put up before the AO confirms the same. Thus, these advances was used by the assessee for charitable purpose only. AO and CIT(A) was not correct in denying the claim of application of income on the advances made to the various suppliers/contractors. Therefore, Ground No. 1 of the assessee’s appeal is allowed. Deemed application u/s 11(1) explanation 2 of the Income Tax Act, 1961 fulfills all the conditions prescribed therein - HELD THAT:- CIT(A) held that the original return was filed and the same was not accompanied by intimation in writing to the AO regarding exercise of the option under Explanation 2 to Section 11(1). The intimation was attached to the revised return filed under Section 139(5), and therefore, the benefit of filing of intimation was denied by the CIT(A). But as per the provision of the Section 139(5) there is no bar for filing intimation with the revised return. The intimation can be filed at any time before the assessment proceedings are completed. Therefore, the Assessing Officer as well as the CIT(A) was not correct in rejecting this claim of the assessee. Therefore, Ground No. 2 of the assessee’s appeal is allowed. Granting benefit of Section 11 and 12 - when the assessee is involved in purely commercial activities. From the records we can see that the objects of the assessee was never disputed by the Revenue authorities at any stage. There was no change in the object and the functions of the assessee. The activities which are carried by the assessee was as per the objects and functions. Therefore, Revenue failed to establish that there is any commercial activity. CIT(A) rightly granted benefit of Section 11 and 12 of the Act to the assessee. Depreciation claim of assessee trust - CIT-A allowed the claim - HELD THAT:- There is no need to interfere with the findings of the CIT(A) as the CIT(A) after going through various records given a finding. In fact, the Hon’ble Apex Court in case of CIT vs. Rajasthan & Gujrati Charitable Foundation Poona [2017 (12) TMI 1067 - SUPREME COURT] held that charitable institution registered under Section 12A, even though incurred expenditure for acquisition of capital assets has to be treated as application of income for charitable purposes under Section 11(1)(a) and depreciation has to be allowed on assets so purchased. Therefore, the appeal filed by the Revenue does not survive.
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