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2016 (3) TMI 746 - AT - Income TaxEntitlement to the exemption under section 11 - Violation of provisions of section 13(1)(c) and 13(2)(a)/(b)/(g) - Held that:- Having held that the Poddar Trust comes within the list of prohibited persons under section 13(3), now we are left to examine the transaction which has taken place between the assessee and the said M/s. Poddar Trust. The AO, after examination has found that the assessee has given a loan of ₹ 42,69,615/- to PMTI College, a unit of M/s. Poddar Trust which is a prohibited person within the meaning of section 13(3) of the Act. In our view, the fact of giving the loan by the assessee trust to M/s. Poddar Trust does not violate section 13(1)(d) read with section 11(5) of IT Act, 1961, as the said loan is neither an investment nor a deposit and the said amount has been given to M/s. Poddar Trust which is also a registered trust having the similar objects under the Act of 1961. The said trust has, in fact, returned back the money to the assessee trust in the subsequent assessment year and, therefore, the AO has not disallowed the exemption. In view thereof, though M/s. Poddar Trust is a prohibited person within the meaning of section 13(3) of the Act, however, the transaction of ₹ 42,69,615/- does not fall within the provisions of section 13(1)(d) read with section 11(5) of the Act. In view thereof, the assessee is entitled to the exemption under section 11 of the Act. - Decided in favour of assessee
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