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2016 (5) TMI 1179 - AT - Income TaxTaxing the bank interest as income from other sources - assessee is a charitable organisation with DIT (E), Mumbai, under Section 12A - Held that:- The assessee depositing money in the bank does not constitute trade, commerce or business. The Assessing Officer has in fact gone much beyond and held that the interest itself constitutes taxable income falling foul of the proviso to section 2(15). If the Assessing Officer's view is correct, it will militate against the mandate requirement and object of Section 11(5) of the Act read with Section 13 of the Act. These Sections require an entity seeking the shelter of Sections 11 to 13 to deposit its surplus funds in specified assets and it cannot be that the mandate requirement and object of Section 11 (5) which serves to put in place a mechanism to regulate the funds of the charitable institutions are overcome, overridden and nullified by an interpretation so that the very mandate of Section 11(5) if complied with results in the institutions being declared to be non-charitable. This is a contradiction in terms and therefore must be rejected. Accordingly, we hold that the interest earned on fixed deposit with banks complying with the provisions of Section 11(5) is exempt and the proviso to Section 2(15) has no application to the facts of the assessee's case. In view of the above, we set aside the order of both the lower authorities and direct the AO to delete the addition of interest so made which is exempt u/s.11(5) of the Act and the proviso to Section 2(15) has no application to the facts of instant case. - Decided in favour of assessee
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