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2017 (1) TMI 999 - AT - Income TaxDisallowance of deduction u/s 10(23C)(iiiad) - assessee society is an educational institution, also registered u/s 12A - Held that:- The exemption u/s 10(23C)(iiiad) of the Act is available to an institution, which is solely exists for educational purposes. Therefore, the phrase used as “solely” means that not for the purposes of profit. Therefore, plain reading of the said Section means that an educational institution, which is engaged solely for the purpose of imparting education is solely for the purpose of imparting education is qualifies for the exemption u/s 10(23C)(iiiad). In the case of the assessee, we find that the assessee society has not carried out any other activity other than education, therefore, the assessee is eligible for deduction u/s 10(23C)(iiiad) of the Act. - Decided in favour of assessee Rejection of registration u/s 12AA - the assessee has failed to file return of income u/s 139(4A) read with section 121 to Section 139(1) - Held that:- for making eligible to exemption u/s 11 in accordance with the certificate granted u/s 12A by the CIT, Bhopal, the assessee should have filed its return of income within the due date as prescribed u/s 139(1) of the Act read with Explanation 2 to Section 139(1) of the Act and in accordance with the provisions of Section 139(4) of the Income-tax Act, 1961. Since the assessee has failed to furnish the return as per the terms and conditions laid down while granting the registration to the Society, the AO has correctly rejected and held that the assessee is not eligible to exemption u/s 11 as its registration has been ceased to exist for the assessment year under consideration for non-compliance of the terms and conditions stipulated while granting certificate u/s 12AA by the Commissioner of Income-tax, Bhopal. - Decided against assessee Addition as surplus on sale of land as short term capital gain - Held that:- We have considered the facts and find that the assessee is found to be eligible for exemption u/s 10(23C)(iiiad) of the Act, hence surplus earned on account of sale of land at ₹ 58.68 lakhs has been applied for purchase of construction of land amounting to ₹ 276 lakhs. Hence, the surplus earned on this transaction by the Society not taxable, as the income of the society is held as exempt in our finding as given in ground no.1 above. This ground is, therefore, allowed in favour of assessee Addition on account of unsecured loan - Held that:- We find that the Society is eligible for exemption u/s 10(23C)(iiiad) as held in ground no.1 above. Further, the assessee has filed the confirmations of the creditors explaining the source of source, who in turn, obtained loans from the persons, who are also facing Court cases for non return of such loans. Further, the amount has been invested by the Society in land and building. Hence, the borrowed funds have been utilized for the benefit of the Society. Therefore, the finding of the lower authorities are without any basis and not in accordance with law. Therefore, the addition made on account of unexplained cash credit is deleted. - Decided in favour of assessee
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