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2017 (1) TMI 1085 - AT - Income TaxExemption under section 11 denied - A.O. invoked the provision of section 13(1)(c) - assessee trust has given loans to its managing committee members Shri Dushyant Chaturvedi and Pallavi Chaturvedi in violation of provisions of section 13(1)(c) - Held that:- Assessee in this case does not deserve denial of exemptions under section 11. Only the amount which has not been utilised for the objects of the trust but has been advanced to the rated related persons should be subjected to denial of exemption and taxation thereof. Accordingly we are of the opinion that the assessee is eligible for exemption under section 11 of Income Tax Act. Only the advancement of loan to the above related persons need to be brought under the purview of tax. The Assessing Officer is directed to disallow interest at the market rate on the sums advanced to the above persons. Since we have already held that the trust deserves to be allowed exemption under section 11 of the Income Tax Act, adjudication on the other limb of assessee's contention will only be of academic interest. Disallowance under section 40 (a)(ia) - Held that:- The assessee submitted that payee has furnished its return of income under section 139 (1) on 30/10/2008. That the payee has taken into account such interest for computing income. The payee has paid the tax due on the income declared. That certificate from the accountant under form 26A has been furnished. In this regard Learned counsel of the assessee has relied upon the decision of Honourable Delhi High Court in the case of CIT vs Ansal Land Marktownship [2015 (9) TMI 79 - DELHI HIGH COURT] for the proposition that second proviso to section 40(a)(ia) of the Income Tax Act is declaratory and curative in nature and has retrospective effect from 1/4/2005.We find that the above submission of the Learned counsel of the assessee is cogent. However the issue requires factual verification of the submissions made. Disallowance towards provision for salary and DA - Held that:- Upon careful consideration we find that the issue needs verification on the part of the Assessing Officer. Hence in the interest of justice we remit this issue to the file of the Assessing Officer. The Assessing Officer shall examine the issue afresh after giving assessee an opportunity of being heard. In this regard it is another contention of the Learned counsel of the assessee that if the above some is excluded for the purpose of application of computing income under section 11 of the Income Tax Act, the application is more than 85% of the income of charitable institution. Hence rendering decision on this ground may become academic nature. We find that the aspect again needs examination of the computation and hence we leave the suspect of computation for the Assessing Officer.
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