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2018 (3) TMI 1035 - AT - Income TaxDetermination of the correct income for the current year chargeable to tax under the Act - AO has regarded the assessee as not a charitable trust - Held that:- There is no basis for allowing exemption to the assessee on its’ income u/s. 11 to whatever extent. We may accordingly answer the two aspects of the impugned assessment that we discern as arising for our consideration/ adjudication. The voluntary contributions to the assessee-society qualify as income u/s. 2(24)(iia) of the Act, and is therefore, subject to the provisions of the Act, eligible for exemption u/s. 11 on application. Two, the assessee is not entitled to exemption u/s. 11 in-as-much as it is admittedly not registered u/s. 12AA of the Act, which issue stands settled by the decision by the Apex Court in U.P. Forest Corporation v. Dy. CIT [2007 (11) TMI 303 - SUPREME Court]. That apart, it may be appreciated that not so holding, i.e., that the assessee is not entitled to any exemption u/s. 11 on account of non-registration u/s. 12AA, on which aspect there is no ambivalence in law (refer section 12A(1)), would render our own order as internally inconsistent, i.e., the same malady that inflicts the orders by the Revenue authorities, besides laying down a wholly unacceptable legal proposition/judicial precedent, inconsistent with the decision in U.P. Forest Corporation v. Dy. CIT (supra). We are also, we may add, conscious of the provision of s. 12A(2), which essentially seeks to extend the benefit of sections 11 and 12 to years for which registration u/s. 12AA is not available subject to the non-change of the objects of the trust during the intervening period, i.e., at the time of grant of registration and that obtaining during the relevant previous year. The same, however, would get triggered only upon grant of registration u/s. 12AA, which has admittedly not even been applied for by the assessee. The matter accordingly shall travel back to the file of the AO for adjudication afresh in accordance with law, in light of the foregoing findings/ observations. The assessee shall be allowed deduction qua any expenditure incurred, if any, including administrative expenditure, for the purposes of the running the institution or organizing its’ activities. The burden of proof or the onus to prove the said expenditure would be on the assessee, whose accounts are presumably audited, i.e., under the provisions of its charter read with its’ governing law, i.e., Society Registration Act, 1860. A charitable trust, we may though clarify, is to apply its’ accounting income, so that the expenditure need not necessarily satisfy the mandate of sec. 37(1) or sec. 57.
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