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2020 (9) TMI 722 - AT - Income TaxExemption u/s 11 and 12 - Amount deployed towards share capital of BARC pursuant to the policy of the Central Government and TRAI recommendations treated in the nature of investment in violation of Section 11(5) read with section 13(1)(d) - HELD THAT:- BARC enables assessee to fulfil its ‘objects incidental or ancillary to the attainment of the main objects, like to affiliate, admit to membership, aid and to receive aid from any other society, association, company, corporation firm, partnership or person promoting or formed or intending to promote any of the objects of Company - BARC, being a not for profit Company under section 25 of the Companies act, 1956, is not permitted to distribute any dividends or profits to its shareholders On liquidation, its MOA provides that any surplus left shall be transferred to another Section 25 Company undertaking similar objectives and cannot distribute any such funds to its shareholders, which establishes that the deployment of funds in BARC is not for earning any income or profit, rather only to meet the objectives of the Assessee. It cannot be said that the assessee invested the amounts and committed violation within the meaning of section 13 (1) (d) of the Act - whatever may be stage, the observations of the Hon’ble Delhi High Court in assessee’s own case [2017 (3) TMI 1820 - DELHI HIGH COURT] to the effect that the amounts in question were deposited with the BARC not by way of investment or choice, but on account of a Central government policy, can not be ignored - there was no violation committed by the assessee within the meaning of the provisions under section 11 (5) of the Act read with section 13 (1) (d) - Decided in favour of assessee.
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