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2022 (8) TMI 19 - AT - Income TaxExemption u/s 11 - Voluntay contributions by Deendayal Memorial Hospital (‘DMH’) as a contributory within the meaning of section 13(3)(b) - HELD THAT:- Admittedly, the assessee received donation from prohibited person in terms of section 13(3)(b) of the Act, that being so, the arguments of ld. AR is not accepted. We find the CIT(A) discussed the same in Para No. 16 of the impugned order and rightly held that the said explanation could have been accepted, that if the donation could have been received from a person other than prohibited person. Further, there is no dispute about the fact that “DMH” had made a substantial contribution to the assessee and the said contribution so made up to the end of the previous year relevant to the assessment year under consideration being Rs.65,00,000/- far exceeding Rs.50,000/-. There is also not disputed about the fact that “DMH” applied the said sum for the benefit of assessee. Therefore, the provisions under Sub-section (3) of section 13 is attracted as rightly held by the AO by placing reliance on the decision of Hon’ble High Court of Bombay in the case of Champa Charitable Trust [1994 (12) TMI 56 - BOMBAY HIGH COURT] Therefore, taking into consideration the submissions of ld. AR and ld. DR and our discussion made hereinabove paras, we find no infirmity in the order of CIT(A) in holding the “DMH” is a prohibited person u/s. 13(3)(b) and consequently denying exemption u/s. 11 of the Act for violation of provision u/s. 13(1)(c) of the Act to the assessee. Thus, ground Nos. 1 to 6 raised by the assessee are dismissed. Denying exemption u/s. 11 of the Act in the light of provisions u/s. 13(6) - As decided in AUDYOGIK SHIKSHAN MANDAL, PUNE [2018 (12) TMI 1344 - BOMBAY HIGH COURT] observed that the law laid down by the Hon’ble High Court of Karnataka FR MULLERS CHARITABLE INSTITUTIONS [2014 (2) TMI 1033 - KARNATAKA HIGH COURT] in holding the benefit of section 11 of the Act will not be available to diverted income and also observed that in order to come to such conclusion, the Hon’ble High Court of Karnataka placed reliance on the decisions of High Courts of Bombay and Delhi in the cases of Sheth Mafatlal Gagalbahai Foundation Trust [2000 (10) TMI 26 - BOMBAY HIGH COURT] and Agrim Charan Foundation [2001 (8) TMI 78 - DELHI HIGH COURT] respectively. Therefore, respectfully following the law laid down by the Hon’ble High Court of Bombay, we hold, that the denial of exemption u/s. 11 of the Act is restricted only to Rs.65,00,000/- which was received from prohibited person. Thus, ground No. 7 raised by the assessee is allowed.
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