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2023 (9) TMI 264 - HC - Income TaxExemption u/s 11 - appellant company had made an investment into the joint stock company towards equity, the assessing officer found the same to be in violation of Section 11 (5) of the Act - Whether the word ‘fund’ in Section 13(1)(f) can apply only to service income and not to ‘corpus’ of the trust?” - HELD THAT:- The appellant is a society, registered under Andhra Pradesh (Telangana Area) Public Societies Registration Act and is registered u/s 12A and exempted u/s 80G of Income Tax Act, 1961. The principal object of the society was, used to impart training, promotion of education, research etc, in the field of construction and allied industries. However, contrary to the objects of the society, an amount of Rs. 1.5 crore was invested in HITEX, the objects of which are not similar to that off the appellant society and in fact, it is also involved in using the land for commercial purpose. Apart from investment of Rs. 1.5 crore in HITEX, the appellant society had also transferred 100 acres of land on lease out of 167.30 Acres of land which was allotted by the Government to the Appellant. The Assessing Officer had taken note of transfer of 100 acres by the appellant society to HITEX, however, in his wisdom, he did not further enquire into the terms and conditions of such transfer and as to whether lease rental or any amounts are being received by the appellant society. Thus, investment of Rs. 1.5 crore and transfer of 100 acres of land by the Appellant to HITEX squarely covered under Section 13(1)(d) of the Act, 1961 and, therefore, the appellant society made themselves disentitle to the benefit under Section 11 of the Act, 1961 in view of violation of section 11(5) of the Act, 1961. The High Court of Kerala in Agappa Child Centre [1996 (8) TMI 52 - KERALA HIGH COURT] dealt with a similar issue wherein Assessee a public charitable trust, purchased a refrigerator and kept it at the residence of its managing trustee. The Court held that the Managing Trustee was one of the prohibited persons as per Section 13(3). Therefore, the Court held that the entire exemption of the trust is to be denied. Decided against assessee trust.
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