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2018 (11) TMI 48 - AT - Income TaxDenial of exemption u/s 11 - application of maximum marginal rate - deemed registration u/s 12A - Held that:- The provisions at section 12A(2) will apply from the assessment year immediately following the financial year in which such application is made. In this case, the application of registration is made on 27.11.2015, hence the exemption under section 11 & 12 will be applicable not before A.Y. 2016-17. Further, the proviso section 12 A(2) will also not apply in the case of the assessee as the assessee has not shown any income derived from the property under trust. Beside this, the registration granted by CIT does not grant exemption u/s 11,12 &13 automatic and it is conditional after the Assessing Officer satisfies himself about the genuineness of the activities claimed. The claim of the assessee that it should not be taxed at maximum marginal rate is also not tenable as the PAN of the assessee suggests that the assessee is a Body of Individuals and not 'Trust' as the fifth character of PAN is 'B' and not 'T' which should be the case of Trust. As the Return of Income was filed by the assessee in capacity of Body of Individuals and automatically the provisions of section 11, 12 &13 will not apply in the case of the appellant unless the registration is granted by CIT which was granted later. Hence, the provisions of section 167B (1) of the Act clearly suggests that under this situation the appellant has to be taxed at maximum marginal rates. No infirmity in the order of CIT(A) in upholding the action of the CPC Bangalore in taxing the assessee at maximum marginal rate. Capital receipt - Held that:- CIT(A) has relied upon the order dated 16.5.2017 of ITAT, Delhi Bench in the case of Divine Educational Institute & Social Development Society vs. ITO [2017 (5) TMI 966 - ITAT DELHI] wherein, it has been held that corpus fund which is meant for specific purpose to meet out capital expenditure could not be part of annual receipts, even if the trust is not registered under section 12AA of the Income Tax Act. However, in the present case the assessee has shown the receipt towards corpus fund of building account which is a capital receipt which has been invested in FDR. Therefore, Ld. CIT(A) correctly followed the aforesaid decision of ITAT and held that this receipt and treated as capital receipt to meet the capital expenditure and not chargeable to tax. No relief can be given on account of interest on FDR of Building Fund also which is a revenue receipt and income during the year. Further, other deductions claimed by the assessee were not allowed u/s 11 & 12 of the Act and there is no infirmity in the intimation u/s 143(1) of CPC Bangalore. CIT(A) has passed well reasoned order which does not need any interference, on my part, therefore, uphold the same and reject the grounds raised by the Assessee.
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