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2020 (7) TMI 159 - AT - Income TaxExemption u/s 11 - proof of charitable activity - Assessee was granted registration under section 12AA by order dated 20/06/1988 - non applicability of provisions of sec.2(15) - HELD THAT:- As decided in assessee's own case [2015 (7) TMI 169 - KARNATAKA HIGH COURT] referring to the provisions of the KIDA Act [Karnataka Industrial Areas Development Act, 1966], and principle laid down in the aforesaid decision of the HonbIe Delhi High Court in the case of India Promotion Organization [2015 (1) TMI 928 - DELHI HIGH COURT] in our view, will clearly show that the Assessee does not driven primarily by desire or motive to earn profits but to do charity through advancement of an object of general public utility. The assessee is operating on no profit basis. This is substantiated by the actual income received on operations of the Assessee and the expenditure incurred set out in the earlier paragraphs of this order. Proviso to Sec 2(15) of the Act is therefore not applicable to the case of the Assessee. We therefore hold that the Assessee is entitled to the benefits of Sec.11 of the Act. The AO has not disputed the conditions necessary for allowing exemption u/s.11 of the Act, except the applicability of proviso to Sec.2(15) of the Act. In view of our conclusions that the said proviso is not applicable to the case of the Assessee, we hold that the Assessee's income is not includible in-the total income and therefore the income returned by the Assessee is directed to be accepted. We therefore hold that income of assessee will be eligible to claim exemption under section 11 - Decided in favour of assessee. Surplus arises due to interest income and other income in the nature of penalty and other charges, and not from activity of acquisition of land and providing infrastructure facilities for industrial development - HELD THAT:- As we note that Ld.AO has not verified whether, assessee satisfies provisions of section 11 so far as application of income is concerned, for availing exemption under section 11 of the Act. We accordingly, direct Ld.AO to verify the same and to consider claim in accordance with law. Depreciation on assets of trust - double deduction - HELD THAT:- Both sides submits that this issue stands squarely settled in favour of assessee by decision in case of CIT vs Rajasthan and Gujarat Charitable Foundation Poona [2017 (12) TMI 1067 - SUPREME COURT] wherein as noted that, amendment to section 11 (6) of the Act introduced by Finance Act No.2/2014 is prospective in nature, and will be effective from assessment year 2015-16 onwards. Hon’ble Supreme Court upheld the observations of ITAT Mumbai, which was confirmed by Hon’ble Bombay High Court in case of DIT (E) vs Framjee Cawasjee Institute [1992 (7) TMI 331 - BOMBAY HIGH COURT] wherein it was held that if amount has been spent on acquiring assets and has been treated as application of income in the year. - Decided against revenue.
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