TMI Blog2015 (9) TMI 711X X X X Extracts X X X X X X X X Extracts X X X X ..... n the trust that cannot go against the assessee especially when legal actions were taken to recover the amount and criminal prosecution is also initiated. Since the facts were not examined by the lower authorities, this Tribunal is of the considered opinion that the matter needs to be re-examined by the Assessing Officer. Accordingly, the orders of the lower authorities are set aside and the entire issue of claim of exemption u/s 11 of the Act is remitted back to the file of the Assessing Officer to examine the material available on record and find out whether it is an expenditure incurred by the assessee on Shri G. George or the funds were misappropriated by Shri G. George as contended by the assessee before this Tribunal. Decided in f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act and computed the taxable income over the expenditure at ₹ 1,43,46,216/-. 4. On appeal by the assessee, the CIT(A), by placing reliance on the judgment of the Rajasthan High Court in DCIT vs Cosmo Metropolitan Education Society, 244 ITR 494, and the judgment of the Bombay High Court in DIT(E) vs Sheth Mafatlal Gagalbhai Foundation Trust, 249 ITR 533, found that the assessee incurred expenditure on the General Secretary, therefore, not eligible for exemption u/s 11 of the Act. 5. The ld. Senior Counsel submitted that Shri G. George, the former General Secretary of the assessee-trust misappropriated the funds, therefore, a complaint was made to the Commissioner of Police on 10.8.2011, the copy of which is available at Sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ajasthan High Court in DCIT vs Cosmopolitan Education Society(supra). The High Court found that if there was any misutilization or mismanagement, action could be taken against the members of the society, but from the records and facts, it is not possible to say that any amount of funds of the society was not utilized for educational purposes. Placing reliance on the decision of Cuttack Bench of this Tribunal in Bhubaneswar Stock Exchange vs ACIT [2005] 96 ITD 480, ld. Senior Counsel pointed out that when the funds were misutilized and diverted by the office bearers of the trust, the Tribunal found that the assessee could not be held responsible for the acts of its office bearers who committed default in their personal capacity. The Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by the Assessing Officer and the CIT(A). 8. We have considered the rival submissions on either side and also perused the material available on record. The Assessing Officer rejected the claim of the assessee on the ground that the assesseetrust incurred expenditure on Shri G. George, former General Secretary who is managing the affairs of the trust. It is not known on what account the expenditure was incurred on Shri G. George. The Assessing Officer has not brought on record the nature of expenditure incurred by assessee on Shri G. George. The CIT(A) also proceeded as if the assessee-trust incurred expenditure which was in violation of sec. 13(1) r.w.s 13(3) of the Act. The CIT(A) has also not brought on record the nature of expendit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gal action has been taken to recover the amount and criminal prosecution is also pending, this Tribunal is of the considered opinion that the authorities below are bound to examine the claim of the assessee and find out whether it is a misappropriation of funds or expenditure incurred by the assessee on the Secretary, Shri G. George. Without examining this basic claim of the assessee, the CIT(A) confirmed the disallowance made by the Assessing Officer denying exemption u/s 11 as if there was a violation of sec. 13(1) r.w.s 13(3) of the Act. This Tribunal is of the considered opinion that if the funds were misappropriated and legal actions were initiated to recover the amount from Shri G. George and criminal prosecution is also initiated, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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