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The Income Tax Officer (Exemptions) , Ward – 2, Chennai Versus M/s. Holy Family Charitable Trust

Denial of exemption under section 11 - investment in chits on the ground that it is in violation of section 11(5) r.w.s. 13(1)(d) - CIT(A) allowed the claim - Held that:- CIT(A) has observed that the assessee is liable for Rs..1,30,724/- to the Social Forum Kuris and there is no investment on the asset side of the balance sheet as on 31.03.2010. Further in the receipts and payments account as on 31.03.2010 also the payments were made to social form chit account which is nothing but repayments. T .....

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iolation u/s 13(1)(d) - Held that:- The interest free loan given by the assessee society to other society having similar objects and registered under section 12A of the Act does not violate section 13(1)(d) read with section 11(5) of the Act as the said loan was neither an investment nor a deposit. Accordingly, the ratio lay down by the Hon’ble Delhi High Court in the case of DIT(E) v. ACME Educational Society (2010 (7) TMI 159 - DELHI HIGH COURT ) squarely applies to the facts of the present ca .....

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iled by the Revenue is directed against the order of the ld. Commissioner of Income Tax (Appeals) VII, Chennai, dated 13.08.2014 relevant to the assessment year 2010-11. 2. Brief facts of the case are that the assessee is a public charitable trust constituted by a trust deed dated 28.06.1989. It was registered under section 12AA of the Income Tax Act, 1961 [ Act in short]. The assessee trust filed its return declaring NIL income. The return was processed under section 143(1) of the Act. The case .....

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as expenditure. When the assessee was informed that the above sums were not entitled to exemption under section 11 of the Act, the AR of the assessee filed a revised computation excluding the above sum of Rs..45,00,000/-, but made an alternative claim of Rs..75,00,000/- being advance paid for purchase of land as application. The Assessing Officer has observed that though the claim of the assessee is acceptable, he was of the opinion that the quantum of claim needs to undergo a change. The Assess .....

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ing Officer has also found that a loan of Rs..40,00,000/- was given to Pavanatma Provisional House, Kallettumkara, Kerala who is the founder of the assessee trust. Since the objects of both the trusts are no symmetric, the giver being charitable and the recipient being religious, the Assessing Officer has held that the provisions of section 13(1)(d) of the Act are attracted. He has also observed that the loan was given without adequate security and is interest free. Accordingly, the Assessing Of .....

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6. On the other hand, the ld. Counsel for the assessee has strongly supported the order passed by the ld. CIT(A). 7. We have heard both sides, perused the materials on record and gone through the orders of authorities below. In the assessment order, the Assessing Officer has denied exemption under section 11 of the Act for the investment in chits on the ground that it is in violation of section 11(5) r.w.s. 13(1)(d) of the Act. The ld. CIT(A), after considering the written submissions and consi .....

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ris were considered as not violative of sec. 11(5) read with sec. 13(1)(d) of the Act. For the AY 2010-11 also, it was found that repayments were made to the Social Forum Kuris and there is no investment in the chits. Perusal of balance sheet as on 31.03.2010 reveals that the assessee is liable for Rs..1,30,724/- to the Social Forum Kuris and there is no investment on the asset side of the balance sheet as on 31.03.2010. Perusal of receipts and payments a/c as on 31.03.2010 reveals that payments .....

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in the receipts and payments account as on 31.03.2010 also the payments were made to social form chit account which is nothing but repayments. Therefore, the ld. CIT(A) has held that the assessee has not made any investment in violation of section 11(5) r.w.s. section 13(1)(d) of the Act. The ld. DR could not controvert the above findings of the ld. CIT(A). Accordingly, we find no infirmity in the order passed by the ld. CIT(A) and dismiss the ground raised by the Revenue. 9. With regard to loa .....

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) of the Act. The loan of ₹ 40 lakhs was given to M/s. Pavanatma Provincial House and received back by the assessee as the purpose for which the loan taken was not served. The balance sheet of Pavanatma Provincial House reflects the transaction as a liability due to the assessee as on 31.03.2010. Therefore, the ld. CIT(A), by following the decision of the Lucknow Bench of the ITAT in the case of Kanpur Subash Shiksha Samiti v. DCIT in ITA No. 456 (Luck)/2010 for the assessment year 2006-07 .....

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the amount advanced is only a temporary loan transaction between the charitable organizations registered under section 12A(a) of the Act as no benefit was accrued to any of the interested persons in the transaction done. 10. Before us, the ld. Counsel for the assessee has strongly contended on the findings of the Assessing Officer in the assessment order at para 4.2 that the objects of the giver and receiver are not symmetric is not correct. In this connection, he referred to paper book page No .....

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ety 326 ITR 146 is squarely applies to the facts of the present case. He further submitted that all the particulars as filed before the Tribunal in the paper book were duly furnished before the authorities below. We find force in the arguments of the ld. Counsel for the assessee. Initially, M/s. Pavanatma Provincial House has obtained the above interest free loan of Rs..40 lakhs from the assessee for reconstruction work of St. Don Bosco Girls High School and since the above purpose was not mater .....

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