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DDIT (E) -I Kolkata Versus Sasha Association for Craft Products

Exemption u/s 11 - Investment in shares in a Private Limited Company - Held that:- Investment in shares in a Private Limited Company if made out of the profit of business then the exemption benefit shall not be denied to the assessee. In the instant case the assessee claimed to have made the investment out of the fund representing the profit and gains of assessee’s business and the Ld. DR failed to bring anything on record contrary to the point of argument of the ld. AR. Accordingly, in our cons .....

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pany. Therefore, in the instant case benefit under section 11 of the Act cannot be denied.

Similarly, we also find that the assessee has been claiming the exemptions benefit under section 11 of the Act for the last several years but the same was not denied therefore in our view principle of consistency should be applied in the instant case. - Decided in favour of assessee. - ITA No.914/Kol/2013 - Dated:- 27-4-2016 - Shri Waseem Ahmed, Accountant Member and Shri S.S.Viswanethra Ravi, J .....

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raised by Revenue are reproduced below:- 1. That on the facts and the circumstances of the case and also in the question of law, the Ld. CIT(A)/Jalpaiguri erred in holding that though no resjudicata or estoppels applies in Income Tax proceedings, consistency should be maintained in assessments. 2. That on the facts and the circumstances of the case, the Ld. CIT(A)/Jalpaiguri erred in holding that investment in the Share Capital of a private Limited Company out of income set apart us. 11(20(b) d .....

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ng on behalf of Revenue. 2. The facts in brief are that the assessee in the present case is a registered charitable society and having registration under section 12A of the Act vide-no. 80E/209/88-89 dated 28-11-1990. The main activity of the society is to help the artisans and handicrafts people in terms of their enterprise development, skill and technical up-gradation so as to promote their products in the National and International market. For achieving the desired object of the society, the .....

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he shares of the company in the agreed ratio. The assessee made its representatives as Director in the private limited company and these representatives were directors in the company without any shareholdings. The society (assessee) acquired 1 lac shares @ ₹ 10.00 per share, total value ₹ 10 lacs. During assessment proceedings, Assessing Officer found that the investment of ₹ 10 lacs made by the assessee in the company is in contravention of the provisions of Section 11(5) of t .....

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was possible to have the perfect knowledge about the requirement and information regarding the design of the product and reasonable pricing of the product in foreign market. 3) The directors of the company Shri P.S. Chawla and Smt. Roop Mehta are the representative of the society and they have no substantial interest in the company so there is no violation of section 13(2)(h) of the Act. 2.1 However the AO disregarded the plea of the assessee by holding that as per the provisions of section 13(3 .....

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ied to the assessee. 3. Matter was carried before the First Appellate Authority, wherein various contentions were raised on behalf of the assessee and having considered the same the Ld CIT(A) deleted the addition made by the AO on the issue by observing as under : … …. I have also considered the submissions of the appellant that the contribution to share capital was made in the assessment year 2005-06 and in all the assessments thereafter except the AY in question, on same set of f .....

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inciples laid down by the Hon Supreme Court, in the case of Radho SamiSatsang 193 ITR page 321, consistency should have been maintained. In the said judgment the Hon Supreme Court laid down that the principles of resjudicata or estoppels does not applied to income tax proceedings but a decision taken in other years on same set of facts should not be disturbed and the principles of consistency should be followed. In view of the above, the AO is directed to allow the exemption u/s. 1 of the appell .....

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property held under assessee-trust includes business undertaking and benefits of income exemption u/s 11 of the Act will be equally applied to such undertaking if the business is incidental to the attainment of objective of the trust and separate books of accounts are maintained in respect of such business as per section 11(4A) of the Act. The Ld. AR further submitted that in the instant case the provision of section 13(1)(d)(iii) shall not be applied as per the proviso attached to this section .....

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ons of that Section 11(5) of the Act. However the Ld CIT(A) granted the relief to the assessee on the ground that the investment in share capital was made in the assessment year 2005-06 and the exemption benefit has not been denied in the earlier assessment years also and subsequent assessment year 2009-10 so there is consistency in claiming the exemptions benefit u/s 11 of the Act. Now the question before us arises whether the investment made in the share capital of a Private Limited Company by .....

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in the case of a trust for charitable purposes or a charitable institution created or established after the commencement of this Act, any income thereof if the trust or institution is created or established for the benefit of any particular religious community or caste; (c) …. … (d) in the case of a trust for charitable or religious purposes or a charitable or religious institution, any income thereof, if for any period during the previous year - (i)any funds of the trust or instit .....

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A) Shares in a public sector company; (B) Shares prescribed as a form or mode of investment under clause (xii) of sub-section (5) of section 11, are held by the trust or institution after the 30th Provided that nothing in this clause shall apply in relation to - (i) Any assets held by the trust or institution where such assets form part of the corpus of the trust or institution as on the 1st day of June, 1973; (ia) any accretion to the shares, forming part of the corpus mentioned in clause (i), .....

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er the expiry of one year from the end of the previous year in which such asset is acquired or the 31st day of march, [1993], whichever is later;] (iii) Any funds representing the profits and gains of business, being profits and gains of any previous year relevant to the assessment year commencing on the 1st day of April, 1984 or any subsequent assessment year. Explanation.- Where the trust or institution has any other income in addition to profits and gains of business, the provisions of clause .....

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hing on record contrary to the point of argument of the ld. AR. Accordingly, in our considered view, we find that there is no violation of the provisions of Section 13 of the Act and the assessee is entitled for exemptions under section 11 of the Act. We also find that the Private Limited Company was formed for the furtherance of the objects of the assessee and both the societies were the shareholders in the company. None of the Director had any substantial interest in the company. The members o .....

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ucational Society does not violate s. 13(1)(d) r/w s. 11(5) of Act, 1961 as the said loan was neither an "investment" nor a "deposit". This is more so as both the societies had similar objects and were registered under s. 12A of Act, 1961 and had approvals under s. 80G of the Act, 1961. The fact that the loan was interest-free and had been subsequently returned is also significant. In view of the order passed by the CIT(A) in the case of Nav Bharati Educational Society, Ms. B .....

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