TMI Blog2016 (7) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... e office bearer for the purposes of services rendered by the third person to the assessee society as same has been adjusted in the month of April, 2011. Therefore, it is clear cut default U/s 13 but as various ITATs as well as Hon'ble High Courts held that if there is violation of Section 13 read with Section 11, MMR can be applied to that sum, which was considered U/s 13 as violated during the year, the assessee’s advance ₹ 1,54,880/-. Therefore, by following the decision cited by the assessee particularly decision of Hon'ble Supreme Court in the case of DIT Vs Working Women’s Forum (2015 (9) TMI 1447 - SUPREME COURT) and Jurisdictional ITAT decision in the case of M/s Santokba Durlabh Ji Trust Fund Vs ITO (2014 (11) TMI 444 - IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e accounting treatment thereafter, which was not considered by him and assessed the society at surplus shown in the income and expenditure account oat ₹ 20,51,064/-. 2. The assessee society filed its return for A.Y. 2009-10 on 29/09/2009 declaring NIL income. The case was scrutinized U/s 143(3) of the Income Tax Act, 1961 (in short the Act). The ld Assessing Officer observed that the assessee is a registered society constituted on 24/11/1967 which was registered U/s 12A of the Act by the CIT w.e.f. 31/1/2002 vide certificate issued on 14/6/2002. The society is also registered U/s 80G of the Act vide certificate issued on 13/9/2007. The ld Assessing Officer further held that on examination of books of account, it is found that cer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even then the amount of remand with the office bearer for a period of more than one year. This is clear violation of Section 13(2)(a) of the Act. The submission made by the assessee is also not reliable. Since the books of account for A.Y. 2009-10 and 2010- 11 had already been closed. Hence the assessee had no option but to show the adjustment entry in April, 2011 as only the current year books of account can be modified. The assessee had declared surplus of ₹ 20,51,064/- in the consolidated income and expenditure account for the year ended on 31/3/2009. Since the benefit of Section 11 was not given by the Assessing Officer and assessee is not allowed to accumulate 15% of income. The application of the income against the investment in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee society made advances to Smt. Manjulata Sharma, Shri Manoj Kumar Sharma and Shri Kanta Prasad Mishra in previous year and not in the year under consideration. The advances were given to them for making onwards payment to certain parties from whom the society had obtained services or for repayment of unsecured loan taken from some persons. ₹ 68,000/- was paid to Shri Manoj Kumar Sharma for repayment of unsecured loan taken by the society from various persons, which was adjusted in the books of account on 15/4/2011. ₹ 50,000/- was paid to Shri Kanta Prasad Mishra and ₹ 36,880/- to Smt. Manjulata Sharma for making onwards payment to Shubh Advertising and Marketing/Bhavana Traders, which was utilized for that pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C) decision dated 18/9/2015 wherein it has been held that there is violation of Section 13, the assessee would result in MMR of tax only on dividend income on shares, which was not the recognized mode of investment and that the assessee would not be vested with marginal rate of tax on entire income. He further relied on the following case laws:- (i) CIT Vs Fr. Mullers Charitable Institutions (2014) 227 Taxman 369 (Hon'ble Supreme Court) decision dated 19/9/2014. (ii) Cit Vs. Fr. Mullers Charitable Institutions (2014) 363 ITR 230 (Kar.) (iii) CIT Vs. Orpat Charitable Trust (2015) 230 Taxman 0066 (Guj) (HC). (iv) DIT (Exemption) Vs. Sheth Mafatlal Gagalbhai Foundation Trust 249 ITR 533 (Bom) He further argued that this issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese amounts were really provided and kept with the office bearer for the purposes of services rendered by the third person to the assessee society as same has been adjusted in the month of April, 2011. Therefore, it is clear cut default U/s 13 but as various ITATs as well as Hon'ble High Courts held that if there is violation of Section 13 read with Section 11, MMR can be applied to that sum, which was considered U/s 13 as violated during the year, the assessee s advance ₹ 1,54,880/-. Therefore, by following the decision cited by the assessee particularly decision of Hon'ble Supreme Court in the case of DIT Vs Working Women s Forum (supra) and Jurisdictional ITAT decision in the case of M/s Santokba Durlabh Ji Trust Fund Vs IT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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