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2016 (7) TMI 96 - ITAT JAIPUR

2016 (7) TMI 96 - ITAT JAIPUR - TMI - Rate of tax where the Benefit of Section 11 denied - violation of Sec. 13 - Held that:- It is undisputed fact that during the year, the assessee has shown surplus income over the expenditure at ₹ 20,51,064/-. There is violation of Sec. 13 that the assessee had made advances to the office bearer, which was coming as opening from 01/4/2008 and also as on 31/3/2009 for ₹ 1,54,880/- . The assessee’s explanation was that it was advances for payment wa .....

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n 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 - ITAT JAIPUR) are squarely applicable. Accordingly, the ld Assessi .....

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pur for the assessment year 2009-10 wherein the assessee raised following ground as under: As per consolidated income and expenditure account of RBN Samiti, gross receipts of society from operation have been shown at ₹ 1,42,878,550/- against which after claiming all the expenses surplus of ₹ 20,51,064/- has been shown. Ongoing threw the records the A.O. found certain payments are made to the office bearers of society which he has considered it as payment made for personal benefits of .....

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urplus 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 .....

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same has been as opening balance as on 01/4/2008 and no payments were made to any of them during the year 2008-09. As such the opening balance was also the closing balance in these accounts. Since all of the above persons being office bearers of the assessee society are covered U/s 13(3) of the Act and provisions of Section 13(1)(c) and 13(2)(a) comes into operation. He has reproduced provisions of Section 13(1) and 13(2) of the Act and gave reasonable opportunity of being heard to the assessee .....

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e 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 a .....

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ase of society. Accordingly he has not given benefit of Section 11 and held surplus of ₹ 20,51,064 as taxable. 3. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld CIT(A), who had dismissed the appeal of the assessee by observing that the society is engaged in the providing education. As on 01/4/2008 the assessee society had shown advances to the three persons for ₹ 1,54,880/-, which was also outstanding as on 31/3/2009. The assessee .....

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of the assessee. 4. Now the assessee is in appeal before us. The ld AR of the assessee has submitted that 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 .....

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ent proceedings. Therefore, there is no violation of provisions of Section 13 of the Act. Without prejudice to above submission, it was further argued that if the assessee violated the provisions of Section 13 and entire surplus cannot be charged to tax but only that part of the income, which is not exempt U/s 11 by virtue of clause (c) or clause (d) of Section 13(1) shall be charged to tax at Maximum Marginal Rate (MMR). He has also referred Section 164 deals with charge of tax where the shares .....

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erefore, entire surplus amount cannot be taxed @ MMR.. This principle has been laid down by the Hon ble Karnataka High Court, affirmed by the Hon'ble Supreme Court, which was followed by the Jurisdictional ITAT, Jaipur Bench in number of cases. He has further relied on the decision in the case of DIT Vs Working Women s forum (2015) 235 Taxman 516 (SC) 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 divid .....

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eth Mafatlal Gagalbhai Foundation Trust 249 ITR 533 (Bom) He further argued that this issue has also been considered by the Hon ble ITAT, Jaipur Bench, Jaipur in the case of M/s Santokba Durlabh Ji Trust Fund Vs ITO in ITA No. 169/JP/2112 order dated 5/11/2014 for A.Y. 2008-09 and in the case of M/s Rajkala Charitable Trust Vs ACIT in ITA No. 140/JP/2015 dated 28/4/2016. The ld AR finally requested to direct the Assessing Officer to allow exemption U/s 11 and in case of assessee held that provis .....

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