TMI Blog2012 (3) TMI 533X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee society has not obtained the mandatory approval under S.10(23C)(vj), though its receipts exceeded ₹ 1 crore during the year. Accordingly, the assessing officer opined for the very non-receipt of such notification from the prescribed authority, it was not entitled for exemption under S.10(23C)(vi). 3. Further, the assessee submitted that since it was registered under S.12A, the provisions of S.11 to 13 are applicable to its case. The assessing officer did not grant exemption to the assessee society under S.11 of the Act also, on the ground that it is an educational institution and entitled for exemption only under S.10(23)(vi) of the Act, and as the assessee has not got the approval under S.10(23C)(vi) it was as such not en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... guments with regard to denial of exemption under S.11 of the Act, on account of investments made, in the following manner- (a) Investments in violation of the modes specified under S.11(5) apply only to such funds which are accumulated or set apart within the meaning of S.11(2)(b). It was further submitted that provisions of S.11(2)(b) could only apply when the assessee does not spend 85% of the income derived by it, and such amount in excess of 85% is put in deposit. In the case of the assessee, aggregate receipt was ₹ 9,96,59,046, whereas the expenditure on revenue account and capital account aggregate to ₹ 10,42,19,104. It was submitted that since the assessee had already spent 85% of the receipts for its activities, the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons made by the assessee to the chit funds are to be considered as investments only. He did not find any merit in the contention of the assessee that chit fund contributions were made so as to arrange for working capital. Further, the CIT(A) held that since the assessee failed to comply with the basic pre-condition of keeping its funds in any of the modes specified in S.11(5), assessee was not entitled to claim exemption under S.11 of the Act, even alternatively. 9. We heard the parties. The provisions of S.11 to 13 would apply to the assessee, as they have not obtained approval under S.10(23C). According to S.13(1)(d), in the case of a trust for charitable or religious purpose or a charitable religious institution, any income thereof fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which we find that there have been substantial payments. However, there are certain receipts also. The ratio of the decision of the Visakahaptnam Bench of the Tribunal in the case of Priyadarshini Educational Academy (supra) is that if the borrowing activity outweighs the savings activity, then the contributions will tantamount to repayment of loan and the corollary is that if the savings activity outweighs the borrowings activity, then the contributions would partake the character of investment. In the present case, in the circumstances of the case, there is need to examine the nature of the activity of the assessee in relation to chits, so as to determine whether the activity of the assessee tantamount to savings/investment activity or r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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