TMI Blog2016 (4) TMI 1337X X X X Extracts X X X X X X X X Extracts X X X X ..... this case that there is a violation of sec. 13(1)(c) of the Act as the assessee invested funds in a limited company where the trustee is the Managing Director and his wife is a Director - decided against assessee. - I.T.A. No.1894/Mds/2015 - - - Dated:- 26-4-2016 - Shri Chandra Poojari, Accountant Member Shri Duvvuru RL Reddy, Judicial Member For the Appellant Shri G. Baskar, Advocate For the Respondent : Shri A. B. Koli, JCIT ORDER PER DUVVURU RL REDDY, JUDICIAL MEMBER: This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals) 17, Chennai dated 20.02.2015 relevant to the assessment year 2011-12. The only effective ground raised in the appeal of the assessee is with regard to confirmation of disallowance under section 11(5) of the Income Tax Act, 1961 [ Act in short]. 2. Brief facts of the case are that the assessee is a public charitable trust registered under section 12AA of the act and engaged in yeoman service, generally and specially to orphanages, hospitals, churches and education. The assessee has filed its return dated 29.09.2011 declaring NIL income. The return filed by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cannot be allowed as expenditure. Accordingly, the ld. CIT(A) confirmed the order of the Assessing Officer. On an identical issue and similar facts and circumstances, the Coordinate Bench of the Tribunal in the case of DDIT(E) v. The India Cements Educational Society in I.T.A. No. 1525/Mds/2010 order dated 20.01.2016 [(2016) 46 ITR (Trib) 80 (Chennai) has observed and held as under: 3. We have heard both the parties and perused the material available on record. In this case, the assessee advanced an amount of ₹.39,66,50,000/- on 30.6.2006 to M/s Anna Investment Pvt. Ltd. and the capital gain arising on sale of land at Navalur Egattur and Thalambur during the financial year on 31.3.2007. M/s Anna Investment Pvt. Ltd have returned the money on 31.3.2009 and the said amount was not invested in new asset within the previous year, therefore, exemption u/s 11(1)(a) is not available to the assessee. The contention of the ld. A.R of the assessee is that only that amount of capital gain to be taken out of the total income of the assessee and the assessee is entitled for exemption u/s 11 on the balance amount of the income and the capital gain only to be taxed in terms of sec. 16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... religious institution, any income thereof- (i) if such trust or institution has been created or established after the commencement of this Act and under the terms of the trust or the rules governing the institution, any part of such income enures, or (ii) if any part of such income or any property of the trust or institution (whenever created or established) is during the previous year used or applied, directly or indirectly for the benefit of any person referred to in sub-section (3) : Provided that in the case of a trust or institution created or established before the commencement of this Act, the provisions of sub-clause (ii) shall not apply to any use or application, whether directly or indirectly, of any part of such income or any property of the trust or institution for the benefit of any person referred to in sub-section (3), if such use or application is by way of compliance with a mandatory term of the trust or a mandatory rule governing the institution : Provided further that in the case of a trust for religious purposes or a religious institution (whenever created or established) or a trust for charitable purposes or a charitable institution created or esta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is against the assessee. 6. The next contention of the assessee is that only that portion of income i.e capital gain to be considered for tax in terms of sec. 112 of the Act at maximum marginal rate as proposed by the Assessing Officer. In our opinion, this argument of the assessee is misplaced. Sec. 164(2) of the Act reads as follows: (2) In the case of relevant income which is derived from property held under trust wholly for charitable or religious purposes, or which is of the nature referred to in sub-clause(iia) of clause(24) of section 2, or which is of the nature referred to in sub-section(4A) of section 11, tax shall be charged on so much of the relevant income as is not exempt under section 11 or section 12, as if the relevant income not so exempt were the income of an association of persons: Provided that in a case where the whole or any part of the relevant income is not exempt under section 11 or section 12 by virtue of the provisions contained in clause(c) or clause(d) of subsection( 1) of section 13, tax shall be charged on the relevant income or part of relevant income at the maximum marginal rate. 7. The provision of section 164(2) is concerned with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch has not considered the meaning of maximum marginal rate as defined in sec. 2(29C) of the Act which reads as follows: 2(29C) maximum marginal rate means the rate of incometax( including surcharge on income-tax, if any) applicable in relation to the highest slab of income in the case of an individual[association of persons or, as the case may be, body of individuals] as specified in the Finance Act of the relevant year] 9. Being so, the above two decisions of the Mumbai Bench cannot be said that they laid down correct proposition of law. Hence, these are not considered. Therefore, the benefit of sec. 112 of the Act so as to assess the gain from the transfer of the capital asset cannot be given to the deemed AOP. Accordingly, this appeal of the Revenue is allowed. 8. Accordingly, respectfully following the decision of the Coordinate Bench of the Tribunal in the case of DDIT(E) v. The India Cements Educational Society (supra), we confirm the order passed by the ld. CIT(A) and dismiss the appeal filed by the assessee. 9. In the result, the appeal filed by the assessee is dismissed. Order pronounced on the 26th April, 2016 at Chennai. - - TaxTMI - TMITax - Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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