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2019 (12) TMI 151

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..... adequate security and adequate interest, the legal fiction in Sub-section (2) of section 13 of the Act would come into play and the income or property of the institution shall, for the purpose of Clause (d) of sub-section (1) of section 13 of the Act, be deemed to have been applied for the benefit of the prohibited category of persons under Sub-section (3) and thereby, the Hon’ble Supreme Court affirmed the view of the Assessing Officer. The decision of the Hon’ble Jurisdictional High Court in the case of CIT v. Working Women’s Forum [2014 (8) TMI 681 - MADRAS HIGH COURT] is not in favour of the Revenue, wherein, it was held that denial of exemption should only be to the extent of the income which is violative of section 1 .....

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..... 12.09.2011 for the assessment year 2011-12 declaring NIL income. The case was selected for scrutiny and the assessee filed particulars and records as called under statutory notices. On verification of details filed by the assessee and considering the submissions, by denying the exemption under section 11 of the Act, the Assessing Officer held that the assessee has violated the provisions of section 13(1)(c) of the Act and accordingly completed the assessment by assessing the total income of the assessee at ₹.1,56,95,060/-. On appeal, after considering the submissions of the assessee, the ld. CIT(A) has held that the assessee is eligible for exemption under section 11 of the Act and directed the Assessing Officer to verify whether 85% .....

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..... under section 11 of the Act. It was the submission before the ld. CIT(A) that the assessee had not claimed any expenditure pertaining to M/s. Sri Renugambal Travels. It was further submission that the trust is operating buses to transport the students at free of cost. In case of breakdown, the Managing Trustee offers the vehicles of his own transport business to ferry the students. Further, it was submitted that the Managing Trustee never utilized the transport service of the trust for his personal purpose or his own business purpose. It was submission that the Assessing Officer has mistakenly taken into account some vouchers belonging to Sri Renugambal Travels, which were mixed up with the vouchers of trust and came to a conclusion that s .....

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..... ption under section 11 of the Act, the ld. CIT(A) has failed to consider the decision of the ITAT, Chennai in the case of DDIT(E) v. Paramasiva Naidu Muthuvel Raj Education Trust (supra), wherein the Tribunal has considered the decision in the case of CIT v. Fr. Mullers Charitable Institutions [2014] 363 ITR 230 (Kar.) and in the case of CIT v. Working Women Forum [2014] 363 ITR 353 (Mad.). We have gone through the case law relied on by the Department in the grounds of appeal and find that in the case of DDIT v. Paramasiva Naidu Muthuvel Raj Education Trust (supra), it is clear cut case of violation of provisions of section 13(1)(c) of the Act since in that case it was an undisputed fact that during relevant assessment year, the land had be .....

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..... similar to that of the case of DDIT(E) v. Paramasiva Naidu Muthuvel Raj Education Trust (supra). In the case of DIT v. Bharat Diamond Bourse (supra), in the previous year relevant to the assessment year 1989- 90, the assessee had advanced an amount of ₹. 70 lakhs to one Bharat Shah without interest and security and even without entering into a written agreement with the said Bharat Shah. The said Bharat Shah was one of the signatories to the Memorandum of Association of the assessing Company and also the Honorary Secretary of the Institution. For this reason, the Assessing Officer was of the view that Bharat Shah was a person belonging to the prohibited category within the meaning of section 13(3)(a) and section 13(3)(cc) of the Act a .....

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