TMI Blog2021 (2) TMI 680X X X X Extracts X X X X X X X X Extracts X X X X ..... 13(3), the disallowance u/s. 11 is limited only to the amount which the assessee trust has diverted for purchase of a car in the name of trust, i.e. ₹ 9,56,175/-. Considering the above, we direct the Assessing Officer to restrict the disallowance to the extent of ₹ 9,56,175/- and not to disallow the entire accumulation as held by the Ld. CIT(A). We are of the view that no error, not to speak of any error of law, could be said to have been committed by the Tribunal in passing the impugned order. - R/TAX APPEAL NO. 368 of 2020 - - - Dated:- 4-12-2020 - HONOURABLE THE CHIEF JUSTICE MR. JUSTICE VIKRAM NATH AND HONOURABLE MR. JUSTICE J.B.PARDIWALA MRS MAUNA M BHATT FOR THE APPELLANT ORAL JUDGMENT PER : HONOUR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has forfeited all the exemptions under Section 11 and 12 of the Act as provisions of Section 13(1)(c) of the Act are applicable ? (D) Whether on the facts and circumstances of the case and in law, the Appellate Tribunal was justified in restricting the disallowance of accumulation u/s 11(1)(a) to the extent of ₹ 9,56,175/- without appreciating the fact that the assessee has forfeited all the exemption under Section 11 and 12 of the Act as the provisions of Section 13(3) are applicable ? 3. It appears from the materials on record that the assessee filed its return of income for the Assessment Year 2011-12 on 18th August 2011, declaring the total income at Rs.NIL in the status of Association of Persons (Trust). The retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with Section 147 of the Act 1961 was erroneous and prejudicial to the interest of the Revenue. 6. The assessee, being dissatisfied with the decision of the CIT(E), filed appeal before the appellate tribunal. The appellate tribunal directed the Assessing Officer to restrict the disallowance to the extent of ₹ 9,56,175=00 and not disallow the entire accumulation as held by the CIT(E). 7. Ms.Mauna Bhatt, the learned senior standing counsel appearing for the Revenue submitted that, in accordance with the provisions of Section 13(1)(c)(ii) read with Section 13(2) of the Act 1961 if any part of the income or any property of the Trust or Institution is directly or indirectly used or applied for the benefit of any specified person refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as passed on 7th February 2014 determining the total income at Rs.Nil. The case was reopened u/s 147 and the re-assessment was finalized on 6th December 2016 determining the total income at Rs.Nil after disallowing ₹ 8,82,707/-, the expenditure made for the purpose of a car in the name of trustee. During the course of re-assessment proceedings, the Assessing Officer has disallowed the expenditure of ₹ 8,82,707/- on account of accumulation u/s. 11(1)(a) which could have been at ₹ 9,57,175/-, therefore, there have been less dis-allowance to the extent of ₹ 73,468/-, however, the Ld. CIT(E) vide order u/s. 263 of the Act dated 22nd March 2019 has held that if any part of income or any property of other trust or the inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly to amount which was diverted for purchase of car in name of prohibited person, i.e., trustee of assessee, in violation of Section 13(2)(b) Held, yes (Paras 5 and 8) (In favour of assessee). After considering the judicial pronouncements of Hon'ble High Court of Bombay and Hon'ble High Court of Karnataka as supra on the identical issue on similar facts, we consider that in the case of the assessee on violation of Section 13(1) (c)(ii)/13(2) r.w.s. 13(3), the disallowance u/s. 11 is limited only to the amount which the assessee trust has diverted for purchase of a car in the name of trust, i.e. ₹ 9,56,175/-. Considering the above, we direct the Assessing Officer to restrict the disallowance to the extent of ₹ 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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