TMI Blog2018 (10) TMI 1919X X X X Extracts X X X X X X X X Extracts X X X X ..... entire income of the assessee and at the most dividend on shares would lose the benefit of exemption. In view of the above, we restore the issue to the file of the Assessing Officer with a direction to find out the dividend income, if any, out of these shares including that of value of bonus shares that were received/obtained during the year and bring the same to tax. We hold and direct accordingly. Investment in share in Co-operative Society are covered under section 13(1)(d) - HELD THAT:- Provisions of section 13(1)(d) cannot be invoked vis- -vis investment in share in Co-operative Society. Since the assessee has not violated the provisions of section 13(1)(d) of the Act, the assessee cannot be denied the benefit of section 11 of the Act. Following the same parity of reasoning as held while deciding the assessee s appeal in A.Y.2006-07 [ 2016 (12) TMI 1567 - ITAT PUNE] we uphold the order of CIT(A) and thus, the ground of appeal raised by Revenue is dismissed. Disallowance of expenditure for it being of prior period - Addition on the basis of the report of Special Auditor appointed under Sec.142(2A) - as contented expenditure related to earlier period but since the li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals), Central, Pune dated 14.10.2014 for A.Y. 2008-09 2009-10 respectively. Since all the appeals are interconnected, all these appeals are heard together. We first take up the appeal for A.Y.2007-08. 2. The facts as culled out from the material on record for AY 2007-08 are as under. Assessee is a trust whose aims and objects are stated to include imparting education, running educational institutions. Assessee filed its return of income for A.Y. 2007-08 on 31.10.2007 showing Nil taxable income. The case was selected for scrutiny and thereafter the assessment was framed under section 143(3) of the Act vide order dated 31.12.2009 and the total income was determined at ₹ 31,06,59,700/-. Aggrieved by the order of Assessing Officer (AO), Assessee carried the matter before CIT(A), who vide order dated 31.10.2014 (in appeal No. PN/CIT(A)- CENTRAL/DCIT Cen. Cir. 2(2)/1188/2009-10) granted partial relief to the Assessee. Aggrieved by the order of Ld CIT(A), Assessee and Revenue are now in appeal before us. The grounds raised by the Assessee in appeal No 2075/PUN/2015 reads as under. 1. On the facts and in the circumstances of the case the CIT(A) has erred in not appre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of rent considering only one limb of the Hon'ble ITAT's order no.149/PN/2010 dtd. 31/03/2012 regarding the existence of M. N. Navale (bigger HUF), however has entirely overlooked the other limb of the said order wherein the Hon'ble ITAT had directed the AO to examine the veracity of source of investment in the properties by the Bigger HUF which were let out on rent to the assessee. 4. On the facts and in the circumstances of the case, the Ld. CIT (A) was not justified in deleting the addition made by the AO on account of Investment in shares of Co-operative bank and Public Limited Companies by not. appreciating the Facts that the assessee had contravened the provisions of Section 13(1)(d) for the reason of investment in shares of co-operative bank and Public Limited Companies as these are not specified in section 11 (5) of the Act. The Ld. CIT (A) has also not appreciated the fact that similar addition made in A.Y. 2006-07 with respect to investment in shares of Cooperative Banks which has been confirmed by Ld. CIT (A). Further, the Ld. CIT (A) has not considered the amended provisions of section 13(1)(d)(iii) of the Act with respect to investment in shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He, therefore, held that the Assessee is to be assessed like any other assessee and no benefit u/s. 11 12 were available to Assessee and accordingly treated the Assessee to be as Association of Persons (AOP) . Aggrieved by the order of Assessing Officer, Assessee carried the matter before CIT(A) who granted partial relief to the Assessee by following his own order in Assessee s own case for AY 2008-09. The relevant observations of the Ld. CIT(A) are as under: 6. Grounds No.1 (a) and 2(c): Under these grounds of appeal it is contended that the AO erred in holding that the appellant had contravened the provisions of section 13(1)(c) by reason of payment of excess rent to Shri M. N. Navale and that no disallowance under section 40A(2)(b) was called for on account of the rents paid to Shri M.N.Navale. This ground is identical to Ground No.1 (a) and 2(b) of appeal for AY. 2008-09. Hence, the ratio of decision for AY 2008-09 applies equally to this AY too. 6.1 In view of the detailed discussions in my order in the appellant s own case for A.Y 2008-09, the additional made by the Ld. AO vis-a-vis the properties at Flats No.7, 8 9, Geeta Building, Sion, Mumbai and Farm House at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... F out of its agricultural holdings to the Ld. AO That exercise for quantification by the AO of income potentially earned by the HUF and the assets acquired by the HUF out of the same, is still underway. From the point of view of the issue at hand, however, the significant fact to be noted is that ITAT categorically held that the Compromise Decree passed by the Civil Court, Pandhapur is sacrosanct and binding upon the department so far as the quantity allocated by the Hon'ble Court, Pandharpur are concerned. . Having perused a copy of the said Compromise Decree, I find that the properties under contention namely Flat No. 7,8 9, Geeta Building, Sion, Mumbai and the property at Warje ( NDA Road) are listed as properties of the M.N Navale ( Bigger HUF) which have been partitioned among the smaller HUFs. Such being the facts, respectfully following the decision of jurisdictional bench of ITAT which still holds the field notwithstanding the department s appeal before the Hon'ble High Court. I hereby uphold the appellant s contention and delete the addition worked out by the Ld. AO on account of excess rent paid to the bigger HUF. It is also correct that the said Bigger HUF do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given careful consideration to the appellant's submissions on this issue. There is little doubt that the rental value of any property would depend on a number of factors including some of the factors listed by the appellant At the same time, however, where the owner and the tenant were closely related and there is a strong reason to believe that the transaction was not at arm's length, there is little option with the AO but to estimate the fair rent In this context I do not find any fundamental infirmity in the AO's reliance upon the judgment of the Allahabad High Court. I also find that my predecessor while deciding the appeal in the appellant's case for A Y 2006-07 had held as follows: 10.11 With regard to the Assessing officer questing the hiring of the Farm House at Village Warje, NDA Road, Pune which was approximately at 10 Kms distance from the campus of the institutions run by the appellant has justified its earlier stand and contented that it was not for the Assessing Officer to suggest that the appellant should have hired halls for meeting and sports complexes for sports meets etc, since commercial expediency is within the purview of a businessman, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot been found to be a worthwhile proposition and experience and it has been experienced that bank fixed deposit have been providing better rates of returns with lesser hassels. 10.13 It is therefore a fact that there are decisions of two different High Courts, in which 7 to 8.4% of the rate of return with reference to the cost of investment in property have been held to be reasonable. It is also noticed that the appellant has not been able to give any contrary decisions of any court of tribunal. 6.11 In view of the my observations as above as well as considering the reasons provided by the CIT(A)-II, Pune in his order extracted above with which I am in full agreement, this argument of the appellant is also hereby rejected. 6.12 The next contention of the appellant is that Shri M.N.Navale was making immense contribution to the management of the affairs of the appellant trust including day to day administration, coordination and liaison, obtaining necessary clearances from government authorities, entering into agreements, pursuing legal matters, managing the financial affairs, acquiring properties, arranging finance, standing guarantee for loans etc. As such he was shoulder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defeating argument to say that since the managing trustee was making a valuable contribution, the trust found a way to compensate him by paying excess rent for the properties owned by him and hired by the trust. It is also true that the case law relied upon by the appellant in his support does not come to his rescue by any stretch of imagination. In that case the issue arose vis- -vis the amount spent by a missionary on maintenance of nuns who had taken vows of poverty, were not supposed to own any worldly wealth, and were not getting any salary. Having considered these facts, the Hon'ble High Court of Madras held that the provisions of S. 13(1)(c) could not be invoked in relation to the amount spent on their maintenance. There are absolutely no parallels between the facts of the case and the present one. Most significantly, amounts spent on subsistence of an individual cannot be equated with rent paid for hiring of properties. As such this argument off the appellant is hereby rejected. 6.14 The next contention of the appellant is that the appellant's contention that the rents were reasonable is backed by valuation reports obtained from Registered Valuer. I have give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 1968 dated 06/07/1968 which mandates that fair market value of the goods, legitimate needs of the business and benefit derived etc. I have given careful consideration to this submission of the appellant. In the said circular, the Board had conveyed that while invoking the provisions of the section the Assessing Officer is expected to exercise his judgment in a reasonable and fair manner and that it should be borne in mind that the section is meant to check evasion of tax through excessive or unreasonable payments to relatives and associate concerns and should not be applied in the manner which will cause hardship in bonafide cases. As discussed in the foregoing paragraphs, the facts of the present case do not speak of a situation where the AO has acted in the manner in which CBDT has spoken of in its circular. For the reasons discussed in detail in the said paragraphs, the applicability of S. 13(1)(c) in the appellant s case is hereby upheld. Accordingly, the appellant cannot draw any support from the said circular. 6.17. In view of the detailed discussions above, the addition made by the Ld. AO vis- -vis the properties at Flats No. 7, 8 9, Geeta Building, Sion, Mumbai and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of ₹ 1,25,000/- and Flat Nos. 7,8, 9 in Geeta Building, Sion, Mumbai on a monthly rent of ₹ 1,56,000/-. According to the Assessing Officer the fair rent should be equal to 7% per annum of the cost of the property in view of the decision of Hon ble Allahabad High Court in the case of Radha Devi Dalmia reported in 125 ITR 134. We find the Ld.CIT(A) enhanced such fair rent to 9% of the cost of property. It is the submission of the Ld. Counsel for the assessee that the rent paid to M.N. Navale (Bigger HUF) in respect of the first two properties are outside the purview of section 13(1)(c). It is also his submission that the CIT(A) in assessee s own case for A.Y. 2007-08 and 2008-09 has held that there is no violation of provision of section 13(1)(c) on account of rent paid to M.N. Navale (Bigger HUF) in respect of the properties being Flat No.7, 8 and 9 at Geeta Building, Bombay and the Farm house at Warje. 83. We find force in the above argument of the Ld. Counsel for the assessee. We find the CIT(A) in assessee s own case for A.Y. 2008-09 vide order dated 14-10-2014 at Para 6.8 of the order has observed as under : 6.8 The first contention of the appellant is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notwithstanding the department s appeal before the Hon. High Court, I hereby uphold the appellant s contention and delete the addition worked out by the Ld. AO on account of excess rent paid to the bigger HUF. It is also correct that the said Bigger HUF does not stand in a relationship specified under section 13(3) of the Act. Therefore, the provisions of section 13(1)(c) will not be attracted vis- -vis these properties. 6.9. . . . . . . . . . . . . . . . 6.17. In view of the detailed discussions above, the addition made by the Ld. Assessing Officer vis- -vis the properties at Flats No.7,8 9, Geeta Building, Sion, Mumbai and Farm House at NDA Road, Warje, Pune are hereby deleted and the additions in respect of the remaining properties are confirmed. For the same reasons, the applicability of S.13(1)(c) in the appellant s case is hereby upheld since a part of the income of the institution was used during the PY for the benefit of a person referred to under section 13(1)(c). Accordingly, these grounds may be treated as partly allowed. 84. We find following the above order the CIT(A) in assessee s own case for A.Y. 2007-08 at Para 6 and 6.1 of the order has observed as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irected the Assessing Officer to adopt 9% of the cost of the property at Karve Road as reasonable rent. While doing so, he has also relied on the decision of the Hon ble Allahabad High Court in the case of Smt. Radha Devi Dalmia reported in 125 ITR 134. In our opinion, the above decision is not applicable to the facts of the present case. In that case, the property was vacant and for the purpose of section 22 of the I.T. Act the notional annual value was required to be decided u/s.23. Under these circumstances the annual value of the property was directed to be determined at 7% of the cost of the property. However, in the instant case the assessee had filed certain details before the CIT(A) for calculation of fair rent of the property which has been ignored by him. Under these circumstances and in the interest of justice, we deem it proper to restore this issue to the file of the CIT(A) with a direction to adjudicate this issue in the light of facts and submissions made and the additional evidences filed before him. The CIT(A) shall give due opportunity of being heard to the assessee and decide the issue as per fact and law. We hold and direct accordingly. 87.1 We may also clari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erving as under: 7. Ground No. 1(b): Under this ground of appeal, the appellant has challenged the AO s action of holding that the appellant had contravened the provisions of S. 13(1)(d) for the reason of investment in shares of cooperative banks and public limited companies. Upon closer perusal it is seen that this ground is identical to Ground No. 1(b) for A.Y. 2008-09. Hence, the ratio of decision for A.Y 2008-09 applies equally to this AY too. 12. While deciding the issue for A.Y 2008-09, the Ld. CIT(A) has observed as under: 7.8 The next issue therefore is applicability of the said provision, namely, S. 13(1) (d) vis- -vis Shares held in Public Limited Companies. In this regard, the appellant vide submission dated 14.03.2012 has enclosed a list of the shares acquired. It is contented that there are the shares of different companies having different activities. The quantity of the shares acquired was hardly in the range of 1 to 5 shares. The total cost invested ₹ 1,50,000/- as against the total outlay of the appellant institution of ₹ 413.56 Crore. From this , the appellant states, it is crystal clear that the cost of shares in Public limited Co. is too ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Y 2006-07, the ground be allowed. Ld DR on the other hand supported the order of Assessing Officer and further submitted that once there was violation of the provisions of Section.13(1)c) rws 13(2)(a) to 13(2)(h) of the Act, for diversion of income or part of the income for the benefit of the interested persons as prescribed under Section 13(3) of the Act, the Assessee would forfeit the benefit of exemption under Section 11 and 12 of the Act on the entire income and no benefit of application of income can be given. 14. We have heard the rival submissions and perused the material on record. We find that identical issue arose in Assessee s own case in A.Y 2006-07 and the issue was decided by the Co-ordinate Bench of the Tribunal by observing as under: 128. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We find the assessee in the instant case is holding 220 shares ranging from 1 to 15 in different limited blue-chip companies. Although the Assessing Officer has not discussed the issue in the body of the assessment order, however, on the basis of the information provided b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted companies, this ground of appeal may be treated as partly allowed. 130. We find the CIT(A) has also followed the same view in A.Y. 2007-08. It was brought to our notice by the Ld. Authorised Representative that the Revenue has not gone on appeal on this issue. 131. While deciding the additional ground No.3 we have already held that there cannot be wholesale denial of exemption of the entire income of the assessee and at the most dividend on shares would lose the benefit of exemption. In view of the above, we restore the issue to the file of the Assessing Officer with a direction to find out the dividend income, if any, out of these shares including that of value of bonus shares that were received/obtained during the year and bring the same to tax. We hold and direct accordingly. Ground of appeal No.8 by the assessee is accordingly partly allowed for statistical purposes. 15. Before us, the submission of the Ld AR that the facts in the year are identical to that of AY 2006-07 has not been controverted by Revenue. Further, Revenue has not pointed any distinguishing feature in the facts of the present case and that of AY 2006-07. We find that the co-ordinate Bench while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt order either as regards the fact that the investment were utilized for the objects of the trust. In view of these facts, I find the contention of the appellant acceptable and accordingly, hold that section 13(1)(d) cannot be allowed invoked vis a vis the investments in shares of cooperative society. 123. In the instant case also the Ld. Counsel for the assessee substantiated that the shares were obtained on account of loans availed. He has also filed a chart showing that after the loans were repaid, the shares were subsequently redeemed in May 2010 and July 2010. Therefore, considering the totality of the facts of the case and relying on the decision of Hon'ble Bombay High Court cited (supra), we hold that the assessee has not violated the provisions of section 13(1)(d) by investing in shares of cooperative banks from which it has taken loans. Therefore, the assessee cannot be denied the benefit of section 11. Ground raised by the assessee is accordingly allowed. Provisions of section 13(1)(d) cannot be invoked vis- -vis investment in share in Co-operative Society. Since the assessee has not violated the provisions of section 13(1)(d) of the Act, the assessee cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 18. We have heard the rival submissions and perused the material on record. The issue in the present ground is with respect to allowability of prior period expenses which were disallowed by AO and CIT(A). We find that identical issue arose in Assessee s case in AY 2006-07. The Coordinate Bench of Tribunal, by following the decision of Hon ble Bombay High Court in the case of CIT Vs. Nagri Mills (33 ITR 681) and Ahmedabad Bench of Tribunal in the case of ACIT Vs. Home Life Solutions (India) Ltd (41 taxmann.com) remitted the matter back to the AO. The relevant observations of the Tribunal in AY 2006-07 as under: 159. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find on the basis of the recasted final accounts by the special auditors the Assessing Officer disallowed an amount of ₹ 94,84,854/- on account of prior period expenses debited during the year. Since the assessee had not taken any ground before the CIT(A) the same was not adjudicated by him. Since the assessee has taken this ground for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot allowed in the present year, then the same should be allowed in the earlier year, to which such expenses are related to. He also noted that the AO has totally ignored this aspect, although, he has passed the assessment order for the preceding year i.e. A.Y.2000-2001 on the same date. We are of the considered opinion that when there is no other objection of the AO, regarding allowabililty of expenses relating to prior period, the same should be allowed either in the present year or in the preceding year, to which such expenses are related to. The assessee has disclosed a loss of ₹ 6,92,700/- in the present year, and in A.Y.2000-2001, the assessee has filed return of income disclosing NIL income after setting off of brought forward loss of earlier years to the extent of ₹ 303.11 lakhs. Hence, even if this expenses are allowed in the earlier years i.e. A.Y. 2000-2001, it will ultimately be adjusted in the present year, by way of set off of brought forward loss, and therefore, it will make no difference even if deduction is allowed in the present year. Hence, we feel that no interference is called for in the order of the learned CIT(A) on this aspect. The ground no.4 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its brief submission on this issue vide letter dated 14/03/2012, has contended that the AO has made the addition merely relying on the report of the Special Auditor ignoring the fact that these donations were received from doners towards trust corpus with specific directions to this effect. Being earmarked donations towards the trust corpus, the receipts capital in nature and could not be taxed regardless of whether or not the appellant was held to be eligible for deduction under section 11. 13.3 I have given careful consideration to the above facts. The scheme of taxation of charitable trusts and institutions under the IT Act is that firstly all voluntarily contributions received by them are deemed to be the income of such entities under section 2(24)(iia) and thereafter, subject to the fulfillment of conditions laid down in Section 11/Section 12/Section 10(21)/Section 10(23)/Section 10(23C) etc, as the case may be, the same are eligible for exemption. In respect of entities claiming under section 11 and 12, the exemption of corpus donations is provided for under section 11(i) (d). Therefore, once the provisions of section 11 and 12 are found to be inapplicable in view of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mstances of the case the CIT (A) has erred in sustaining the disallowance of ₹ 69,00,538/- on the ground that it is a prior period expenditure. The above grounds of appeal may kindly be allowed to be amended, altered, modified etc., in the interest of' natural justice. 25.1. On the other hand, the grounds raised by the Revenue (which have been subsequently revised) in ITA No.16/PUN/2015 for A.Y. 2008-09 reads as under: 1. On facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the disallowance made u/s.40A(2)(b) on account of payment on rent in excess made to M.N. Navale ( Bigger HUF), a related party. 2. On facts and in the circumstances of the case, the Ld. CIT(A) has erred in holding that the provision of section 13(1)(c) r.w.s.13(3) of the Income Tax Act, 1961 are not attracted. 3.On facts and in the circumstances of the case, the Ld. CIT(A) has erred in deciding the issue of excess payment of rent considering only one limb of the Hon'ble ITAT's order no.149/PN/2010 dtd. 31/03/2012 regarding the existence of M. N. Navale (bigger HUF), however has entirely overlooked the other limb of the said order wherein the Hon&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y.2009-10 are identical to issue raised in A.Y.2007-08 by the assessee. According, we hold that our decision given in A.Y.2007-08 on the said issues would apply mutatis-mutandis. Accordingly, said grounds of appeal are decided as in A.Y.2007-08. The Ld. AR for the assessee pointed out that the issues raised by Revenue in ground of appeal No. 1 to 5 are similar to ground raised by Revenue in A.Y.2007-08. Hence, our decision in A.Y.2007-08 would apply mutatis-mutandis. Grounds of appeal raised by Revenue are, thus, decided as indicated above. 28. Ground No 6 raised by Revenue is with respect to deletion of disallowance of ₹ 1,49,532/- in respect to amounts written off. 29. CIT(A) while deciding the issue in Para 9 of the order has noted that the disallowance was made on the basis of the report of Special Auditor under Section 142(2A) of the Act. It was assessee s submission that the amounts represented petty debit balances carried forward which had remained to be adjusted against the relevant expenses and on realizing that these balances represented fictitious receivables, the aggregate amount of ₹ 1,49,532/- was written off and further the write off was in accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... UN/2015 reads as under: 1. On facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the disallowance made u/s.40A(2)(b) on account of payment on rent in excess made to M.N. Navale (Bigger HUF), a related party. 2. On facts and in the circumstances of the case, the Ld. CIT(A) has erred in holding that the provision of section 13(1)(c) r.w.s.13(3) of the Income Tax Act, 1961 are not attracted. 3. On facts and in the circumstances of the case, the Ld. CIT(A) has erred in deciding the issue of excess payment of rent considering only one limb of the Hon'ble ITAT's order no.149/PN/2010 dtd.31/03/2012 regarding the existence of M. N. Navale (bigger HUF), however has entirely overlooked the other limb of the said order wherein the Hon'ble ITAT had directed the AO to examine the veracity of source of investment in the properties by the Bigger HUF which were let Out on rent to the assessee. 4. On the facts and in the circumstances of the case, the Ld. CIT (A) was not justified in deleting the addition made by the AO on account of Investment In shares of Co-operative bank and Public Limited Companies by not appreciating the facts that the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, issues raised by Revenue are also identical to the issues raised in A.Y.2007-08 and our decision shall apply mutatismutandis. 38. In the result, appeal of the assessee and appeal of the Revenue are decided as indicated above. 39. We now take up Assessee s appeal No.2077/PUN/2014 for AY 2008- 09. 40. The grounds raised by the Assessee in ITA No.2077/PUN/2014 reads as under: On the facts and in the circumstances of the case the CIT(A) has erred in not directing the Assessing Officer to rectify the assessment order by setting off the unabsorbed deficit of earlier A.Y. 2000-01 and 2003-04. 41. Before us, at the outset, the Ld AR submitted that the grounds raised have become academic. The aforesaid contention of the Ld AR has not been controverted by Ld DR. 42. We have heard the rival submissions. In view of the Ld AR s contention that the ground raised in the appeal has been rendered academic, the ground is dismissed and thus, the appeal of assessee is dismissed. 43. In the result, the appeal of assessee in ITA No.2077/PUN/2014 is dismissed. 44. Before close of hearing, the learned Authorized Representative for the assessee stated that for assessment year 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the considered opinion that whenever there is violation of section 11(5) and 13(1)(c) of the I.T. Act, exemption cannot be withdrawn for the entire income and income which is the subject matter of violation only can be brought to tax. Accordingly, additional ground No.3 by the assessee is allowed. Following the same parity of reasoning, since the advances made by assessee to other educational institutions violate the provisions of section 13(1)(c) of the Act, then the said advances cannot be allowed as deduction under section 11 of the Act, same is brought to tax in the hands of assessee. We direct accordingly. Consequently, the assessee is not entitled to any exemption under section 11 of the Act, where there is violation of section 13(1)(c) of the Act. Hence, ground of appeal No.5 raised by assessee is dismissed. 49. To sum up, appeals of the assessee in ITA Nos.2075 and 2076/PUN/2014 for A.Ys.2007-08 and 2008-09 and ITA No. 2110/PUN/2014 for A.Y. 2009-10 are partly allowed. The appeal of assessee in ITA No.2077/PUN/2014 for A.Y. 2008-09 is dismissed. All the appeals of Revenue in ITA Nos. 15 to 17/PUN/2015 for A.Ys. 2007-08 to 2009-10, respectively, are partly allowed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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