TMI Blog2022 (9) TMI 872X X X X Extracts X X X X X X X X Extracts X X X X ..... (1)(c) / 13(1)(d) of the Act, then tax can be levied only on the income which is in violation of provisions of section 13(1)(d) of the Act, as held by the Hon ble High Court of Madras in the case of DIT Vs. Working Women s Forum [ 2015 (9) TMI 1447 - SC ORDER] - In case, there is violation as referred to u/s.13(1)(d) of the Act, then the Assessing Officer is directed to tax income which is in violation of provisions of section 13(1)(d) of the Income Tax Act, 1961 for both the assessment years. Additions made on notional interest on loans advances - AO has imputed notional interest @ 12% on loans advances for both the assessment years - HELD THAT:- First of all, concept of notional interest on loans advances does not arise, because it is not case of the assessee that loans advances were given by the assessee to third party. Even if it is a loan, then also question of imputing notional interest does not arise, because there is no contractual obligation between the assessee and third party. AO has completely erred in imputing notional interest on loans advances. As the argument of the assessee that said loans advances paid for purchase of land. In case, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of the Hon'ble Supreme Court in Commissioner of Income-tax, Mangalore v. Fr. Mullers Charitable Institutions [2014] 51 taxmann.com 378 and [2015] Director of Income-tax, Chennai v. Working Women's Forum 63 taxmann.com 324. vi) The learned CIT(A) erred in not passing a speaking order on the denial of exemption u/s 11, even though when it was held in the order that the same (property Advance) could not be held as investment or deposit as stated in section 13(1)(d) of the Act . The learned CIT(A) had held that there is was no violation of section 13(1)( d) but arbitrarily dismissed the other grounds raised by the assesse trust with respect denial of exemption. For the grounds stated above and the grounds which may be permitted to be adduced at the time of hearing of the appeal it is prayed that additions made be deleted and justice rendered. 3. Brief facts of the case are that the assessee is a trust registered as public charitable trust and recognized u/s.12AA of the Income Tax Act, 1961. The assessee filed its return of income for both the assessment years declaring Nil total income, after claiming exemption u/s.11 of the Income Tax Act, 1961. The case wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e s case. The learned CIT(A) has also upheld imputation of interest @ 12% on notional interest. Aggrieved by the learned CIT(A) order, the assessee is in appeal before me. 5. The learned A.R. for the assessee submitted that the learned CIT(A) erred in sustaining rejection of exemption u/s.11 of the Income Tax Act, 1961, without appreciating fact that advance paid for purchase of land cannot be investment referred to u/s.11(5) of the Act, and thus, it cannot be held that there is violation of provisions of section 13(1)(d) of the Act to reject exemption u/s.11 of the Income Tax Act, 1961. 6. The learned AR for the assessee further submitted that the learned CIT(A) has also erred in sustaining additions made by the Assessing Officer towards notional interest on loans advances. The learned AR further submitted that if at all, there is violation u/s.13(1)(d), then tax can be levied on the income, which is violative of provisions of section 13(1)(d) of the Act, but tax cannot be levied on the total income of the assessee. The learned AR relied upon the decision of the Hon'ble High Court of Madras in the case of DIT Vs. Working Women s Forum (2015) 63 taxmann.com 324. 7. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, the assessee could not file any evidences before the Assessing Officer to justify its claim. Even before me, the assessee could not file any evidence. Therefore, I am of the considered view that unless the assessee proves its claim with evidence, arguments of the counsel for the assessee cannot be accepted. Therefore, I set aside the issue to file of the Assessing Officer with a direction to re-examine claim of the assessee that loans advances shown in the balance sheet is for purchase of land. In case, the assessee files necessary evidence to prove its claim, then the Assessing Officer is directed to allow benefit of exemption claimed u/s.11 of the Income Tax Act, 1961, for both the assessment years. In case, the assessee is unable to prove its case with necessary evidence, then the Assessing Officer is right in denying benefit of exemption u/s.11 of the Act, for both the assessment years. However, fact of the matter is that even if, there is violation referred to u/s. 13(1)(c) / 13(1)(d) of the Act, then tax can be levied only on the income which is in violation of provisions of section 13(1)(d) of the Act, as held by the Hon ble High Court of Madras in the case of DIT Vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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