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TMI Blog2024 (7) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... ified in confirming the action of the Ld AO disallowing the exemption claimed U/s 11 & 12 of the IT Act 1961 solely on the ground that assessee violated the provision of section 17 of FCRA (Foreign Contribution Regulation Act) 2010. 2. For that under no provision of Income Tax Laws related to the Trust can exemption be denied alleging violation of the provision of FCRA 2010 and as such, AO was not justified in bringing to tax the income of the assessee denying the exemption claimed. 3. For that as a matter of fact there is no violation done by the assessee to section 17 of the FCRA 2010 since no funds/ Foreign Contribution has been received by the assessee in any other bank account except the FC Utilization bank account for which appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In response to the notices, ld. AR of the assessee appeared before the AO from time to time and produced necessary documents as called for. During the assessment proceeding, the ld. AO found that Rs. 1,85,121/- of foreign contribution was transferred from designated FC bank account to unauthorized FC utilization bank account of the assessee society. The ld. AO after examining the issues and believed that assessee was in contravention of section 17 of the Foreign Contribution Regulation Act, 2010. The exemption claimed u/s 11 and 12 of the I.T. Act was denied to the assessee in terms of applicability of section 12AA(3) of the Act by assessing the income of assessee at Rs. 3,55,53,212/- u/s 143(3) of the Act. The ld. AO while framing the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). However, assessee could not succeed there and appeal of the assessee was dismissed. 4. Feeling aggrieved by the order of ld. CIT(A) assessee is in appeal before this Tribunal raising four grounds of appeal. The main grievance of the assessee is here against the impugned order passed by ld. CIT(A) by which denying the exemption claimed u/s 11 & 12 of the Act by sustaining the order of ld. AO on the issue of violation of section 17 of the Foreign Contribution Regulation Act, 2010 and also sustaining the order the ld. AO denied the claim of exemption of the assessee u/s 12AA(3) of the Act. On this issue, the ld. AR of the assessee submitted before the bench that the action of the ld. AO denying the benefits of section 11 & 12 of the Act by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where there was violation of the provision of section 13, the entire exemption u/s 11 would not be denied instead expenditure which could not be treated as application of income and in violation u/s 13, same should alone be disallowed. 7. The ld. AR further brought to our notice that CBDT vide its Circular No. 387 of 1984 dated 06.07.1984 in para 28.6 has held as under: "It may be noted that new sub-section (1A) inserted in section 161 of the Income-tax Act, which provides for taxation of the entire income received by trusts at the maximum marginal rate is applicable only in the case of private trusts having profits and gains of business. So far as the public charitable and religious trusts are concerned, their business profits are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it expenditure which could not be treated as application of income. 9. On the other hand, ld. DR supported the decision rendered by the authorities below. 10. We after hearing the submission of the parties and on perusal of material available on record and relying on the various decisions rendered by the Hon'ble High Court as well as Co-ordinate Bench of Tribunal find that assessing officer could not have denied the benefit u/s 11 of the Act. In the case of assessee certificate was continued in force, therefore, the view taken by the ld. AO is not correct. However, we after examining the facts of the case and direct the AO to allow the claim of assessee u/s 11 & 12 of the Act and the expenditure which could not be treated as an applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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