Tax Tribunal: Exemption under Section 11 granted, share investments not a violation. Appeal partly allowed.

The Tribunal partly allowed the appeal by the assessee, permitting exemption under Section 11 and ruling no violation of Section 13(1)(d) due to share investments. The Tribunal also partly allowed the Revenue's appeal, agreeing the CIT(A) should have dismissed the appeal as infructuous under Section 263. Another appeal by the assessee was dismissed as infructuous. The decision was pronounced on December 31, 2012.

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Issues Involved:
1. Validity of assessment under Section 153C.
2. Applicability of exemptions under Section 11 and Section 10(23C).
3. Violation of Section 13(1)(d) read with Section 11(5) due to investments.
4. Treatment of donations received through coupons.
5. Set-off of excess application of income from earlier years.
6. Charging of interest under Section 234B.

Detailed Analysis:

1. Validity of Assessment under Section 153C:
The assessee argued that the assessment under Section 153C was null and void as the additions made were not based on incriminating material found during the search but on enquiries during assessment proceedings. The CIT(A) held that all additions could be made in the assessment and whether they were based on incriminating material was not relevant.

2. Applicability of Exemptions under Section 11 and Section 10(23C):
The CIT(A) held that the assessee trust should have claimed exemption under Section 10(23C) instead of Section 11, as it was providing medical relief. The Tribunal disagreed, stating that the trust was registered under Section 12A and had been granted exemption under Section 11 in previous years. It emphasized that the choice of exemption (under Section 11 or Section 10(23C)) should be left to the assessee.

3. Violation of Section 13(1)(d) read with Section 11(5) due to Investments:
The AO noted that the assessee had invested in shares of Bharati Sahakari Bank and made advances to Bharati Vidyapeeth, which was considered a violation of Section 13(1)(d) read with Section 11(5). The CIT(A) upheld the AO's decision regarding the shares but allowed the assessee's claim concerning advances to Bharati Vidyapeeth. The Tribunal found that the investment in shares was negligible compared to the total assets and was made under compulsion to obtain a loan, thus not constituting a violation.

4. Treatment of Donations Received through Coupons:
The AO treated the donations received through coupons as revenue receipts, not corpus donations, due to the lack of donor identification and specific directions. The CIT(A) upheld this view. The Tribunal agreed that these donations could not be considered corpus donations but accepted the alternative argument that they should be treated as revenue receipts eligible for exemption under Section 11.

5. Set-off of Excess Application of Income from Earlier Years:
The CIT(A) directed the AO to allow the set-off of excess application of income from earlier years against the current year's income. The Tribunal held that this issue became academic since it allowed the exemption under Section 11, making the Revenue's grounds on this point infructuous.

6. Charging of Interest under Section 234B:
Since the exemption under Section 11 was allowed, the issue of charging interest under Section 234B was considered consequential and was allowed.

Conclusion:
- ITA No. 970/Pn/2010 (by assessee): Partly allowed. The Tribunal held that the assessee could claim exemption under Section 11 and that there was no violation of Section 13(1)(d) read with Section 11(5) due to the investment in shares.
- ITA No. 1042/Pn/2010 (by Revenue): Partly allowed. The Tribunal agreed that the CIT(A) should have dismissed the appeal as infructuous when the order was set aside under Section 263.
- ITA No. 969/Pn/2010 (by assessee): Dismissed as infructuous since the order of the AO was set aside under Section 263.

Pronounced in the open court on December 31, 2012.

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