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of <h1>Tribunal remands exemption issue to assessing officer for reconsideration under updated legal framework</h1> <h3>ITO, Wd. 1 Thiruvalla Versus M/s. Believers Church India</h3> ITO, Wd. 1 Thiruvalla Versus M/s. Believers Church India - [2015] 37 ITR (Trib) 495 (ITAT [Coc]) Issues Involved:Appeals against CIT(A) orders for assessment year 2010-11 for two charitable trusts - Violation of sections 11(2) and 13(1)(d) - Application of income for charitable purposes - Interpretation of Explanation to section 11(2) and section 11(3)(d) - Consideration of Delhi High Court and Tribunal judgments - Remand for reconsideration.Detailed Analysis:1. Violation of Sections 11(2) and 13(1)(d):The appeals were directed against CIT(A) orders for two charitable trusts, registered under section 12AA, for the assessment year 2010-11. The Department argued that the trusts violated section 11(2) read with section 13(1)(d) by giving loans exceeding 15% of unutilized income to other trusts. The Department relied on the Allahabad High Court judgment to support its position.2. Application of Income for Charitable Purposes:The trusts contended that they advanced funds to other registered trusts with similar objectives, which amounted to application of income for charitable purposes. They cited the Delhi High Court judgment and the Tribunal decision to support their argument. The trusts emphasized that advancing funds to similar charitable trusts did not violate section 11(5) and section 13(1)(d) of the Act.3. Interpretation of Explanation to Section 11(2) and Section 11(3)(d):The Tribunal analyzed the provisions of section 11(2) and the Explanation, which allow exceptions for accumulation of income not applied for charitable purposes. The Tribunal highlighted the provisions introduced by the Finance Act, 2002, emphasizing that income credited or paid to another trust must be deemed as the income of the assessee. The Tribunal noted that previous judgments did not consider these provisions.4. Consideration of Delhi High Court and Tribunal Judgments:The Tribunal discussed the Delhi High Court judgment and the Tribunal decision, emphasizing that they did not address the implications of the Explanation to section 11(2) and section 11(3)(d) introduced in 2002. The Tribunal concluded that these judgments might not be directly applicable to the current case due to the oversight of the new legal provisions.5. Remand for Reconsideration:The Tribunal found that both lower authorities failed to consider the Explanation to section 11(2) and section 11(3)(d) in their decisions. Consequently, the Tribunal set aside the orders and remanded the issue of exemption under section 11 back to the assessing officer. The Tribunal directed the assessing officer to reconsider the matter in light of the new legal provisions and provide the assessee with an opportunity to explain the implications before making a decision.6. Conclusion:The Tribunal allowed the appeals for statistical purposes, emphasizing the need for a fresh consideration of the exemption issue under section 11 in compliance with the Explanation to section 11(2) and section 11(3)(d) introduced by the Finance Act, 2002. The decision aimed to ensure a fair assessment based on the updated legal framework.This detailed analysis provides a comprehensive overview of the judgment's key issues, legal interpretations, and the Tribunal's decision to remand the matter for reconsideration in light of relevant legal provisions.
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