TaxTMI 
TaxTMI 
2014 (12) TMI 878
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....appeals together and are disposed of by this common order. 2. Shri M Anil Kumar, the ld.DR submitted that both the assessees are registered as charitable trust u/s 12AA of the Act. During the year under consideration, the assessing officer found that both the assessees have given loan to other trusts from the unutilised portion of the income which exceeded more than 15%. Referring to section 13(1)(d)(i) of the Act, the ld.DR submitted that the assessee trust invested its funds in the form / mode otherwise than prescribed in section 11(5) of the Act. Therefore, according to the ld.DR, there was violation of section 11(2) r.w.s. 13(2)(d) of the Act. According to the ld.DR, the assessee is not entitled for any exemption. The ld.DR placed hi....
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....ion of the Lucknow Bench of this Tribunal in Kanpur Subhash Shiksha Samiti vs Dy.CIT (2011) 11 ITR (Trib) 23 (Luck). The ld.representative submitted that when the funds of the assessee trust was advanced to another trust which was registered u/s 12AA with similar objects, the same cannot be considered to be an investment or loan. Therefore, there is no violation of section 13(1)(d) of the Act. 4. We have considered the rival submissions on either side and also perused the material available on record. It is not in dispute that substantial income of the assessee trust was not used by both the assessees for the purposes for which they were formed. When substantial portion of the amount was not used for the purpose for which the trust was e....
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....ner and form as provided in section 11(5) of the Income-tax Act. Explanation to section 11(2) and Section 11(3) of the Income-tax Act makes exception to section 11(2) of the Act. For the purpose of convenience, Explanation to section 11(2) and the provisions of section 11(3) are reproduced hereunder: "(2) xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Provided xxxxxxxxxxxxxxxxxxxxxxxxxxx Provided further xxxxxxxxxxxxxxxxxxxxx Explanation.- any amount credited or paid, out of income referred to in clause (a) or clause (b) of sub-section (1), read with Explanation to that sub-section, which is not applied, but is accumulated or set apart, to any trust or institution register2ed under section 12AA or to any fund or institution or trust or any un....
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....he period aforesaid." 6. Explanation to section 11(2) and Clause (d) of section 11(3) inserted by Finance Act, 2002 with effect from 01-04-2003 says that income which was accumulated as provided in section 11(2) if credited or paid to another trust or institution registered u/s 12AA or approved u/s 10(23C) shall be deemed to be the income of such person of the previous year in which such credit was made or paid as the case may be. Section 11(3A) empowers the assessing officer to allow the trust to apply the income so accumulated for other charitable or religious purpose other than the one for which the same was accumulated or set apart. However, Proviso to section 11(3A) mandates that the assessing officer shall not allow the application....
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....o occasion to consider the implications of Explanation to section 11(2) and section 11(3)(d) of the Act. Similarly, the attention of the Lucknow Bench of this Tribunal was not drawn to the provisions of Explanation to section 11(2) and section 11(3)(d) of the Act in the case of Kanpur Subhash Shiksha Samiti (supra). Therefore, this Tribunal is of the considered opinion that the judgment of the Delhi High Court in Acme Education Society (supra) and the decision of the Lucknow Bench of this Tribunal in Kanpur Subhash Shiksha Samiti (supra) may not be applicable to the facts of this case. 8. Both the authorities below have failed to consider the provisions of Explanation to section 11(2) and section 11(3)(d) of the Act. The assessing office....