TaxTMI 
TaxTMI 
2015 (9) TMI 711
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....ption claimed by the assessee u/s 11 of the Act. 3. Smt. Pushya Sitaraman, ld. Senior Counsel for the assessee submitted that the assessee is a charitable institution registered u/s 12AA of the Act. During the year under consideration, the assessee filed return of income disclosing income of Rs. 9,23,17,011/- and claimed exemption u/s 11 of the Act. The Assessing Officer, however, disallowed the claim of the assessee on the ground that the assessee-trust incurred expenditure on one Shri G. George, General Secretary of the trust who is managing the affairs of the trust. According to the ld. Senior Counsel, the assessee submitted before the Assessing Officer by way of a letter dated 7.12.2011 that the former General Secretary, Shri G. Geor....
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....rge, but it was funds misappropriated by Shri George. Referring to the order of the Madras High Court in O.A No.740 of 2010 dated 18.8.2010, the ld. Senior Counsel submitted that, in fact, the above said Shri G.George has disturbed the functioning of the trust alongwith others, therefore, the assessee was constrained to move the High Court. The High Court appointed a retired judge of the Madras High Court to conduct the election of the trust. The ld. Senior to the notice of the CIT(A), he simply proceeded as if the assesseetrust incurred expenditure on Shri G. George. According to the ld. Senior Counsel, no expenditure was incurred on Shri G. George and in fact, Shri G. George misappropriated the funds of the trust for which action has alre....
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.... and religious trusts are concerned, the business profits are not exempt from taxation unless the same comes u/s 11(4A)(a) and (b) of the Act. The CBDT further clarified that where the trust fulfills the provisions of sec. 13(1) or 13(d), the maximum marginal rate of tax will apply only to that part of the income which was forfeited exemption u/s 11. Therefore, at the best, exemption could be denied in respect of the income which was misappropriated by Shri G. George, former General Secretary of the assessee-trust. 7. On the contrary, Shri A.V. Sreekanth, ld. Departmental Representative submitted that the assessee incurred expenditure on Shri G. George, the former General Secretary, who is managing the affairs of the assessee-trust, t....
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....ership and also decided to proceed legally to recover the amount which was misappropriated by him. By way of interim order in O.A.No.740 of 2010 dated 18.8.2010, the High Court appointed a retired judge of the Madras High Court to conduct the election for the Trust. When the assessee categorically makes a statement by filing documentary evidence that Shri G.George, was a Secretary, but continued as General Secretary by fraudulent means and involved himself in misappropriation of funds in a dubious manner, these factual situations were not considered by any of the authorities below. The authorities below proceeded as if the assessee-trust incurred expenditure on Shri G. George. This Tribunal is of the considered opinion that when the assesse....