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2012 (7) TMI 936

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....12AA of the Income Tax Act, 1961 ('the Act' for short). The assessee had filed a return of income for the year under consideration declaring an income at nil after claiming deduction u/s 11 of the Act. During the course of the assessment proceedings, the AO asked the assessee that in view of the loans/deposits to sister concern there is violation of section 13(1)(d) and 11(5) of the Act why exemption u/s 11 should not be denied and called for the explanation of the assessee. In response to the above the assessee has explained that all the loans are interest-free loans and are given to educational institutions run by the society/trust belonging to its group. The purpose of the loan was purely for putting up building/infrastructure for educat....

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.... Immaculate & Collaborators Trust and M/s. Society for Education for Life) and would not be hit by the provisions of section 13(1)(d) read with section 11(5) of the Act. Further as the organizations are also charitable organizations registered u/s 12A of the Act, the said interest-free loans will not amount to the benefit of any person specified under section 13(3) either directly or indirectly. Hence the said loans were totally outside the purview and scope of section 13(1)(c) as well as 13(1)(d) of the Act and held that the assessee is eligible for exemption under section 11 of the Act. 4. On being aggrieved, the Revenue has carried the matter before the Tribunal. The learned DR has submitted that as the assessee is hit by section 13(1)(....

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....ing on similar functions as carried on by the assessee. According to the AO the assessee has violated section 13(1)(d) read with section11(5) for the reason that the assessee has to invest only as per law which is permitted under section 11(5) of the Act. The assessee advanced interest-free loans to the sister concerns. In our view it is not hit by the provisions of section 11(5) read with section 13(1)(d). Section 13(1)(d)(i) deals with any funds of trust or institution are invested or deposited. Section 11(5) deals with the forms and modes of investing and depositing money. In the present case the assessee has advanced loans to the sister concerns. In our considered opinion it is neither hit by section 13(1)(d) nor section 11(5). There is....