2016 (2) TMI 380

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....with objects of the trust by using the income for charitable purposes and the trust having been exempted in the past. 2. In not restricting the addition to Rs. 2,22,000/- being the interest on the advances given to the specified persons in violation of the provisions of Section 13(1) (d) r.w.s. S 13 (3) and S 11 (5) of the IT Act and taxing it at the maximum marginal tax as provided u/s 164(2) of the Act and in not allowing the exemption u/s 11 to the other income when the same has been actually applied for charitable purposes. 3. In denying the exemption to the entire income of the trust u/s 11 & 12 of the Income Tax Act which has been actually applied for charitable purposes and the trust having been exempted in the past. WITHOUT....

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.... A.O has also made the addition of notional interest of Rs. 2,22,000/- for the interest free loans given to relatives of the managing trustee. The A.O has also made the estimated disallowance of 10% of the expenses of Rs. 3,41,964/- vide the order of the A.O. 4. The assessee filed appeal against the order of the A.O before CIT(A). The assessee was claimed the benefit of exemption u/s 11(1) being a charitable trust but as per the CIT(A), the assessee was not doing any charity to the public at large under the meaning of Section 11(1) of the Income-tax Act. The CIT(A) dismissed the contention of the assessee related to exemption u/s 11(1) as provided u/s 13(1D) and confirmed the order of the Assessing Officer. The CIT(A) further held that the....

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....Act, the Ld. AR submitted that the charging of concessional rates does not take away the charitable character of the institution as 85% of the entire receipts are applied for charitable purposes and / or any surplus accruing thereto is ploughed back to carry out the charitable activities as envisaged in its trust deed. The trustees do not get any profit or any benefit from the trust in the form of any salary, perks or any concession. The trust is providing free, concessional / subsidized rates, to the needy in the form of medical relief as per the data given at pages 16-25 of the paper book submitted. The activity of the trust falls under the first three limbs of Section 2(15) which is given under board circular no. 11/2008 dated 19.12.2008....

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....961 and, thus worked out an addition of Rs. 2,22,000/- to the returned income of the trust. On this account, the Assessing Officer, denied exemption under Section 11 & 12 for the Assessment Year 2010-11 and assessed it as an AOP. He also disallowed 10% of the expenses claimed amounting to Rs. 3,41,964/- on adhoc basis. The CIT(A) while deleting the adhoc addition of Rs. 3,41,964/- in expenses, confirmed the denial of exemption under Section 11 and 12 as done by the Assessing Officer. As regards the denial of exemption u/s. 11 it is submitted that the assessee's activities is related to that of a hospital where medical tests are carried out for giving medical relief to the poor or disadvantaged either free or at a concessional /subsidized ra....