TaxTMI 
TaxTMI 
2016 (7) TMI 96
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....against which after claiming all the expenses surplus of Rs. 20,51,064/- has been shown. Ongoing threw the records the A.O. found certain payments are made to the office bearers of society which he has considered it as payment made for personal benefits of office bearer and denied the exemption U/s 11 and assessed it as total surplus shown in the income and expenditure account which is 20,51,064/- on the same the submission made by ld AR that the advance are not for personal benefit and are given to them in previous year and not in the year under consideration. Further explanation and submission were made to the A.O. about the purpose of advance and the accounting treatment thereafter, which was not considered by him and assessed the societ....
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....ct and gave reasonable opportunity of being heard to the assessee. After considering the assessee's reply, he held that if these advances received from the office bearer in the April, 2009, this amount was kept for two years by them and adjustment entry was passed in April, 2011. When the amount was given even before 01/4/2008 and payments on behalf of the society were made by the office bearer in the month of April, 2009 even then the amount of remand with the office bearer for a period of more than one year. This is clear violation of Section 13(2)(a) of the Act. The submission made by the assessee is also not reliable. Since the books of account for A.Y. 2009-10 and 2010- 11 had already been closed. Hence the assessee had no option but t....
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....utilized the fund by diverting the same to the specified persons, which is liable to face the action of committing default. He further considered Section 13(1)(c) and 13(2)(a) of the Act. The other arguments of nominal amount was also not found convincing to her, accordingly, she dismissed the appeal of the assessee. 4. Now the assessee is in appeal before us. The ld AR of the assessee has submitted that the assessee society made advances to Smt. Manjulata Sharma, Shri Manoj Kumar Sharma and Shri Kanta Prasad Mishra in previous year and not in the year under consideration. The advances were given to them for making onwards payment to certain parties from whom the society had obtained services or for repayment of unsecured loan taken from....
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....e or part of the relevant income at MMR, therefore, entire surplus amount cannot be taxed @ MMR.. This principle has been laid down by the Hon'ble Karnataka High Court, affirmed by the Hon'ble Supreme Court, which was followed by the Jurisdictional ITAT, Jaipur Bench in number of cases. He has further relied on the decision in the case of DIT Vs Working Women's forum (2015) 235 Taxman 516 (SC) decision dated 18/9/2015 wherein it has been held that there is violation of Section 13, the assessee would result in MMR of tax only on dividend income on shares, which was not the recognized mode of investment and that the assessee would not be vested with marginal rate of tax on entire income. He further relied on the following case laws:- (....
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....0,51,064/-. There is violation of Sec. 13 that the assessee had made advances to the office bearer, which was coming as opening from 01/4/2008 and also as on 31/3/2009 for Rs. 1,54,880/- . The assessee's explanation was that it was advances for payment was to be made for the services provided by the third person but as such the assessee has not established any nexus with evidence that these amounts were really provided and kept with the office bearer for the purposes of services rendered by the third person to the assessee society as same has been adjusted in the month of April, 2011. Therefore, it is clear cut default U/s 13 but as various ITATs as well as Hon'ble High Courts held that if there is violation of Section 13 read with Sect....