TaxTMI 
TaxTMI 
2014 (10) TMI 926
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.... registered u/s 12A of the Income-tax Act, 1961, vide order no. 1723 dated 14-08-2000. The main objects of the trust are to undertake, promote and provide facilities for carrying out research including action research in the area of labour, employment, poverty, health, education and other aspects of human development, to disseminate information and knowledge and results of research on all matters within the scope of its objectives through publications, seminars, conferences, workshops, lectures etc. It had filed its return of income, declaring nil income. During the course of assessment proceedings, the AO noticed that the loans and advances, as mentioned in schedule 5 of the balance sheet, included "loans and advances to staff" of Rs. 19,6....
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.... Rs. 72,44,119 2.2. Ld. CIT(A) partly allowed the assessee's appeal, inter alia, observing that the AO is required to make addition only in respect of difference of the interest portion as per market rate which is 13.5% as against 6% i.e. difference of Rs. 7.5%. The other additions were deleted. 2.3. Being aggrieved with the order of ld. CIT(A), the department has preferred appeal and the assessee has filed cross-objection. Following respective grounds have been taken: Revenue's appeal: "1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in allowing the exemption u/s 11 & 12 of the Income Tax Act, 1961. 2. On the facts and in the circumstances of the case and in law, the Ld....
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....entire receipts of assessee society or to be restricted qua the amount to which default is attracted. We find that this issue is no more res integra and is covered by the decisions of various High Courts and the ITAT, holding that disallowance is to be restricted only qua amounts to which violation u/s 13(1)(c)/13(2) is attracted and the exemption in respect of other incomes cannot be forfeited. 3.1. The Hon'ble Bombay High Court in the cases of Director of Income-tax (Exemptions) Vs. Sheth Mafatlal Gagalbhai Foundation Trust has observed as under: "The proviso to section 164(2) of the Income-tax Act, 1961, was inserted by the Finance Act, 1984. It specifically refers to violation of section 13(1)(d) and its consequences. The pr....
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.... would not be available on the amounts which have been extended directly or indirectly for the benefit of any person referred to in sub-section (3) of section 13 of the Act, meaning thereby, if an assessee has extended any undue benefit to the person mentioned in sub-clause (3) then those amounts would not be considered as application of income for the purpose of fulfilment of objects of the society and benefit of sections 11 & 12 would not be available to the assessee on those amounts. Thus, section 13(3)(1)(c)(ii) is analogous to section 40A(2a) of the Act. Learned CIT(Appeals) has rightly observed that restriction is applicable to those amounts which have been applied directly or indirectly for the benefit of any person referred to in su....
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.... same. Ground is dismissed. 6. Apropos ground no.4, brief facts are AO found development fund in the balance sheet at Rs. 2,79,380/-. The assessee in its explanation pointed out that the fund basically included consultancy fee received by the employees of the assessee trust in intruded capacity, a part of which has to be given back to the assessee trust for using the resources of the organization. The assessee further pointed out that the consultancy fee were not recognized as donation and had not been taken in the Income & Expenditure a/c. The AO did not accept the assessee's contention and treated the same as assessee's total income. 6.1. Ld. CIT(A) deleted the addition taking note of the fact that two employees, namely, Sh. Harishw....