2018 (6) TMI 95

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....5 of the Companies Act, 1956 and is also registered u/s 12AA(1) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') with effect from 11.11.1991. The assessee is promoted by the Bennett Coleman & Company Ltd. of Times of India Group. The assessee is involved in providing Journalism, Marketing and Management courses as per the objects contained in the Memorandum. The return of income was filed declaring income at Rs. Nil. The assessee's case was selected for scrutiny and during the course of assessment proceedings it was noticed by the AO that the assessee had received a donation of 50,000/- shares worth Rs. 2,00,000/- from Angelo Rhodes Ltd. (United Kingdom) way back in 1996 and had received a dividend income of Rs. 2,36,000/-....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ed law that only income from investments or deposits made in violation of section 11(5) of the Act are liable to be taxed and violation of section 13(1)(d) of the Act does not result in denial of exemption u/s 11 to the total income of the assessee. The Ld. Authorised Representative placed reliance on numerous case laws in support of his contention. 5. We have heard the rival submissions and have also perused the material on record. The facts of the case remain undisputed and the only question requiring adjudication is whether the assessee can be denied the benefit of exemption u/s 11 on the ground that the assessee was holder of shares in violation of provisions of section 13(1)(d) of the Act. It issue is no more res integra. It is well....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....n 164(2), proviso is applicable only to that part of income of the trust which has forfeited exemption and not the entire income. The relevant paragraph reads as under: "Section 164(2) refers to the relevant income which is derived from property held under trust wholly for charitable or religious purposes. If such income consists of severable portions, exempt as well as tax able, the portion which is exempt is to be left out and the portion which is not exempt is charged to tax as if it is the income of an association of persons. Therefore, a proviso was inserted by the Finance Act, 1984, with effect from April 1, 1985, under which in cases where the whole or any part of the relevant income is not exempt under section 11 or section....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....e maximum marginal rate of Income-tax will apply only to that part of the income which has forfeited exemption under the said provision and not to the entire income. There is a vital difference between eligibility for exemption and withdrawal of exemption/forfeiture of exemption for contravention of the provisions of law. These two concepts are different. They have different consequences. In the circumstances, there is merit in the contention of the assessee that in the present case the maximum marginal rate of tax will apply only to the dividend income from shares held in contravention of section 13(1) (a) and not to the entire income. Therefore, income other than dividend income shall be taxed at normal rate of taxation under the Act." ....