TaxTMI 
TaxTMI 
2018 (11) TMI 48
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....firming the action of the assessing officer in not allowing exemption u/s 11 and 12 of the Act for the year under consideration ignoring the first proviso to section 12A(2) of the Act providing for deemed registration of the society u/s 12A and thus making it eligible to claim the said exemption for the year under consideration. Thus the exemption claimed u/s 11 and 12 should be allowed to the society. 3. The CIT(A) erred in law and on facts in holding that the income of the assessee society is chargeable at maximum marginal rate instead of slab rates by incorrectly applying provisions of section 167B(1) of the Act though the same are not applicable on societies registered under the Societies Registration Act, 1860 . Thus necessary directions should be given to compute tax by applying slab rates on the assessee. 4. The CIT(A) erred in law and on facts in including the amount of Rs. 94,323/- being interest earned on FDRs made out of corpus fund in taxable income ignoring the fact that interest earned on corpus fund has to be treated at par with the corpus fund. Thus the said amount should be excluded from taxable receipts. 5. The CIT(A) erred in l....
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....ideration. Thus the exemption claimed u/s 11 and 12 should be allowed to the society. It was the further submission that Ld. CIT(A) wrongly held that the income of the assessee society is chargeable at maximum marginal rate instead of slab rates by incorrectly applying provisions of section 167B(1) of the Act though the same are not applicable on societies registered under the Societies Registration Act, 1860. Thus necessary directions should be given to compute tax by applying slab rates on the assessee. It was further submitted that lower authorities have erred in including the amount of Rs. 94,323/- being interest earned on FDRs made out of corpus fund in taxable income ignoring the fact that interest earned on corpus fund has to be treated at par with the corpus fund. Thus the said amount should be excluded from taxable receipts. Lastly he submitted that lower authorities have wrongly held that the gross receipts as taxable income without allowing the expenses of Rs. 3,22,837/- incurred towards the said receipts and ignoring that only surplus is taxable as income and not the gross receipts. Thus the expenses should be allowed as deduction against the gross receipts. In view ....
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....xemption from taxation will be available only after the AO is satisfied about the genuineness of the activities promised or claimed to be carried on each financial year relevant to assessment year and all the provision of law acted upon. This will be further subject to provisions of section 2(15) of the Income tax Act, 1961." 5.1 I further find that on perusal of the aforesaid conditions and as per the provision of section 12AA, the Ld. CIT(A) has rightly held that assessee's claim was not found acceptable due the fact that the assessee has applied for registration under setion 12AA of the Act on 27.11.2015 i.e. during AY 2016-17 whereas the present case of the assessee relates to AY 2014-15. For the sake of convenience, the relevant conditions for applicability of section 11 and 12 are reproduced as under:- Conditions for applicability of sections 11 and 12. 12A. (1) The provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely:- (aa) the person in receipt of the income has made an application for registration of the trust or institution on or aft....
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....rther note that the claim of the assessee that it should not be taxed at maximum marginal rate is also not tenable as the PAN of the assessee suggests that the assessee is a Body of Individuals and not 'Trust' as the fifth character of PAN is 'B' and not 'T' which should be the case of Trust. As the Return of Income was filed by the assessee in capacity of Body of Individuals and automatically the provisions of section 11, 12 &13 will not apply in the case of the appellant unless the registration is granted by CIT which was granted later. Hence, the provisions of section 167B (1) of the Act clearly suggests that under this situation the appellant has to be taxed at maximum marginal rates. The provisions of section 167B(1) is as under: - "Charge of tax where shares of members in association of persons or body of individuals unknown, etc. 167B. (1) Where the individual shares of the members of an association of persons or body of individuals other than a company or a co-operative society or a society registered under the Societies Registration Act, 1860 (21 of I860] or under any law corresponding to that Act in force in any part of India in t....