TaxTMI 
TaxTMI 
2026 (7) TMI 428
X X X X Extracts X X X X
X X X X Extracts X X X X
....Exemptions) Ward-2(2), New Delhi under Section 143(3) of the Income Tax Act, 1961 ('the Act') concerning Assessment Year (A.Y.) 2015-16. 2. The grounds raised by the assessee are as under : "1. That the CIT(A) grossly erred in law and on the facts and circumstances of the case in dismissing the appeal of the Assessee by confirming the order dated 27.12.2017 passed by the respondent without considering that the respondent erred in making additions of Rs. 2,09,61,212/- to the income of the Assessee under section 13 read with section 11 and 12 of the Act. 2. That the CIT(A) grossly erred in law and on the facts and circumstances of the case in dismissing the appeal of the Assessee by confirming the order dated 27.12.2017 p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....7.12.2017 passed by the respondent without considering that the same was without jurisdiction and thus void ab initio. 9. That the CIT(A) grossly erred in law and on the facts and circumstances of the case in dismissing the appeal of the Assessee by confirming the order dated 27.12.2017 passed by the respondent without considering that the additions of Rs. 2,56,67,137/- to the income of the Assessee was made without considering the material on record and in denial of the principals of natural justice." 3. Brief facts of the case is that the assessee is a charitable trust registered u/s 12A of the Income Tax Act vide order dated 07/01/2010. Assessee has filed ITR on 31/08/2015 declaring NIL income (loss of Rs. 3,38,63,296/-). The....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... 2,09,61,212/- are not allowed due to section 13, still the amount of Rs. 1,11,12,547/- under section 11 cannot be disallowed as the denial under section 11 has to be restricted only to Rs. 47,05,925/- and Rs. 2,09,61,212/- and not any other amount i.e, of Rs. 1,11,12,547/-. 6. The ld AR stated that the Ld. AO in Para 6 of the order relied on judgment of the Apex Court in DIT v. Bharat Diamond Bourse to deny Rs. 1,11,12,547/-, however, the said judgment has been considered in CIT (E), Pune Vs. Audyogik Shikshan Mandal, [2019] 261 TAXMAN 12 (Bom) (Para 7); Navajbhai Ratan Tata Trust Vs. ADIT (E), [2022] 140 taxmann.com 157 (MumTrib.) (Para 6.6-6.8); DCIT, Exemption Circle Vs. Jay Singh Shikshan Sanstan, ITA No.3013/DEL/2024 (Para 10-11);....
X X X X Extracts X X X X
X X X X Extracts X X X X
....consequential as the said form is procedural and contrary to the ITR filed. 9. The ld AR further stated without prejudice to the above, that the application of income under section 11 for expenses of Rs. 2,09,61,212/- (capital expense) was disallowed on the ground that the company to whom payment was made i.e. M/s Edusmart Services Pvt. Ltd. is a specified concern under section 13(3)(e) of the Act and the payment was not substantiated. The findings in Para 4.6 of the AO order at Page 36 are dealt hereunder: Regarding point 4.6(a), documents like invoices, purchase order, consignment note, JJ Form are attached at Page 62-75 of the paperbook and further school is located at Amritsar and not Panipat as stated; Regarding point 4.6(b), paymen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in DIT v. Bharat Diamond Bourse (supra), relied upon by the AO is concerned, we find that the hon'ble Bombay High Court in the case of CIT(E) V Audyogik Shikshan Mandal (supra), has distinguished the same and has held that it is not clear whether it is only to the extent of income diverted or the entire income. The said issue has been settled by the hon'ble Delhi High Court in the case of CIT vs. IILM Foundation (supra) which held as under:- "21. A plain reading of sub-section (1) of Section 13 of the Act indicates that exemptions under Section 11/12 of the Act would not operate so as to exclude from the total income of the previous year any income, which is directly or indirectly, for the benefit of the person referred to in sub-s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e ITR filed. In view of the above, we direct the AO to allow the said amount. Ground 2 is allowed. 14. Similarly, the disallowance of capital expense of Rs. 2,09,61,212/- on the ground that the company to whom payment was made i.e. M/s Edusmart Services Pvt. Ltd. is a specified concern under section 13(3)(e) of the Act and the payment was not substantiated is not justified. The assessee had submitted documents like invoices, purchase order, consignment note, JJ Form as evidence of payment. Further, we agree with assessee that payment of application of income is not necessary prior to insertion of explanation 7 to section 11 of the Act which as inserted only on 01.04.2022. Prior to the amendment, accrual of expense has been considered as ....