2023 (2) TMI 1463

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.... assessment year 2011-12 vide order dated 25.03.2014. 2. The only issue in this appeal of Revenue is against the order of CIT(A) allowing exemption u/s.11 of the Act without considering the impact of section 11 & 12 of the Act which operates as to exclude from total income if violations are as mentioned in section 13(1) of the Act. For this, Revenue has raised the following grounds:- 2.1 The Ld CIT(A) allowed the exemption u/s 11 of the I.T. Act, 1961 without realizing the fact that Sec. 13(1) clearly states that nothing contained in Sec.11 or 12 shall operate so as to exclude from total income if violations as mentioned is those clauses are attracted. 2.2 The Ld. CIT(A) failed to follow the decision of Hon'ble ITAT....

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....by audited accounts and report in Form No.10B. The AO during the course of assessment proceedings noticed that the assessee's trust has advanced an amount of Rs.32.45 lakhs for purchase of a property for assessee's trust. According to AO, this investment violates provisions of section 13(1)(d) of the Act and accordingly, he taxed the surplus amount at Maximum Marginal Rate denying exemption u/s.11 of the Act. The AO noted that the assessee has made investment in the modes other than specified instruction 11(5) and this investment in capital land of advance of Rs.32.45 lakhs could not be proved by filing any evidence, copy of agreement, details of said advance and since the funds of the assessee's trust have remained with the proposed seller....

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....le High Court of Madras held -In case of a trust registered under section 12AA, only such part of income which is violative of section 13(1) (d) can be brought to tax at maximum marginal rate and entirety of income cannot be denied exemption under section 11. 6.5.2 In [2015] 63 taxmann.com 324 (SC) Director of Income-tax, Chennai vs Working Women's Forum, the Hon'ble Supreme Court of India dismissed SLP against High Court's ruling (arising out of order of High Court of Madras in CIT VS Working Working Women's Forum [2014] 365 ITR 353) that in case of a trust registered under section 12AA, only such part of income which is violative of section 13(1) (d) can be brought to tax at maximum marginal rate and entirety of i....