ITAT – JAIPUR
M/S GANGA DEVI MEMORIAL ... VS
INCOME TAX OFFICER (EXEMPTION), ... ON 27 JUNE, 2018
Summarised
Judgement (Scroll for Complete Judgement)
This appeal by the assessee is directed against the
order dated 1st February, 2018 of ld. CIT (A)-3, Jaipur for the assessment year
2012-13. The assessee has raised the following grounds of appeal :-
" 1. Under the facts and circumstances of the
case the assessment order passed by the learned Assessing Officer is unlawful,
illegal and unjustified and deserves to be quashed being ab-initio void has
been wrongly confirmed by the learned CIT (A).
2. Under the facts and circumstances of the case the
learned CIT (A) has erred in confirming the addition of Rs. 17,75,000/- by
disallowing exemption u/s 11(1)(a) of the Income Tax Act, 1961 for the amount
which were received in earlier years.
Facts
of the Case:
The assessee is a trust
established vide Trust Deed dated 23.08.2001 and registered with the Sub
Registrar, Jaipur-1, Jaipur. The assessee trust was granted registration under
section 12AA of the I.T. Act, 1961.
During the course of
assessment proceedings, the AO noted that the assessee has given loans and
advances of Rs. 17,75,000/- in contravention of provisions of section 13(1)(d)
read with section 11(5) of the Act.
The assessee also
explained that an interest income of Rs. 1,39,758/- was received by the
assessee in the next year which has been utilized for charitable purposes of
this Trust. The AO did not accept the contention of the assessee and held that
the said amount of Rs. 17,75,000/- being accumulated amount has not been
applied by the assessee for charitable purposes and addition of the said
amount. The assessee challenged the action of the AO before the ld. CIT (A) but
could not succeed.
Judgement:
Hence, in view of the
above facts and circumstances of the case as well as following the decision of
Coordinate Bench of the Tribunal, we hold that when the assessee has already
applied 85% of the income for charitable purposes then the investment in
question in violation of provisions of section 11(5) read with section 13(1)(d)
would attract the provisions of section 164(2) only in respect of the income on
such investment.
Consequently, we set
aside the orders of the authorities below and delete the addition made by the
AO.
In the result, appeal
of the assessee is allowed.
--------------------------------------------------------
Complete Judgement
Income Tax Appellate Tribunal – Jaipur
M/S GANGA DEVI MEMORIAL ... VS
INCOME TAX OFFICER (EXEMPTION), ... ON 27 JUNE, 2018
ITA No. 247/JP/2018
IN
THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
BEFORE:
SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, AM
M/s.
Ganga Devi Memorial cuke The Income Tax Officer,
Charitable
Trust, Vs. (Exemptions)
C-21,
Chomu House, C-Scheme, Ward-1,
Jaipur. Jaipur.
This appeal by the
assessee is directed against the order dated 1st February, 2018 of ld. CIT
(A)-3, Jaipur for the assessment year 2012-13. The assessee has raised the
following grounds of appeal :-
" 1. Under the
facts and circumstances of the case the assessment order passed by the learned
Assessing Officer is unlawful, illegal and unjustified and deserves to be
quashed being ab-initio void has been wrongly confirmed by the learned CIT (A).
2. Under the facts and
circumstances of the case the learned CIT (A) has erred in confirming the
addition of Rs. 17,75,000/- by disallowing exemption u/s 11(1)(a) of the Income
Tax Act, 1961 for the amount which were received in earlier years.
3. Under the facts and
circumstances of the case the learned CIT (A) has erred in confirming the
action of the learned Assessing Officer in making the addition of Rs.
17,75,000/- by alleging that the assessee has violated section 13(1)(d) r.w.s.
11(5) of the Income Tax Act, 1961 without considering the submission of the
assessee that the assessee has parked its surplus fund to generate more
revenue.
4. The assessee craves
your indulgence to add, amend or alter all or any grounds of appeal before or
at the time of hearing.
2. The assessee is a
trust established vide Trust Deed dated 23.08.2001 and registered with the Sub
Registrar, Jaipur-1, Jaipur. The assessee trust was granted registration under
section 12AA of the I.T. Act, 1961. The assessee filed its return of income for
the year under consideration on 28th September, 2012 and claimed exemption
under section 11(1)(a) of the IT Act. During the course of assessment
proceedings, the AO noted that the assessee has given loans and advances of Rs.
17,75,000/- in contravention of provisions of section 13(1)(d) read with
section 11(5) of the Act. The AO asked the assessee as to why the exemption
claimed under section 11 should not be withdrawn. In response the assessee
submitted that during the year the assessee has temporarily given advances of Rs.
17,00,000/- to M/s. Govind Agencies to earn interest income on the surplus fund
for a short period of time. The assessee also explained that an interest income
of Rs. 1,39,758/- was received by the assessee in the next year which has been
utilized for charitable purposes of this Trust. The AO did not accept the
contention of the assessee and held that the said amount of Rs. 17,75,000/-
being accumulated amount has not been applied by the assessee for charitable
purposes and accordingly made an addition of the said
amount. The assessee challenged the action of the AO before the ld. CIT (A) but
could not succeed.
3. Before us, the ld.
A/R of the assessee has submitted that when the assessee has applied 85% of its
income for charitable purposes as per the provisions of section 11(1)(a) of the
Act, then the amount of Rs. 17,75,000/- though may not be an investment as per
the modes prescribed under section 11(5) of the Act, the same cannot be held as
application of income for non-charitable purposes. Thus the ld. A/R has
submitted that as per the provisions of section 13(1)(d) only the income on
such investment can be taxed and the principal amount cannot be added or
charged to tax. In support of his contention he has relied upon the decision of
Coordinate Bench of this Tribunal dated 05.11.2014 in case of Santokba
Durlabhji Trust Fund, Jaipur vs. ITO in ITA No. 169/JP/2012 as well as the
decision of Mumbai Benches of the Tribunal dated 04.02.2016 in case of ACIT
(Exemptions) vs. Jamshetjee Tata Trust in ITA No. 3807/Mum/2015. Hence, the ld.
A/R has submitted that at the most the interest income earned on such
advances/loans can be charged to tax and not the principal amount when the
assessee has already complied with the conditions as prescribed under section
11(1)(a) of the Act to the extent of application of 85% of income for
charitable purposes. 3.1. On the other hand, the ld. D/R has submitted that
this is a clear violation of provisions of section 11(5) as well as section
13(1)(d) of the Act as the assessee has advanced the money to private parties
and not invested as per the modes prescribed under section 11(5) of the IT Act.
Since the assessee has violated the provisions of section 13(1)(d) of the Act,
therefore, the assessee lost the exemption under section 11 of the Act and the
entire income of the assessee is liable to be taxed. The ld. D/R has thus
submitted that instead of taxing the entire income, the assessee has made the
addition only to the extent of Rs. 17,75,000/-. She has relied upon the orders
of the authorities below.
4. We have considered
the rival submissions as well as the relevant material on record. The assessee
is undisputedly granted registration under section 12AA as a
charitable/religious trust and, therefore, entitled for exemption under section
11 of the IT Act. The income derived from the property held under the Trust
wholly for charitable or religious purposes to the extent of which it is
applied for charitable purposes in India is exempt from income tax as the same
shall not be included in the total income of the Trust. Thus in order to avail
the benefit under section 11 of the Act, the conditions stipulated under
sections 11 and 13 of the Act are to be fulfilled. The provisions of section 11
contemplate the conditions of application of income whereas the provisions of
section 13 of the Act prescribe the conditions of source of income from the
investment of funds of the Trust. In the case in hand, the AO has added a sum
of Rs. 17,75,000/- on the ground that the assessee has violated the provisions
of section 11(5) read with section 13(1)(d) of the Act. It is pertinent to note
that section 11(5) of the Act prescribes certain modes of investment and
deposits of the accumulated amount or set apart amount from the income of the
Trust. For availing the exemption under section 11(1)(a), there is no such
condition of deposit of accumulated amount or set apart amount not in exceed of
15% of the income to be invested or deposited in the manner and modes
prescribed under section 11(5) of the Act but has to be applied for charitable purpose within a period
of five years. For ready reference, we reproduce the provisions of section
11(1) as under :-
" 11. (1) Subject
to the provisions of sections 60 to 63, the following income shall not be
included in the total income of the previous year of the person in receipt of
the income--
[(a) income derived
from property33 held under trust wholly33 for charitable or religious
purposes33, to the extent to which such income33 is applied33 to such purposes
in India33; and, where any such income is 33accumulated or set apart for
application to such purposes in India, to the extent to which the income so
accumulated or set apart36 is not in excess of 37[fifteen] per cent of the
income from such property;
(b) income derived from
property held under trust in part36 only for such purposes, the trust having
been created before the commencement of this Act, to the extent to which such
income36 is applied to such purposes in India; and, where any such income is
finally set apart for application to such purposes in India, to the extent to
which the income so set apart is not in excess of 37[fifteen] per cent of the
income from such property;
(c) income 38[derived]
from property held under trust--
(i) created on or after
the 1st day of April, 1952, for a charitable purpose which tends to promote
international welfare in which India is interested, to the extent to which such
income is applied to such purposes outside India39, and
(ii) for charitable or
religious purposes, created before the 1st day of April, 1952, to the extent to
which such income is applied to such purposes outside India:
Provided that the
Board, by general or special order, has directed in either case that it shall
not be included in the total income of the person in receipt of such income;
[(d) income in the form
of voluntary contributions made with a specific direction that they shall form
part of the corpus41 of the trust or institution.] 42 43 [ [Explanation
1].--For the purposes of clauses (a) and (b),-- (1) in computing the
44[fifteen] per cent of the income which may be accumulated or set apart, any
such voluntary contributions as are referred to in section 12 shall be deemed
to be part of the income;
(2) if, in the previous
year, the income applied to charitable or religious purposes in India falls
short of 45[eighty-five] per cent of the income derived during that year from
property held under trust, or, as the case may be, held under trust in part, by
any amount--
(i) for the reason that
the whole or any part of the income has not been received during that year, or
(ii) for any other
reason, then--
(a) in the case
referred to in sub-clause (i), so much of the income applied to such purposes
in India during the previous year in which the income is received or during the
previous year immediately following as does not exceed the said amount, and
(b) in the case
referred to in sub-clause (ii), so much of the income applied to such purposes
in India during the previous year immediately following the previous year in
which the income was derived as does not exceed the said amount, may, at the
option of the person in receipt of the income 46[(such option to be exercised
before the expiry of the time allowed under sub-section (1) of section 139 for
furnishing the return of income, in such form and manner as may be
prescribed47)] be deemed to be income applied to such purposes during the
previous year in which the income was derived; and the income so deemed to have
been applied shall not be taken into account in calculating the amount of
income applied to such purposes, in the case referred to in sub-clause (i),
during the previous year in which the income is received or during the previous
year immediately following, as the case may be, and, in the case referred to in
sub-clause (ii), during the previous year immediately following the previous
year in which the income was derived.] [Explanation 2.--Any amount credited or
paid, out of income referred to in clause (a) or clause (b) read with Explanation
1, to any other trust or institution registered under section 12AA, being
contribution with a specific direction that they shall form part of the corpus
of the trust or institution, shall not be treated as application of income for
charitable or religious purposes."
Thus to the extent of
the accumulation or set apart not in excess of 15% of the income is permitted
under section 11(1)(a) for availing the exemption of the income derived from
property held under the Trust. Even as per the Explanation to section 11(1)(a)
and (b) a Trust is further allowed to defer the application of income which is
even falls short of 85% of the income derived during the year, if the assessee
has exercised an option before the due date of filing the return under section
139(1) that the said income will be applied in the immediately following
previous year. Hence to the extent of the application of 85% and accumulation
of remaining 15%, there is no condition of keeping the said 15% amount as per
the modes of investment and deposits prescribed under section 11(5). However,
there is a further relaxation even for application of 85%
of income to the extent if such income is accumulated or set apart either in
whole or in part for application to such purposes in India subject to the
conditions prescribed under sub-section (2) of section 11 of the Act. For ready
reference, we quote section 11(2) of the Act as under :- 52 "
[(2) 53[Where
54[eighty-five] per cent of the income referred to in clause (a) or clause (b)
of sub-section (1) read with the Explanation to that sub-section is not
applied, or is not deemed to have been applied, to charitable or religious
purposes in India during the previous year but is accumulated or set apart,
either in whole or in part, for application to such purposes in India, such
income so accumulated or set apart shall not be included in the total income of
the previous year of the person in receipt of the income, provided the
following conditions are complied with, namely:--] [(a) such person furnishes a
statement in the prescribed form and in the prescribed56 manner57 to the
Assessing Officer, stating the purpose for which the income is being
accumulated or set apart and the period for which the income is to be
accumulated or set apart, which shall in no case exceed five years;
(b) the money so
accumulated57 or set apart is invested or deposited in the forms or modes
specified in sub-section (5);
(c) the statement
referred to in clause (a) is furnished on or before the due date specified
under sub-section (1) of section 139 for furnishing the return of income for
the previous year:
Provided that in
computing the period of five years referred to in clause (a), the period during
which the income could not be applied for the purpose for which it is so
accumulated or set apart, due to an order or injunction of any court, shall be
excluded.] [Explanation.--Any amount credited or paid, out of income referred
to in clause (a) or clause (b) of sub-section (1), read with the Explanation to
that sub-section, which is not applied, but is accumulated or set apart, to any
trust or institution registered under section 12AA or to any fund or
institution or trust or any university or other educational institution or any
hospital or other medical institution referred to in sub-clause (iv) or
sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of
section 10, shall not be treated as application of income for charitable or
religious purposes, either during the period of accumulation or
thereafter.]"
Therefore, a trust
would not loose exemption even in case 85% of the income is not applied during
the year under consideration but the short fall of 85% either in whole ITA No.
247/JP/2017 Ganga Devi Memorial Charitable Trust, Jaipur.
or in part is
accumulated or set apart for application to such purposes in India by giving a
notice in writing to the AO and the money so accumulated or set part is
invested or deposited in the form or modes specified in sub-section (5) of
section 11. The modes as prescribed under sub-section (5) of section 11 are as
under :- " [(5) The forms and modes of investing or depositing the money
referred to in clause (b) of sub-section (2) shall be the following, namely :--
(i) investment in
savings certificates as defined in clause (c) of section 272 of the Government
Savings Certificates Act, 1959 (46 of 1959), and any other securities or
certificates issued by the Central Government under the Small Savings Schemes
of that Government;
(ii) deposit in any
account with the Post Office Savings Bank;
(iii) deposit in any
account with a scheduled bank or a co-operative society engaged in carrying on
the business of banking (including a co-operative land mortgage bank or a
co-operative land development bank).
Explanation.--In this
clause, "scheduled bank" means the State Bank of India constituted
under the State Bank of India Act, 1955 (23 of 1955), a subsidiary bank as
defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), a
corresponding new bank constituted under section 3 of the Banking Companies
(Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), or under
section 3 of the Banking Companies (Acquisition and Transfer of Undertakings)
Act, 1980 (40 of 1980), or any other bank being a bank included in the Second
Schedule to the Reserve Bank of India Act, 1934 (2 of 1934);
(iv) investment in
units of the Unit Trust of India established under the Unit Trust of India Act,
1963 (52 of 1963);
(v) investment in any
security for money created and issued by the Central Government or a State
Government;
(vi) investment in
debentures issued by, or on behalf of, any company or corporation both the
principal whereof and the interest whereon are fully and unconditionally
guaranteed by the Central Government or by a State Government;
(vii) investment or
deposit73 in any 74[public sector company]:
[Provided that where an
investment or deposit in any public sector company has been made and such
public sector company ceases to be a public sector company,-- (A) such
investment made in the shares of such company shall be deemed to be an
investment made under this clause for a period of three years from the date on
which such public sector company ceases to be a public sector company;
(B) such other
investment or deposit shall be deemed to be an investment or deposit made under
this clause for the period up to the date on which such ITA No. 247/JP/2017
Ganga Devi Memorial Charitable Trust, Jaipur.
investment or deposit
becomes repayable by such company;]
(viii) deposits with or
investment in any bonds issued by a financial corporation which is engaged in
providing long-term finance for industrial development in India and 76[which is
eligible for deduction under clause (viii) of sub-section (1) of section 36];
(ix) deposits with or
investment in any bonds issued by a public company formed and registered in
India with the main object of carrying on the business of providing long-term
finance for construction or purchase of houses in India for residential
purposes and 76[which is eligible for deduction under clause (viii) of
sub-section (1) of section 36];
[(ixa) deposits with or
investment in any bonds issued by a public company formed and registered in
India with the main object of carrying on the business of providing long-term
finance for urban infrastructure in India. Explanation.--For the purposes of
this clause,--
(a) "long-term
finance" means any loan or advance where the terms under which moneys are
loaned or advanced provide for repayment along with interest thereof during a
period of not less than five years;
(b) "public
company" shall have the meaning assigned to it in section 378 of the
Companies Act, 1956 (1 of 1956);
(c) "urban
infrastructure" means a project for providing potable water supply,
sanitation and sewerage, drainage, solid waste management, roads, bridges and
flyovers or urban transport;]
(x) investment in
immovable property.
Explanation.--"Immovable
property" does not include any machi-nery or plant (other than machinery
or plant installed in a building for the convenient occupation of the building)
even though attached to, or permanently fastened to, anything attached to the
earth;] [(xi) deposits with the Industrial Development Bank of India
established under the Industrial Development Bank of India Act, 1964 (18 of
1964);] [(xii) any other form or mode of investment or deposit as may be
prescribed.81]" Therefore, the condition of investment or deposit in the
manner and modes prescribed under section 11(5) is to be fulfilled only in case
the Trust has not applied its income during the year to the extent of 85% and
as per section 11(2) has set apart or accumulated the short fall portion to be
applied for specific purposes, then the said amount of short fall has to be
kept in the investment or deposits as ITA No. 247/JP/2017 Ganga Devi Memorial
Charitable Trust, Jaipur.
prescribed under
section 11(5) of the Act. Hence in case the Trust has complied with the
conditions of application of 85% of the income during the year under
consideration, then there is no pre-condition for the balance income
accumulated not exceeding 15% to be kept in the deposits or investment as
prescribed under section 11(5) of the Act for availing the exemption under section
11(1)(a) of the IT Act.
5. As regards the issue
of violation of the conditions as prescribed under section 13(1)(d), there is
no dispute that the investment being the advances/loans given to the persons
and not in conformity with the provisions of section 11(5), the income from
such investment would not be eligible for exemption under section 11 of the Act
due to the reason of not fulfilling the conditions prescribed under section
13(1)(d) of the Act. For ready reference, we quote section 13(1)(d) as under :-
" 13. (1) Nothing contained in section 1133[or section 12] shall operate
so as to exclude from the total income of the previous year of the person in
receipt thereof--
(a) Xxxx xxxxx
(b) Xxxxx xxxxx (bb)
35[***] xxxxx
(c) xxxx xx [(d) in the
case of a trust for charitable or religious purposes or a charitable or
religious institution, any income thereof, if for any period during the
previous year--
(i) any funds38 of the
trust or institution are invested or deposi- ted38 after the 28th day of February,
1983 otherwise than in any one or more of the forms or modes specified in
sub-section (5) of section 11; or
(ii) any funds of the
trust or institution invested or deposited38 before the 1st day of March, 1983
otherwise than in any one or more of the forms or modes specified in
sub-section (5) of section 11 continue to remain so invested or deposited after
the 30th day of November, 1983; or [(iii) any shares in a company, other than--
ITA No. 247/JP/2017
Ganga Devi Memorial Charitable Trust, Jaipur.
(A) shares in a public
sector company ;
(B) shares prescribed
as a form or mode of investment under clause (xii) of sub-section (5) of
section 11, are held by the trust or institution after the 30th day of
November, 1983:] Provided that nothing in this clause shall apply in relation
to--
(i) any assets held by
the trust or institution where such assets form part of the corpus of the trust
or institution as on the 1st day of June, 1973 40[***];
[(ia) any accretion to
the shares, forming part of the corpus mentioned in clause
(i), by way of bonus
shares allotted to the trust or institution;]
(ii) any assets (being
debentures issued by, or on behalf of, any company or corporation) acquired by
the trust or institution before the 1st day of March, 1983;
[(iia) any asset, not
being an investment or deposit in any of the forms or modes specified in
sub-section (5) of section 11, where such asset is not held by the trust or
institution, otherwise than in any of the forms or modes specified in
sub-section (5) of section 11, after the expiry of one year from the end of the
previous year in which such asset is acquired or the 31st day of March,
43[1993], whichever is later;]
(iii) any funds
representing the profits and gains of business, being profits and gains of any
previous year relevant to the assessment year commencing on the 1st day of
April, 1984 or any subsequent assessment year.
Explanation.--Where the
trust or institution has any other income in addition to profits and gains of
business, the provisions of clause (iii) of this proviso shall not apply unless
the trust or institution maintains separate books of account in respect of such
business.] 4 4 [Explanation.--For the purposes of sub-clause (ii) of clause
(c), in determining whether any part of the income or any property of any trust
or institution is during the previous year used or applied, directly or
indirectly, for the benefit of any person referred to in sub-section (3), in so
far as such use or application relates to any period before the 1st day of July,
1972, no regard shall be had to the amendments made to this section by section
7 [other than sub-clause (ii) of clause (a) thereof] of the Finance Act,
1972.]"
Thus section 13(1)(d)
provides the investment/deposits as prescribed under section 11(5) of the Act
and non-fulfillment of the said conditions would not deprive a Trust the
exemption in respect of other income so long the assessee is granted
registration under section 12AA of the Act. Accordingly, the provisions of
section ITA No. 247/JP/2017 Ganga Devi Memorial Charitable Trust, Jaipur.
164(2) for bringing the
income to tax at maximum marginal rate which is not eligible for exemption due
to non-satisfaction of the conditions of investment as prescribed under section
11(5) of the Act. Hence only the income from such investment which is made in
violation of provisions of section 11(5) will be taxed in terms of the
provisions of section 164(2) and not the investment itself has to be taxed when
the assessee has complied with the conditions of section 11(1)(c) of the Act.
The Coordinate Bench of this Tribunal in case of Santokba Durlabhji Trust Fund
vs. ITO (supra) held in para 4.7 and 5.1 as under :-
" 4.7 We find
merit in the contention of ld. Counsel for the assesse that the proposition of
apportionment of income eligible for benefits u/s 11 and 12 between exempted or
non exempted income is upheld by Hon'ble Supreme Court in Dawoodi Bohra Trust
(supra). Thus Hon'ble Supreme court has rationally dealt with this situation
and instead of denying the entire benefits of sec 11 and 12 even for a
technical, venial or smaller breach a sound and reasonable proposition has been
laid down. In view of the foregoings we have no hesitation to hold that the
entire benefits of sec. 11 and 12 cannot be forfeited from the trust and the
corresponding dividend income from TISCO shares will not be eligible for
Benefits of sec. 11 and 12.
5.1 Now we advert to
the assessee's contention that income not eligible for benefits of sec 11 and
12 is to be subjected to other provisions of the IT Act and thereafter the
taxable income is to be subjected to maximum marginal rate. We find force in
this argument. As per the scheme of the Act, first the trust income is to be
worked out, thereafter, benefits of provision of secs. 11 and 12 are to be
applied. Remainder income is than to be treated with regular provisions of the
Act and resultant income i.e. taxable income is to be subjected to maximum
marginal rates. Applying ITA No. 247/JP/2017 Ganga Devi Memorial Charitable
Trust, Jaipur.
this scheme of the I T
Act to assessee case the non-beneficial income is in the form of dividend
income from TISCO shares. There is no dispute between the parties about the
nature of income being dividend and quantum thereof. In the backdrop of these
facts the dividend income being exempt from income by express provisions of sec
10(34), the dividend income is exempt from Income Tax. This being so, in the
result there remains no tax liability on the trust. Consequently we hold
accordingly and delete the additions in this behalf. Our judgment is fortified
by the judgments cited by the assessee's counsel (supra) which deal with the
issue before us with precision and which we respectfully follow. Apropos the
case laws cited by ld DR - They have been considered by above judicial
precedents to arrive at the above conclusion, which we are respectfully
following. We may hasten to add that even department has not been taking any
particular stand and allowing the benefits of sec 11 and 12 in some of the
years, then rethinking and refusing the benefits by reopening the assessments.
Thus even the department has its own share of interpretations, leading to
repetitive proceedings. In consideration of all the foregoing, we allow the
appeal filed by the assessee."
Hence, in view of the
above facts and circumstances of the case as well as following the decision of
Coordinate Bench of the Tribunal, we hold that when the assessee has already
applied 85% of the income for charitable purposes then the investment in
question in violation of provisions of section 11(5) read with section 13(1)(d)
would attract the provisions of section 164(2) only in respect of the income on
such investment. The assessee has earned the income on such investment in the subsequent
year and, therefore, no addition is called for for the year under consideration
either on the investment or income from such investment.
Consequently, we set
aside the orders of the authorities below and delete the addition made by the
AO.
6. In the result,
appeal of the assessee is allowed.
Order pronounced in the
open court on 27/06/2018.
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