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2017 (3) TMI 673 - ITAT PUNEBenefit of sections 11 and 12 - investment in mutual funds - AO denied the benefit of exemption u/s. 11 and 12 of the Act on the entire surplus generated by the assessee merely for the reason that the assessee has made investment in funds not approved u/s. 10(23D) - Held that:- It is no more res integra that where the investments or deposits are made by charitable trust are in violation of section 11(5) of the Act, the benefit of exemption u/s. 11 of the Act would not be denied on the entire income of the assessee. It is only the investments or deposits made in violation of provisions of section 11(5) of the Act that would attract maximum marginal rate of tax as per the provisions of law. As decided in Commissioner of Income Tax Vs. FR. Mullers Charitable Institutions [2014 (2) TMI 1033 - KARNATAKA HIGH COURT] it is only the income from such investment or deposit which has been made in violation of Section 11(5) of the Act that is liable to be taxed and that violation under Section 13(1)(d) does not tantamount to denial of exemption under Section 11 on the total income of the assessee . Where the whole or part of the relevant income is not exempted under section 11 by virtue of violation of section 13(1)(d) of the Act, tax shall be levied on the relevant income or a part of the relevant income at the maximum marginal rate. - Decided in favour of assessee
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