9911796707
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Issues Involved:
1. Exemption on the ground of mutuality. 2. Taxability of grants-in-aid received from the Government of India. 3. Carry forward and set off of deficit from earlier years. 4. Computation of deduction u/s 11(1)(a). 5. Disallowance of expenses incurred outside India. 6. Writing off of advances to Indian Diamond Institute. 7. Levy of interest for short deduction of taxes from salaried employees. 8. Levy of interest u/s 139(8) and u/s 217. Summary: 1. Exemption on the ground of mutuality: The first ground of appeal, "The income of the Council be considered as fully exempt on the ground of mutuality," was dismissed as not pressed. 2. Taxability of grants-in-aid received from the Government of India: The second ground of appeal, "Grants-in-aid received from the Government of India be considered as not taxable," was also dismissed as not pressed. 3. Carry forward and set off of deficit from earlier years: The assessee claimed adjustment of excess application in earlier years out of the income of the year under appeal. The Tribunal allowed the claim of the assessee, subject to verification and determination of the deficit by the Assessing Officer, stating that the excess application of income in earlier years should be considered as application out of the income of the current year for purposes of section 11 of the Act. 4. Computation of deduction u/s 11(1)(a): The dispute was whether the gross receipts or the net income after necessary expenditure should be considered for accumulation. The Tribunal held that the income available for accumulation u/s 11(1)(a) is the income computed on commercial principles. The issue was set aside and remitted to the Assessing Officer to determine the expenditure to be deducted from the gross income for the purpose of determining the income and then working out the 25% for accumulation. 5. Disallowance of expenses incurred outside India: The Tribunal held that the expenditure incurred by the assessee for sending a Trade Delegation abroad qualifies for exemption u/s 11(1)(a) as the application of income was for purposes in India, despite the expenditure being incurred outside India. 6. Writing off of advances to Indian Diamond Institute: The Tribunal upheld the disallowance of the claim to write off Rs. 6,04,639 advanced to the Indian Diamond Institute, stating that the expenditure does not qualify for exemption u/s 11(1)(a) as it was not claimed as application of income for charitable purposes. 7. Levy of interest for short deduction of taxes from salaried employees: The Tribunal upheld the disallowance of Rs. 6,339 paid as penal interest for short deduction of taxes from salaried employees, stating that it does not qualify for exemption as it does not amount to application of income for charitable purposes. 8. Levy of interest u/s 139(8) and u/s 217: The Tribunal directed the Assessing Officer to grant consequential relief to the assessee regarding the levy of interest u/s 139(8) and u/s 217. Conclusion: The appeal of the assessee was partly allowed.
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