2012 (7) TMI 936 - AT - Income Tax

Summary

Issues involved: Interpretation of provisions u/s 13(1)(d) and 11(5) of the Income Tax Act, 1961 for eligibility of exemption u/s 11 for an educational organization providing interest-free loans to sister concerns.

Summary:
The appeal by the Revenue challenged the denial of exemption u/s 11 of the Act for the assessment year 2008-09 due to alleged violation of sections 13(1)(d) and 11(5) by the assessee, an educational organization registered u/s 12AA. The AO contended that interest-free loans to sister concerns infringed the mentioned sections. The CIT(A) ruled in favor of the assessee, stating that loans to registered charitable organizations did not breach the provisions. The Revenue appealed to the Tribunal, arguing against the exemption eligibility based on the alleged violation. The Tribunal considered the facts, emphasizing that the loans were not investments or deposits, thus not falling under the sections in question. Citing the decision in ACME Educational Society case, the Tribunal upheld the CIT(A)'s order, dismissing the Revenue's appeal.

In conclusion, the Tribunal upheld the eligibility of the assessee for exemption u/s 11 of the Act, as the interest-free loans to sister concerns did not violate the relevant provisions. The appeal by the Revenue was dismissed, affirming the CIT(A)'s decision.