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2012 (12) TMI 1062 - AT - Income TaxDenial of exemption under s. 11 on the ground that same should have been claimed exempt under s. 10(23C) - Held that - When the law permits the assessee to claim exemption under s. 10(23C) or s. 11 the choice should be left to the assessee and the Department cannot force the assessee to adopt only a particular provision. Since in the instant case the assessee has been granted registration under s. 12A which has not been cancelled and is still in force for the impugned assessment year and since the assessee was granted the benefit of exemption under s. 11 in the past years under scrutiny assessments and no objection was raised by the Revenue for such exemption under s. 11 therefore following rule of consistency the learned CIT(A) should have allowed exemption under s. 11 and the learned CIT(A) in our opinion is not justified in holding that the assessee should have claimed exemption under s. 10(23C). The various decisions relied on by the learned CIT(A) in our opinion are distinguishable and not applicable to the facts of the present case. In this view of the matter we set aside the order of the CIT(A) on this issue and hold that the assessee can claim exemption under s. 11 if it fulfils the other conditions prescribed under the said section. The grounds raised by the assessee are accordingly allowed. Considering the fact that the Revenue had no objection in the past for holding the shares of the bank during the tenure of loan utilised by the assessee trust and considering the fact that the assessee trust is still enjoying overdraft facilities from the bank we are of the considered opinion that there is no violation of provisions of s. 11(5) r/w s. 13(l)(d) on account of holding the shares of the bank. In this view of the matter we set aside the order of the CIT(A) and the grounds raised by the assessee on this issue are allowed. Donations received through issue of coupons as revenue receipts - Held that - Since in the preceding paras we have held that there is no violation of provisions of s. 11(5) r/w s. 13(l)(d) and since the donations are treated as revenue receipts therefore it does not make any difference. We therefore hold that exemption under s. 11 is allowable on such coupon donations. The grounds by the assessee are decided accordingly.
Issues Involved:
1. Validity of assessment under Section 153C. 2. Applicability of exemptions under Section 11 and Section 10(23C). 3. Violation of Section 13(1)(d) read with Section 11(5) due to investments. 4. Treatment of donations received through coupons. 5. Set-off of excess application of income from earlier years. 6. Charging of interest under Section 234B. Detailed Analysis: 1. Validity of Assessment under Section 153C: The assessee argued that the assessment under Section 153C was null and void as the additions made were not based on incriminating material found during the search but on enquiries during assessment proceedings. The CIT(A) held that all additions could be made in the assessment and whether they were based on incriminating material was not relevant. 2. Applicability of Exemptions under Section 11 and Section 10(23C): The CIT(A) held that the assessee trust should have claimed exemption under Section 10(23C) instead of Section 11, as it was providing medical relief. The Tribunal disagreed, stating that the trust was registered under Section 12A and had been granted exemption under Section 11 in previous years. It emphasized that the choice of exemption (under Section 11 or Section 10(23C)) should be left to the assessee. 3. Violation of Section 13(1)(d) read with Section 11(5) due to Investments: The AO noted that the assessee had invested in shares of Bharati Sahakari Bank and made advances to Bharati Vidyapeeth, which was considered a violation of Section 13(1)(d) read with Section 11(5). The CIT(A) upheld the AO's decision regarding the shares but allowed the assessee's claim concerning advances to Bharati Vidyapeeth. The Tribunal found that the investment in shares was negligible compared to the total assets and was made under compulsion to obtain a loan, thus not constituting a violation. 4. Treatment of Donations Received through Coupons: The AO treated the donations received through coupons as revenue receipts, not corpus donations, due to the lack of donor identification and specific directions. The CIT(A) upheld this view. The Tribunal agreed that these donations could not be considered corpus donations but accepted the alternative argument that they should be treated as revenue receipts eligible for exemption under Section 11. 5. Set-off of Excess Application of Income from Earlier Years: The CIT(A) directed the AO to allow the set-off of excess application of income from earlier years against the current year's income. The Tribunal held that this issue became academic since it allowed the exemption under Section 11, making the Revenue's grounds on this point infructuous. 6. Charging of Interest under Section 234B: Since the exemption under Section 11 was allowed, the issue of charging interest under Section 234B was considered consequential and was allowed. Conclusion: - ITA No. 970/Pn/2010 (by assessee): Partly allowed. The Tribunal held that the assessee could claim exemption under Section 11 and that there was no violation of Section 13(1)(d) read with Section 11(5) due to the investment in shares. - ITA No. 1042/Pn/2010 (by Revenue): Partly allowed. The Tribunal agreed that the CIT(A) should have dismissed the appeal as infructuous when the order was set aside under Section 263. - ITA No. 969/Pn/2010 (by assessee): Dismissed as infructuous since the order of the AO was set aside under Section 263. Pronounced in the open court on December 31, 2012.
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