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Issues involved:
The judgment involves issues related to the eligibility of exemption u/s 10(23C)(vi) and u/s 11/12 of the Income Tax Act, 1961, cancellation of registration u/s 12A, disallowances/additions made by the Assessing Officer, and various grounds raised by the Revenue in two appeals. I.T.A. No. 426/Ind/2007 for assessment year 2003-04: The appellant, a registered society, had its registration u/s 12-A cancelled subsequent to denial of exemption u/s 10(23- C)(vi). The Assessing Officer (A.O.) disallowed exemption u/s 11/12 due to excess payment to an individual, unexplained cash credit, sale of building, donations, and interest on loans. The Ld. CIT(A) deleted all additions/disallowances, considering the restoration of registration u/s 12-A by the Tribunal. The Revenue appealed, challenging the deletions. Grounds raised by the Revenue: 1. Excess of income over expenditure: The A.O. made an addition due to ineligibility for exemption u/s 10(23C)(vi) and u/s 12A, which was later restored. The Tribunal dismissed this ground. 2. Excess payment made to an individual: The Tribunal found no unusual benefit received by the individual, hence dismissed the addition. 3. Unexplained cash credit: The Ld. CIT(A) rightly deleted the addition as the advance was returned directly to the society. 4. Sale of building: The sale consideration was rightly reduced from the opening W.D.V. for depreciation calculation. 5. Donation: Donations related to trust objects were rightly allowed by the Ld. CIT(A). 6. Preliminary expenses: Write-off of preliminary expenses was allowed as they were necessary for the society's objects. 7. Interest disallowed: Loans given without interest to educational and charitable societies were found in line with the society's objects, hence no disallowance was warranted. 8. Benefit of interest passed on: No disallowance of interest paid or notional interest was justified, and the society's income was held exempt u/s 11 & 12. I.T.A.No.439/Ind/2007: The issues raised in this appeal were similar to those in I.T.A. No. 426/Ind/2007, and the Tribunal dismissed the grounds raised by the Revenue in this appeal as well. In conclusion, both appeals of the Revenue were dismissed by the Tribunal on 26th November, 2009.
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