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Issues involved: Appeal against the order of Commissioner of Income-tax(Appeals) regarding entitlement to benefit under section 11 of the Income-tax Act, 1961 and violation of section 13(1)(c) of the Act.
Entitlement to benefit under section 11: The appellant, an educational organization registered under section 12AA of the Act, filed for exemption under section 11. The Assessing Officer denied the exemption, citing violation under section 13(1)(c) due to advances made to related concerns. On appeal, the Commissioner of Income-tax(Appeals) found no contravention of section 13(1)(c) and granted the exemption under section 11. It was established that the appellant only repaid loans previously availed, not exceeding owed amounts, to related concerns, and no benefit accrued to the managing trustee to invoke section 13(1)(c). Violation of section 13(1)(c): The Assessing Officer contended that advances made by the appellant to related concerns, where the managing trustee held positions, violated section 13(1)(c) as it benefited the trustee. However, the Commissioner of Income-tax(Appeals) analyzed the transactions and concluded that the appellant had not exceeded its liabilities to related concerns during the financial year 2007-08. The payments made were found to be repayments of loans and not additional benefits to the managing trustee, thus not violating section 13(1)(c). Decision: The Commissioner of Income-tax(Appeals) directed the Assessing Officer to allow the benefit of exemption under section 11, as there was no violation of section 13(1)(c). Consequently, the appeal filed by the Revenue was dismissed, upholding the decision in favor of the appellant. The order was pronounced in an open court on September 5, 2012, in Chennai.
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