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2018 (10) TMI 1919 - AT - Income TaxAssessment of trust - payment of rent to the trustee of the Assessee and invoking of provisions of Section 13(1) - HELD THAT - As decided in own case 2016 (12) TMI 1567 - ITAT PUNE in the instant case the assessee had filed certain details before the CIT(A) for calculation of fair rent of the property which has been ignored by him. Under these circumstances and in the interest of justice we deem it proper to restore this issue to the file of the CIT(A) with a direction to adjudicate this issue in the light of facts and submissions made and the additional evidences filed before him. Since the issue which is raised is identical to the issue in A.Y.2006- 07 we therefore remit the issue back to the file of CIT(A) to decide the same in the light of our direction in A.Y.2006-07. Acquisition of shares which were held to be in contravention of provisions of Section 13(1)(d) of the Act - HELD THAT - As decided in own case 2016 (12) TMI 1567 - ITAT PUNE there cannot be wholesale denial of exemption of the entire income of the assessee and at the most dividend on shares would lose the benefit of exemption. In view of the above we restore the issue to the file of the Assessing Officer with a direction to find out the dividend income if any out of these shares including that of value of bonus shares that were received/obtained during the year and bring the same to tax. We hold and direct accordingly. Investment in share in Co-operative Society are covered under section 13(1)(d) - HELD THAT - Provisions of section 13(1)(d) cannot be invoked vis- -vis investment in share in Co-operative Society. Since the assessee has not violated the provisions of section 13(1)(d) of the Act the assessee cannot be denied the benefit of section 11 of the Act. Following the same parity of reasoning as held while deciding the assessee s appeal in A.Y.2006-07 2016 (12) TMI 1567 - ITAT PUNE we uphold the order of CIT(A) and thus the ground of appeal raised by Revenue is dismissed. Disallowance of expenditure for it being of prior period - Addition on the basis of the report of Special Auditor appointed under Sec.142(2A) - as contented expenditure related to earlier period but since the liability for the expenses crystallized during the year the expenses were allowable - HELD THAT - We find that identical issue arose in Assessee s case in AY 2006-07. The Coordinate Bench of Tribunal by following the decision of Nagri Mills 1957 (9) TMI 30 - BOMBAY HIGH COURT and Home Life Solutions (India) Ltd 2013 (10) TMI 973 - ITAT AHMEDABAD remitted the matter back to the AO - we therefore for the similar reasoning as given by the co-ordinate Bench of the Tribunal while deciding the Assessee s appeal in AY 2006-07 and with similar directions set aside the issue to the file of AO. Thus the ground of Assessee is allowed for statistical purposes. Amounts paid to various trusts in alleged contravention of provisions of Section 13(1)(c) - HELD THAT - The Revenue has filed appeal against the decision of CIT(A) on the issue which is decided against the assessee. Consequently assessee has not agitated the said decision of CIT(A). Disallowance in respect to amounts written off - CIT(A) has noted that the AO has not discussed the issue at all on merits and in the absence of any discussion on the nature of amounts he deleted the addition - HELD THAT - Before us Ld DR has not pointed out any fallacy in the findings of CIT(A). In such circumstances we find no reason to interfere with the order of CIT(A) in allowing write off of preoperative expenses and thus the ground No.6 of Revenue is dismissed.
Issues Involved:
1. Validity of the assessment order under section 143(3) versus section 153C. 2. Disallowance of rent paid and applicability of section 13(1)(c). 3. Acquisition of shares and contravention of section 13(1)(d). 4. Disallowance of prior period expenditure. 5. Taxability of corpus donations. 6. Advances to other trusts and contravention of section 13(1)(c). 7. Write-off of amounts and their disallowance. Detailed Analysis: 1. Validity of the Assessment Order: The assessee contended that the assessment should have been made under section 153C instead of section 143(3). The Tribunal dismissed this ground as not pressed by the assessee. 2. Disallowance of Rent Paid and Applicability of Section 13(1)(c): The Assessing Officer (AO) found that rent paid by the assessee to Shri M.N. Navale was excessive and attracted the provisions of section 13(1)(c) as the benefits were derived by persons referred to in section 13(3). The CIT(A) granted partial relief by deleting the additions for certain properties but upheld the applicability of section 13(1)(c). The Tribunal remitted the issue back to the CIT(A) for verification, following the decision in the assessee's case for AY 2006-07, where it was held that only the excess rent should be taxed, not the entire income. 3. Acquisition of Shares and Contravention of Section 13(1)(d): The AO held that the acquisition of shares contravened section 13(1)(d), disallowing the benefits under sections 11 and 12. The CIT(A) granted partial relief, holding that the denial of exemption should be restricted to the relatable income. The Tribunal, following its decision in AY 2006-07, remitted the issue back to the AO to determine the dividend income from these shares and bring it to tax. 4. Disallowance of Prior Period Expenditure: The AO disallowed prior period expenses, which the assessee claimed had crystallized during the year. The CIT(A) upheld the AO's decision. The Tribunal, following its decision in AY 2006-07, remitted the issue back to the AO for verification, emphasizing that the expenses should be allowed if they crystallized during the year. 5. Taxability of Corpus Donations: The AO added corpus donations to the income, stating that the assessee was not entitled to exemption under sections 11 and 12 due to the contravention of section 13. The CIT(A) upheld this addition. The Tribunal held that corpus donations should be taxed if there is a violation of section 13(1)(c). 6. Advances to Other Trusts and Contravention of Section 13(1)(c): The AO disallowed advances made to other trusts, stating that it violated section 13(1)(c). The CIT(A) upheld this disallowance. The Tribunal, following its decision in AY 2006-07, held that such advances violate section 13(1)(c) and should be taxed. 7. Write-off of Amounts and Their Disallowance: The AO disallowed the write-off of amounts based on the Special Auditor's report. The CIT(A) deleted this addition, stating that the AO did not discuss the issue on merits. The Tribunal upheld the CIT(A)'s decision, finding no reason to interfere. Conclusion: The Tribunal's detailed analysis and decisions were based on precedents set in the assessee's earlier assessment years, particularly AY 2006-07. The Tribunal remitted several issues back to the CIT(A) or AO for verification and proper adjudication, ensuring that only the excess or relatable income should be taxed in cases of contravention of sections 13(1)(c) and 13(1)(d). The appeals of the assessee and the Revenue were partly allowed or dismissed based on the specific grounds and issues raised.
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