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Issues involved: Assessment of income u/s 12A, treatment of grants received, eligibility for tax exemptions u/s 11 and 13.
Assessment of income u/s 12A: The appellant, a registered society engaged in charitable activities, filed appeals for assessment years 1982-83 and 1983-84 after the Assessing Officer determined higher incomes than reported. The Commissioner rejected the belated application for registration u/s 12A, leading to assessments as an AOP without considering exemptions u/s 11 and 13. Treatment of grants received: The society received tied-up grants from a foreign donor, Bread for the World, with specific conditions and a requirement to return unspent funds. The Assessing Officer treated these grants as income, disallowing expenses for construction and land reclamation, resulting in increased taxable incomes. Eligibility for tax exemptions u/s 11 and 13: The appellant argued that the grants should not be considered income due to their specific purpose and the nature of the society's activities. The Tribunal agreed, directing the Assessing Officer to exclude the tied-up grants and related expenses from income computation, while allowing deductions for expenses related to charitable activities. Conclusion: The Tribunal allowed the appeals, emphasizing that the tied-up grants should not be treated as income, and expenses for charitable activities must be considered as deductible revenue expenses. The Assessing Officer was directed to revise the assessments accordingly, ensuring a fair treatment of the appellant's financial transactions.
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