9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (1) TMI 115 - HC - Income TaxCharitable activities - exemption under Section 11 denied - violation of Section 11(5) r.w.s. 13(1(d) - whether the Assessing Officer was right in totally rejecting the claim of exemption under Section 11 of the Act on the ground that the assessee had violated the provisions of Section 11(5) read with Section 13(1)(d)? - Held that - The Tribunal ought to have applied the decision in the case of Working Women s Forum 2014 (8) TMI 681 - MADRAS HIGH COURT and accordingly should have restricted the denial of exemption only to that portion of the investments, which were made by the assessee in violation of Section 11(5) of the Act. For the above reasons, the appeal filed by the assessee is allowed, the orders passed by the Tribunal, the CIT (A) and the Assessing Officer are set aside and the substantial questions of law are answered in favour of the assessee.
Issues Involved:
1. Violation of Section 11(5) and Section 13(1)(d) of the Income Tax Act 2. Interpretation of judgments by the Income Tax Appellate Tribunal 3. Application of Section 164(2) of the Income Tax Act Issue 1: Violation of Section 11(5) and Section 13(1)(d) of the Income Tax Act: The case involved the assessee appealing against the order passed by the Income Tax Appellate Tribunal (ITA) regarding the violation of Section 11(5) and Section 13(1)(d) of the Income Tax Act. The Assessing Officer had rejected the claim of exemption under Section 11 due to the investment made by the trust in M/s.Kumari Chit Fund, which was deemed a violation of the Act. The Commissioner of Income Tax (Appeals) and the ITA upheld this decision. The assessee contended that the investment was made inadvertently due to ignorance of the law. The Tribunal relied on its own judgment in a similar case, leading to the appeal. Issue 2: Interpretation of Judgments by the Income Tax Appellate Tribunal: The Tribunal rejected the assessee's case by following its earlier decision in the case of DDIT (E) Vs. India Cements Educational Society. The assessee relied on the judgment of the Division Bench in the case of CIT Vs. Working Women's Forum, which had a different outcome. The assessee filed a miscellaneous petition under Section 254(2) of the Act, arguing that the Tribunal did not consider the favorable decision in the Working Women's Forum case. The Tribunal, however, rejected the petition, leading to further legal scrutiny. Issue 3: Application of Section 164(2) of the Income Tax Act: The High Court analyzed the application of Section 164(2) of the Income Tax Act in cases of violation of Section 13(1)(d). Referring to the decision in the case of Working Women's Forum, the Court highlighted that the violation of Section 11(5) read with Section 13(1)(d) would result in the maximum marginal rate of tax only on the specific income that forfeited exemption. The Court emphasized the distinction between eligibility for exemption and withdrawal of exemption due to contravention of the law. The judgment in the case of Fr. Mullers Charitable Institutions was cited to support the interpretation that the entire income of the trust cannot be assessed to tax for violating Section 11(5) of the Act. In conclusion, the High Court allowed the appeal filed by the assessee, setting aside the orders of the Tribunal, CIT (A), and the Assessing Officer. The Court directed the Assessing Officer to redo the assessment by applying the decision in the case of Working Women's Forum, restricting the denial of exemption to the specific investments made in violation of Section 11(5) of the Act.
|
