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2024 (7) TMI 24 - AT - Income TaxIssues Involved: - Denial of exemption claimed under sections 11 and 12 of the Income Tax Act based on alleged violation of section 17 of the Foreign Contribution Regulation Act, 2010. - Disallowance of exemption by the Assessing Officer (AO) under sections 13(1)(a) and 13(1)(b) of the IT Act. - Disallowance of exemption due to lack of verification of payments made by the society and failure to provide details of donors. - Appeal against the order of the Commissioner of Income-tax (Appeals) [CIT(A)] dismissing the assessee's appeal. - Jurisdiction of the AO to deny exemptions under sections 11 and 12 based on alleged violations of section 13 of the IT Act. Detailed Analysis: 1. The assessee's appeal challenged the denial of exemption under sections 11 and 12 of the Income Tax Act for the assessment year 2016-17. The Assessing Officer (AO) disallowed the exemption based on the alleged violation of section 17 of the Foreign Contribution Regulation Act, 2010, concerning the transfer of foreign contributions. The AO also raised concerns about payments made by the society to individuals and the lack of verification of these transactions. 2. The AO further disallowed the exemption under sections 13(1)(a) and 13(1)(b) of the IT Act, citing unauthorized transfers and lack of documentation regarding the utilization of funds. Additionally, the AO questioned the validity of donations received by the society, as details of donors were not provided. Consequently, the AO assessed the total income of the assessee at Rs. 3,55,53,212 under section 143(3) of the Act. 3. The assessee's appeal to the CIT(A) was unsuccessful, leading to the current appeal before the Tribunal. The main contention was the denial of exemptions under sections 11 and 12 based on alleged violations of section 17 of the FCRA and section 13 of the IT Act. The assessee argued that the AO exceeded jurisdiction by denying exemptions without following due process. 4. The Tribunal, after considering the arguments and relevant legal precedents, found that the AO's denial of benefits under section 11 was incorrect. The Tribunal directed the AO to allow the assessee's claim under sections 11 and 12 of the Act. However, the Tribunal also noted that expenditures not meeting the criteria of application of income under section 13 could be assessed as income. 5. The Tribunal partially allowed the assessee's appeal, setting aside the orders of the lower authorities and directing the AO to allow the exemptions claimed under sections 11 and 12. The Tribunal emphasized adherence to jurisdictional limits and the need for proper assessment of expenditures violating section 13 of the IT Act. 6. In conclusion, the Tribunal's decision upheld the assessee's right to exemptions under sections 11 and 12 while emphasizing the importance of compliance with legal provisions, especially concerning the application of income under section 13. The appeal was partly allowed, providing relief to the assessee on the issues raised in the appeal.
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