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TMI Blog2014 (8) TMI 681X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be taxed only to the extent to which the violation was found by the AO - there is a vital difference between eligibility for exemption and withdrawal of exemption/forfeiture of exemption for contravention of the provisions of law – Decided against Revenue. - TC (Appeal) Nos. 100 to 201 of 2009 - - - Dated:- 3-2-2014 - CHITRA VENKATARAMAN AND MRS., SIVAGNANAM T. S., JJ. JUDGEMENT Mrs. Chitra Venkataraman J.- 1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the denial of exemption should only be to the extent of the income which is violative of section 13(1)(d) and not the total denial of exemption under section 11 ? 2. Whether, on the facts and in the circumstance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority allowed the assessee's appeals that the entirety of the income of the assessee could not be denied of exemption. Aggrieved by this, the Revenue went on appeal before the Income-tax Appellate Tribunal. Referring to the decision of the Bombay High Court in DIT (Exemptions) v. Sheth Mafatlal Gagalbhai Foundation Trust [2001] 249 ITR 533 (Bom), the Tribunal rejected the Revenue's appeals. Hence, the present appeals by the Revenue. Learned counsel appearing for the Revenue submitted that when the assessee had violated the provisions of section 13(1)(d), the question of granting exemption under section 11 did not arise. According to the Revenue, the Tribunal committed a serious error in not considering the fact that the investm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : Under section 161(1A), which begins with a non obstante clause, it is provided that where any income in respect of which a person is liable as a representative assessee consists of profits of business, then tax shall be charged on the whole of the income in respect of which such person is so liable at the maximum marginal rate. Therefore, reading the above two phrases show that the Legislature has clearly indicated its mind in the proviso to section 164(2) when it categorically refers to forfeiture of exemption for breach of section 13(1)(d), resulting in levy of maximum marginal rate of tax only to that part of the income which has forfeited exemption. It does not refer to the entire income being subjected to maximum mar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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