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TMI Blog2016 (6) TMI 517X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Share Capital of a private Limited Company out of income set apart us. 11(20(b) does not violate the provision of Section 11(5) o the IT Act." The inter-connected issue raised by Revenue in its appeal is as regards that Ld. CIT(A) erred in holding that investment in the share capital of a Private Limited Company out of income that set apart under section 11(2)(b) of the Act does not violate the provisions of Section 11(5) of the Act. Shri S.M.Suran, Ld. Authorized Representative appearing on behalf of assessee and Shri Rajat Kr. Kureel, Ld. Departmental Representative appearing on behalf of Revenue. 2. The facts in brief are that the assessee in the present case is a registered charitable society and having registration under section 12A of the Act vide-no. 80E/209/88-89 dated 28-11-1990. The main activity of the society is to help the artisans and handicrafts people in terms of their enterprise development, skill and technical up-gradation so as to promote their products in the National and International market. For achieving the desired object of the society, the assessee made a joint venture agreement with another association of Italy namely CTM/Altromerkato to form a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Matter was carried before the First Appellate Authority, wherein various contentions were raised on behalf of the assessee and having considered the same the Ld CIT(A) deleted the addition made by the AO on the issue by observing as under : "... .... I have also considered the submissions of the appellant that the contribution to share capital was made in the assessment year 2005-06 and in all the assessments thereafter except the AY in question, on same set of facts, the AO has not denied the exemption u/s 11. I find that the assessment for the AY 2007-08 was completed u/s. 143(3) and the fact that the investment was made in earlier years have not been denied by the AO. The as for the subsequent year i.e. AY 2009-10 was also completed u/s. 143(3) wherein also the contribution to share capital continued but exemption has been allowed to the appellant society. The society is engaged in the same activities as in all the earlier years. Therefore, on the principles laid down by the Hon Supreme Court, in the case of Radho SamiSatsang 193 ITR page 321, consistency should have been maintained. In the said judgment the Hon Supreme Court laid down that the principles of resjudicata or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant provisions of section 13 of the Act which reads as under : "13(1) Nothing contained in section 11 [or section 12] shall operate so as to exclude from the total income of the previous year of the person in receipt thereof- (a) any part of the income from the property held under a trust for private religious purposes which does not enure for the benefit of the public; (b) in the case of a trust for charitable purposes or a charitable institution created or established after the commencement of this Act, any income thereof if the trust or institution is created or established for the benefit of any particular religious community or caste; (c) .... ... (d) in the case of a trust for charitable or religious purposes or a charitable or religious institution, any income thereof, if for any period during the previous year - (i)any funds of the trust or institution are invested or deposited after the 28th day of February, 1983 otherwise than in any one or more of the forms or modes specified in sub-section (5) of section 11; or (ii) any funds of the trust or institution invested or deposited before the 1st day of March, 1983 otherwise than in any one or more of the for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is entitled for exemptions under section 11 of the Act. We also find that the Private Limited Company was formed for the furtherance of the objects of the assessee and both the societies were the shareholders in the company. None of the Director had any substantial interest in the company. The members of the assessee society were the directors only in the representative capacity in the company. Therefore, in the instant case benefit under section 11 of the Act cannot be denied. In this connection we are also relying in the decision of High Court of Delhi in the case of Director of Income Tax (Exemption) vs. Acme Educational Society (2010) 326 ITR 0146 (Del) wherein it was held that "we are of the opinion that interest-free loan of Rs. 90,50,000 given by the assessee-society to Nav Bharti Educational Society does not violate s. 13(1)(d) r/w s. 11(5) of Act, 1961 as the said loan was neither an "investment" nor a "deposit". This is more so as both the societies had similar objects and were registered under s. 12A of Act, 1961 and had approvals under s. 80G of the Act, 1961. The fact that the loan was interest-free and had been subsequently returned is also significant. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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