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TMI Blog2009 (8) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... ated period or not maintaining accounts or intimating the Assessing Officer as laid down. - Thus, while holding that the observation of the Tribunal that sub-section (1), (2), (3) or (3A) of Section 11 do not apply to the income falling under Section 11(4A) of the Act is erroneous, there is no error in the conclusion for holding the assessee eligible for exemption X X X X Extracts X X X X X X X X Extracts X X X X ..... dings of the High Court, reported in [1992] (3) SCC 390." 2. The assessee is running a school and claimed exemption under Section 11 of the Act in respect of its income. The Assessing Officer rejected the claim on the ground that the assessee had not applied 85% of the profits for the purpose of the Society, as required under Section 11 (4A) read with Section 11(2) of the Act. This view was reversed by the CIT(A) taking into account the fact that the assessee had spent the amount equal to more than 85%. The relevant observations are as under: " The details of income of the society and schools as per P&L account attached with the return are as under: Before application of income to charitable (in Rs.) After application of income charita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t constructed school building which amounts to applying income for charitable purpose only." This view was affirmed by the Tribunal with the following observations: "The another contention raised by ld. DR is that the ld. CIT(A) allowed the expenditure incurred on the construction of the Panchkula School building amounting to Rs.41,12,590/-before calculating the quantum of accumulation of income @ 15% specially when it was opined in the assessment order that the assessee is not a trust but an institution. However, facts remains that the assessee is a charitable society, registered under the societies registration act and also under section 12A of the Act. We are of the view, if the expenditure of Rs.41,12,590/- was incurred for the const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome applicable even in respect of profits and gains. The Tribunal erred in observing that in such a situation where income falls under Section 11(4A), sub-section (1), (2), (3) or (3A) will not apply. Finding of the Tribunal is contradictory. If sub sections (1),(2) and (3) or (3A) are held to be inapplicable, exemption could not be available. We are of the view that on plain reading of the provisions, these sub-sections will apply, except where the income falls in the exclusionary provision, which is not the case here. It is not even the case of the revenue that the income falls in exclusionary clause. The exclusionary clause applies if business income is not incidental to the main objects or other conditions are not fulfilled. 6. Learned ..... X X X X Extracts X X X X X X X X Extracts X X X X
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