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TMI Blog2024 (3) TMI 775X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act and secondly whether there was a breach of the provisions of Section 13 of the Act, where one Bharat Shah can be said to be a founder of the institution within the meaning of sub-clause (a) of sub-Section (cc) of Section 13(3) of the Act. The judgment does not say whether the entire benefit under Section 11 of the Act will be disallowed or disallowance will be only to the extent of income diverted. The basic dispute in Bharat Bourse (supra) was whether the objects of the trust were charitable and whether the person to whom the loan was given was a person covered by Section 13 of the Act. We also find support for this view in Audyogik Shikshan Mandal [ 2 018 (12) TMI 1344 - BOMBAY HIGH COURT ] held on a plain reading of Sections 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Hon'ble ITAT is right in allowing the benefit of sec. 11 of the I.T. Act, 1961 to the assessee trust ? B. Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT is right in holding that the denial of benefit under sec. 11 of the IT Act will be restricted only to that income of the Trust which was used/ applied directly or indirectly for the benefit of the prohibited persons? C. Whether on the facts and circumstances of the case and in law, the Hon'ble ITAT is right in applying the ratio laid down by the Hon'ble Karnataka High Court in the case of Mullers Charitable Institution 363 ITR 378 (Kar) whereas the Hon'ble Apex Court has already held in Bharat Diamond Bourse reported in 259 ITR 280 (SC) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts and circumstances of the case and in law, the Hon'ble ITAT is right in holding that expenditure incurred outside India without getting the necessary approval from the concerned authority i.e. CBDT as warranted by proviso to Sec. 11(1)(c) are eligible for exemption u/s 11? G. Whether on the facts and circumstances of the case and in law, whether the Hon'ble ITAT is right in holding that whenever donors have given the donations for specific purposes such as construction of building, purchase of equipment etc., such donations are capital receipts and therefore exempt u/s 11(1)(d), when in fact such donations do not form a part of the corpus as per Sec. 11(1)(d) and are therefore not exempt being revenue receipts? 2. During the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed only to that income of the trust which was used/applied for the benefit of the prohibited persons. Mr. Suresh Kumar submitted that the Apex Court has held that assessee would lose all the benefits of exemption under Section 11 of the Act in its entirety. 4. Having considered the judgment of the Apex Court in Bharat Bourse (supra), in our view, the issue primarily in that matter was whether assessee was a trust entitled to the benefit of Section 11 of the Act and secondly whether there was a breach of the provisions of Section 13 of the Act, where one Bharat Shah can be said to be a founder of the institution within the meaning of sub-clause (a) of sub-Section (cc) of Section 13(3) of the Act. The judgment does not say whether the entire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Karnartaka High Court in Fr. Mullers Charitable Institutions (supra), dealt with the very issue herein viz. the denial of exemption of entire income under Section 11 of the Act, or is the denial restricted only to the quantum of diverted funds. This, as it is hit by Section 13 of the Act. The Court held that the benefit of Section 11 of the Act will not be available only in respect of the diverted income. The above decision of Karnataka High Court was the basis for the view in the impugned order of the Tribunal. Moreover, we note that the order of Karnataka High Court in case of Fr. Mullers Charitable Institutions (supra) inter alia, places reliance upon the decision of this Court in DIT (Exemption) v/s. Sheth Mafatlal Gagalbahai Founda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 8. As regards proposed question (F), that has already been dealt with while answering proposed question nos. (A), (B) and (C), in as much as, only to that part of the expenditure which is not covered by exemption, will be disallowed. 9. As regards proposed question (G), Mr. Jetly submits that there was not even a specific ground raised in the appeal with regard to the donations given for specific purpose like building fund etc., and, therefore, there was no finding either in the impugned order of the ITAT. Mr. Suresh Kumar agrees. Therefore, the substantial question of law as proposed does not arise. 10. In the circumstances, the appeal is admitted on the following question of law : Whether on the facts and circumstances of the case and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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