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TMI Blog2024 (7) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... medy before the AO is to disallow such proportionate expenses from application of income. See case of Kammavari Sangham vs DDI (Exemptions) [ 2022 (11) TMI 672 - KARNATAKA HIGH COURT ] wherein it has been held that the AO has no jurisdiction to deny the benefits of section 11 12 until the certificate u/s 12A was in force. Similarly, in the case of CIT vs Mullers Charitable Institutions [ 2014 (2) TMI 1033 - KARNATAKA HIGH COURT ] has held that perusal of section 13(1)(d) of the Act makes it clear that it is only the income from such investment or deposit which has been made in violation of section 11(5) of the Act that is liable to be taxed and violation of section 13(1)(d) does not result in denial of exemption under section 11 to the tota ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n bringing to tax the income of the assessee denying the exemption claimed. 3. For that as a matter of fact there is no violation done by the assessee to section 17 of the FCRA 2010 since no funds/ Foreign Contribution has been received by the assessee in any other bank account except the FC Utilization bank account for which approval has been accorded by the Ministry of Home Affairs. It is only that after receipt of the contribution in the specified FC Bank account, that the same was transferred to a general bank account to meet the objective of the trust. As such, the facts have been wrongly stated by the lower authorities. 4. For that AO was not justified in alleging that the assessee violated the provisions of section 13(1) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was in contravention of section 17 of the Foreign Contribution Regulation Act, 2010. The exemption claimed u/s 11 and 12 of the I.T. Act was denied to the assessee in terms of applicability of section 12AA(3) of the Act by assessing the income of assessee at Rs. 3,55,53,212/- u/s 143(3) of the Act. The ld. AO while framing the assessment also discussed regarding the income and expenditure account of entire unit of assessee society i.e. Assisi Ashram and noticed that Rs. 1,85,121/- was transferred to ITI Sonepur for 'Brothers Allowance' which was according to ld. AO is in violation of provision of section 13(1)(a) and 13(1)(b) of the I.T. Act, 1961. Further, the AO also stated in the same assessment order that the assessee society was aske ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iolation of section 17 of the Foreign Contribution Regulation Act, 2010 and also sustaining the order the ld. AO denied the claim of exemption of the assessee u/s 12AA(3) of the Act. On this issue, the ld. AR of the assessee submitted before the bench that the action of the ld. AO denying the benefits of section 11 & 12 of the Act by alleging that the assessee has violated the provisions of section 13(1) and 13(3) of the Act which is beyond the jurisdiction of the ld. AO and it is uncalled for. The provisions of section 13 of the Act nowhere stated that the ld. AO can deny the exemption to any assessee's claim u/s 11 & 12 of the Act. The ld. AO has in any case finds that section 13(1) of the Act was violated. In such a case only that approp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1A) inserted in section 161 of the Income-tax Act, which provides for taxation of the entire income received by trusts at the maximum marginal rate is applicable only in the case of private trusts having profits and gains of business. So far as the public charitable and religious trusts are concerned, their business profits are not exempt from tax, except in the cases falling under clause (a) or clause (b) of section l1 (44) of the Income-tax Act. As the maximum marginal rate of tax under the new proviso to section 164(2) applies to the whole or a part of the relevant income of a charitable or religious trust which forfeits exemption by virtue of the provisions of the Income-tax Act in regard to investment pattern or use of the trust prope ..... X X X X Extracts X X X X X X X X Extracts X X X X
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