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TMI Blog2025 (3) TMI 1172X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 11 (5) read with Section 13 (1) (d) of the Act, inasmuch as the said deployment was not intended to yield income, profit, or return, but was made pursuant to a statutory and regulatory obligation to further the Assessee's charitable objectives.
We are of the opinion that the order of the learned ITAT does not suffer from any infirmity or error and, is, therefore upheld. Decided against revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 11 (5) of the Act. Accordingly, the Assessee was issued a show cause notice, asking it to explain why the investments made in contravention of Section 11 (5) of the Act should not be considered a violation within the meaning of Section 13 (1) (d) of the Act. The Assessee was further asked to justify why, in view of the violation of Section 13 (1) (d), the benefits of Sections 11 and 12 of the Act should not be withdrawn and why the entire surplus of Rs. 5, 93, 77, 490/- should not be treated as the Assessee's taxable income for the relevant AY. 6. At this juncture, it is relevant to note that the Assessee had deployed Rs. 99, 990/- towards the equity share capital of BARC (9, 999 shares @ Rs. 10 each) in FY 2010-11. A further amount of Rs. 14, 00, 010/- was deployed for the same purpose in FY 2010-11, and equity shares were issued by BARC to the Assessee in respect of the said amount in FY 2011-12. As on 31.03.2012, the Assessee held total shares of Rs. 15, 00, 000/- (1, 50, 000 equity shares @ Rs. 10 each) in BARC. Thereafter, share application money of Rs. 45, 00, 000/- and Rs. 2, 40, 00, 000/- were deployed by the Assessee with BARC in the FY 2012-13 and FY 2013-14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s under Section 11 and 12 of the Act and making additions of Rs. 5, 93, 77, 490/- pursuant to same, by holding that the transactions involving the purchase of shares and the deployment of funds were violative of provisions of Section 11 (5) of the Act. The learned CIT(A), after considering the assessment order and the submissions made by the Assessee, including reliance placed on the judgment of this Court in the Assessee's own case, i.e. Indian Broadcasting Foundation v. Chief Commissioner of Income Tax (E) & Ors.: W.P.(C) 2489/2017, which was rendered on the issue of stay of demand, noted that this Court had categorically observed that the amount deposited with BARC was not by way of investment or choice, but on account of a Central Government policy, made through the directives of the appropriate ministry. Relying on these observations, the learned CIT(A) concluded that the Assessee had not committed any violation under Section 13 (1) (d) of the Act by deploying the aforesaid funds in BARC, as such deployment was pursuant to government policy and not a voluntary investment. Accordingly, the CIT(A) directed the AO to allow the benefit of exemption under Sections 11 and 12 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is case did not constitute an 'investment' violating Section 13 (1) (d) of the Act. Consequently, the learned ITAT in the present case affirmed the order of the CIT(A), and held that the Assessee was entitled to exemption under Sections 11 and 12 of the Act. 12. The Revenue has preferred the present appeal, challenging the impugned order passed by the learned ITAT. QUESTIONS OF LAW 13. By way of order dated 24.10.2024, this Court had framed following Questions of Law for consideration: "(1) Whether on facts and in circumstances of the case and in law, Hon'ble ITAT is right in holding that the transactions of purchasing shares and investment by way of Share Application Money were within the meaning of section 11 (5) (vii) of the Income Tax Act, 1961? (2) Whether on facts and in circumstances of the case in law, the Hon'ble ITAT is right in upholding the order of Ld. CIT(A) wherein exemption u/s 11 & 12 was allowed?" RIVAL CONTENTIONS 14. The learned counsel for the Revenue contended that the impugned order passed by the learned ITAT is perverse both on facts and on law. It was argued that the learned ITAT erred in ignoring the fact that in the Assessee's own case, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r any income to members, making it incapable of generating any income or return for the Assessee. Therefore, the deployment of funds was an application of income to achieve the Assessee's objectives, not an investment. 18. The learned senior counsel further submits that both the learned CIT(A) and the learned ITAT have recorded concurrent findings of fact that the deployment of funds was solely to meet the Assessee's charitable objectives, and no income or profit was derived from such deployment. It is asserted that these findings, being factual and based on the material placed on record, should not be interfered with. 19. Additionally, it is contended that even if a violation under Section 13 (1) (d) of the Act is presumed, the proviso to Section 164(2) of the Act provides that only the income earned from such restricted investments is taxable at the maximum marginal rate, not the entire income of the Assessee. Since no income was earned from BARC, no tax liability of the Assessee arises in this case. Therefore, it is prayed that the present appeal be dismissed. THE DECISION 20. At the outset, it shall be apposite to note that the present appeal was heard along with ITA 469/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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