The Tax Publishers2020 TaxPub(DT) 2597 (Visakhapatnam-Trib) INCOME TAX ACT, 1961
Section 13(1)(c) Section 13(2)(g) Section 13(3)
Refund was made to M/s. SICL in the normal course of business of the assessee on account of excess amount charged from M/s. SICL and accordingly AO was not right in holding that assessee had diverted its funds to interested persons. Accordingly, AO was not correct in holding that assessee had violated section 13(1)(c) and 13(2)(g) read with section 13(3). Hence, AO was directed to allow exemption as claimed by assessee and delete additions made outwards refund of excess amount to M/s SICL.
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Charitable trust - Exemption under section 11 - Applicability of section 13(1)(c) and 13(2)(g) read with section 13(3) - Refund of excess amount charged from specified person in normal course of business
AO noticed that assessee refunded an amount of Rs. 3,51,90,879 to M/s. SICL, being specified person out of which an amount of Rs. 1,57,47,623 had been refunded in assessment year 2008-09 and remaining balance was refunded in assessment years 2009-10 and 2010-11. According to AO, assessee refunded an amount of Rs. 1,57,47,623 to M/s. SICL was out of income for the year under consideration. The said payment was reflected as an outgoing in receipt and payment of assessee and refund was made by assessee on the basis of resolution passed by trust at the instance of 'authors' or 'founders' and therefore, same was hit by section 13(1)(c) and 13(2)(g) read with section 13(3). Accordingly, same amount was added to total income of assessee. Held: Refund was made to specified person M/s. SICL in the normal course of business of the assessee on account of excess amount charged from M/s. SICL and accordingly AO was not right in holding that assessee had diverted its funds to interested persons. Accordingly, AO was not correct in holding that assessee had violated section 13(1)(c) and 13(2)(g) read with section 13(3). Hence, AO was directed to allow exemption as claimed by assessee and delete additions made towards refund of excess amount to M/s SICL.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. :
INCOME TAX ACT, 1961
Section 11
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