INCOME TAX ACT, 1961

Section 11

Charitable trust - Exemption under section 11 - Disallowance of investment in gold bullion by assessee and treating the same as a violation of section 11(5) -

Assessee-trust had established and was administering an educational institution. Assessee was granted registration under section 12A. Assessee filed its return of income declaring its total income as 'Nil' and claiming exemption under section 11. The case was taken up for scrutiny and notice under section 143(2) was issued on the assessee and certain disallowances/additions were made. On a perusal of appeal raised before Tribunal, it was seen that stand taken by Revenue was that CIT(A) ought not to have held that investment made in gold bullion was not an investment in the modes other than specified in section 11(5). Held: Tribunal came to the conclusion that purchase of gold by assessee was not application of funds, but an investment in gold bullion and this investment is in violation of section 11(5). There was nothing on record to indicate that this opinion was formed by Tribunal and recorded in its order after assessee had an opportunity to put forth its contention. Assessee's case was that if such was the view of Tribunal, then assessee's case should have been considered as per the proviso (iia) to section 13(1)(d). Since this issue was not dealt with by Tribunal, rather assessee appeared to have not been put on notice, the said opinion formed by Tribunal holding that the purchase of gold by the assessee was not application of funds, but an investment in gold bullion, it was found that assessee had been put to prejudice. Therefore, matter was remanded back to Tribunal to consider the said issue afresh.

Followed:DCIT (Exemptions) v. Vekkaliamman Educational & Charitable Trust 2014 TaxPub(DT) 4058 (Chen-Trib)

REFERRED :

FAVOUR : Matter remanded

A.Y. : 2010-11

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