ITA No.126 /Bang/2017. Case: NEKRTC Passenger Vs Asst. Commissioner of Income Tax. ITAT (Income Tax Appellate Tribunal)

Case NumberITA No.126 /Bang/2017
CounselFor Appellant: Shri Shreehari Kutsa, C.A. and For Respondents: Shri AR.V.Sreenivasan, JCIT (D.R)
JudgesShri Vijay Pal Rao, Judicial Member
IssueIncome Tax Act, 1961 - Section 12A
Judgement DateApril 28, 2017
CourtITAT (Income Tax Appellate Tribunal)


Shri Vijay Pal Rao, J.M., (ITAT Bangalore Bench A)

  1. This appeal by the assessee is directed against the order dt.25.11.2016 of Commissioner of Income Tax (Appeals), Gulbarga for the Assessment Year 2010-11.

    2. The assessee has raised the following grounds:

  2. The assessee is a Registered Charitable Trust created by the order of Govt. of Karnataka. The assessee is also Registered under Section 12A of the Income Tax Act, 1961 (in short 'the Act') w.e.f. 15.1.2004 vide order dt.8.3.2004. The Assessing Officer has observed that the assessee trust has credited Rs.6 Crores to the receipts and payment account on maturity of Fixed Deposit from banks and further an amount of Rs.2.5 Crores has been debited to the expenditure account towards deposits in NEKRTC Central Office, Gulbarga. Thus the Assessing Officer was of the view that the assessee trust has invested its funds in violation of Clause (f) of sub-section 2 of Section 13 of the Income Tax Act, 1961 (in short 'the Act') as the funds invested are being used or applied for the benefit of a person referred to in Section 13(3) of the Act. The Assessing Officer observed that NEKRTC, Gulbarga is the sole fund provider to the assessee trust and therefore the assessee is not eligible to the extent claimed of Rs.18,81,498 under Section 11 of the Act. The assessee challenged the action of the A.O. before the CIT(Appeals) and submitted that the provisions of Section 13(1)(f) are not applicable in the case of the assessee as both the assessee trust and NEKRTC are registered under Section 12A of the Act therefore no substantial interest is involved between them. Further it was contended that this amount of Rs.2.5 Crores and net amount of Rs.1.97 Crores to NEKRTC is only 1.22% of the capital of that concern. Therefore it does not exceed 5% of the capital of the NEKRTC. The CIT (Appeals) did not accept the contention of the assessee and confirmed the addition made by the Assessing Officer by holding that NEKRTC has substantial interest in the assessee trust within the meaning of Section 13(3)(b) of the Act and therefore the deposits made of Rs.2.5 Crores with the NEKRTC, Gulbarga attracts the provisions of Section 13(1)(c)(ii) of the Act and consequently the exemption claimed under Section 11 of the Act of Rs.18,81,498 for the year under consideration is rightly disallowed.

  3. Before the Tribunal, the learned Authorised Representative of the assessee has submitted that both the assessee as well...

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