No Denial of Sec. 11 Exemption if Trust’s Activities Were Unchanged and Books Audited Subsequently | ITAT
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Case Details: Assistant Commissioner of Income-tax vs. Mazdoor Welfare Trust - [2024] 169 taxmann.com 733 (Chennai-Trib.)
Judiciary and Counsel Details
- Manu Kumar Giri, Judicial Member & S.R. Raghunathan, Accountant Member
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Nilay Baran Som, CIT for the Appellant.
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G. Baskar, Adv., for the Respondent.
Facts of the Case
Assessee-trust was carrying on activities of education. The assessee filed its return claiming exemption under section 11 for the relevant year. The Assessing Officer (AO) denied exemption on the ground that books of account of the earlier two assessment years, 2005-06 and 2006-07, were not audited. The matter reached the Chennai Tribunal.
ITAT Held
The Tribunal held that it was an admitted fact that the assessee was a trust registered under section 12A and carrying on the activities of education. The AO had denied exemption under section 11 because the books of account of the earlier two assessment years were not audited, and the opening balances for the impugned year were taken as incomplete.
The Commissioner (Appeals) decided the issue in favour of the assessee by allowing the exemption to the trust under section 11 because the accounts for the earlier years were later audited, and the assessee also filed the returns for the said years. Thus, the assessee’s appeal was allowed with direction to the AO to verify and allow the disallowed expenses.
Further, the assessee furnished all the details of the hostel building rent along with ledger extracts to the Commissioner (Appeals), who was referred to the AO for a remand report. The AO did not give adverse remarks to the Commissioner (Appeals).
Since there was no change in the activities of the trust and the assessee continued to enjoy exemption under section 11 for the earlier assessment years, there was no fault in the decision to allow an exemption under section 11 to the assessee by the Commissioner (Appeals) for the relevant assessment year.
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