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1.  CIT Vs. Fr Mullers Charitable Institutions, ITA No. 588/2007, Date of decision: 10/02/2014, High Court of Karnataka

Section 11 and 13 of the Income Tax Act, 1961

Whether violation of Section 11(5) r/w Section 13(1)(d) by the Trust attracts maximum marginal rate of tax on the entire income of the Trust.

Held _No

In the instant case, the assessee-Trust claimed exemption u/s 11 of the Act. The commissioner by exercising his suo-motu power u/s 263 held that in view of Section 13(1)(d) of the Act, total income of the Trust has to be assessed for the tax in view of the said violation. The Hon’ble high court has placed reliance on the judgment of Delhi High Court in the case of Director of Income Tax (E) vs Agrim Charan Foundation (2002) 253 ITR 593  and Bombay High Court in the case of Director of Income Tax (E) vs Sheth Mafatlal Gagalbhai Foundation Trust (2001) 249 ITR 533 and held that reading of the proviso to Section 142 is very clear that the legislature has clearly contemplated that in a case, where the whole or part of the relevant income is not exempted u/s 11 by virtue of violation of Section 13(1)(d) of the Act, tax shall be levied on the relevant income or a part of the relevant income at the maximum marginal rate.

(Please click here for judgment)

2.  Ahinsa Education and Health Trust Vs. DIT (E), ITA No. 1408/Hyd/2013, Date of pronouncement: 20/02/2014, ITAT-Hyderabad

Section 12A/ 12AA of the Income Tax Act, 1961

Whether registration under Hindu Religious institutions and Endowments Act, 1987 or/and other competent authority of Government is mandatory for obtaining registration of trust u/s 12A of the I. Tax Act, 1961.

Held _No

In brief, the assessee is a public trust created by virtue of a registered trust deed and applied for registration u/s 12A of the Act. While granting registration u/s 12AA of the Act, the DIT (E) directed the Trust to obtain the registration from the competent authority of Government of Andhra Pradesh u/s 43 of the Andhra Pradesh Charitable and Hindu Religious institutions and Endowments Act, 1987 and submit the same within a period of six month. The hon’ble Tribunal has held that when the provisions contained u/s 12A r.w. sec. 12AA of the Act do not mandate obtaining of such registration as a condition precedent for registration u/s 12A, the DIT (E) cannot insist upon such registration.

(Please click here for judgment)