February 2019

Charitable or religious trust - Denial of exemption Section 13(2)(c) In order to invoke provisions of section 13(2)(c), it is essential to prove that amount paid to person referred to in sub-section (3) of section 13 is in excess of what may be reasonably paid for services rendered

K. B. Bhujle
Advocate

44. CIT vs. Sri Balaji Society; [2019] 101 taxmann.com 52 (Bom) Date of order: 11th December, 2018 A. Ys. 2008-09 and 2009-10 Sections 12AA and 13 of ITA, 1961

 

Charitable or religious trust - Denial of exemption Section 13(2)(c) In order to invoke provisions of section 13(2)(c), it is essential to prove that amount paid to person referred to in sub-section (3) of section 13 is in excess of what may be reasonably paid for services rendered

 

The assessee was a charitable trust and enjoyed the registration u/s. 12AA. During relevant years, the assessee had incurred expenditure, some of which was paid to one SBC towards advertisements in various magazines and souvenirs. The Assessing Officer noticed that said SBC was a partnership firm consisting of three partners who happened to be trustees of the assessee-trust. The Assessing Officer opined that the firm i.e., SBC was a firm covered u/s. 13(3)(e) vis-a-vis trust. The Assessing Officer thereafter carried out the analysis of the expenditure in connection with the advertisements with a special focus on the payments made to the SBC. He thus denied the benefit u/s. 11 relying upon the provisions of section 13(2)(c).

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