Case Law Details
Ilahia Trust Vs Commissoner of Income Tax (Kerala High Court)
Facts- The assessee, being an educational trust, claimed income tax exemption for the Assessment Year 2010-11. AO called up the assessee to explain advance of sum of INR 72,45,000. The advance made since is not compliant with the general purpose of running the Trust, the AO called upon the assessee to show-cause as to why the provisions of Section 13(1)(c) of the Act should not be invoked and disallow the advances made by the assessee in favour of M/s. VUS Timbers.
Secondly, the assessee has described Mr. Varghese in the list of sundry creditors. The total amount shown against the name is INR 21,27,846. It was alleged that the assessee couldn’t place on record the details of effecting TDS on the amount paid to Varghese. The failure to comply with Section 40(a)(ia) of the Act has been noted and the amount claimed towards capital investment has been disallowed by the AO.
Conclusion- The advance amount of INR 72,45,000 was diverted for personal benefit of an interested party, who is mentioned in section 13(3). Therefore, there is clear violation of provisions of section 13(1)(c).
The following finding of the Tribunal was upheld-
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