SUNIL AMBWANI, SURYA PRAKASH KESARWANI, J. - (1.) WE have heard Shri R.K. Upadhyay, learned counsel for the income tax department. Shri Shakeel Ahmad appears for the respondent assessee.
(2.) IN this income tax appeal under Section 260A of the Income Tax Act, 1961 preferred against the order dated 28.2.2011 passed by the Income Tax Appellate Tribunal in I.T.A. No.456/LKW/2010 for the A.Y. 2006 -07 the appellant has raised the following substantial questions of law for consideration of the Court: - "i. Whether the Hon'ble ITAT was justified in law and on facts in holding that the source of loan given by the assessee to Ram Lakhan Shiksha Samiti was from the funds included in accumulated funds proposed to be utilized for the purposes of section 11 (5) of the Act. Therefore, the funds which were set aside for the purposes as per section 11 (2) could only be utilized in the manner provided in section 11 (5) of the Act. ii. Whether the Hon'ble ITAT was justified in law and on fact in holding that at the relevant time, no registration under section 12AA of the Act was available to the recipient society in the Financial Year in which the loan was given to it." The appeal is admitted on the questions framed as above and was heard with the consent of the parties.
(3.) IN the present case the Assessing Officer (A.O.) held that there was violation of Section 13 (1) (d) read with Section 11 (5) of the Income Tax Act and denied the benefit of Section 11 of the Act on the loan amount of Rs.1,28,06,709/ - given by the assessee society to another educational society namely Ram Lakhan Shiksha Samiti. The A.O. held that though the amount given as loan is less than 15 percent of the income over expenditure, since the amount was not deposited in any of the securities mentioned in Section 11 (5), no allowance can be given for such amount.;