Revenue appeals dismissed, assessee partly successful. Reassessment ordered on salary payments. CIT(A) decisions upheld.

The Tribunal dismissed the Revenue's appeals and partly allowed the assessee's appeals for statistical purposes. It directed the AO to reassess the reasonableness of salary payments to specified persons. The Tribunal upheld the CIT(A)'s decisions on exemption under Section 11 and allowance of capital expenditure claims, emphasizing adherence to its earlier rulings and established principles.

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Issues Involved:
1. Disallowance of salary payments to specified persons under Section 13 of the IT Act, 1961.
2. Denial of exemption under Section 11 of the IT Act.
3. Deletion of surplus amounts due to rejection of exemption under Section 11.
4. Allowance of capital expenditure claims.

Detailed Analysis:

1. Disallowance of Salary Payments to Specified Persons:
The assessee contested the disallowance of Rs. 11,02,000 for A.Y. 2015-16 and Rs. 15,90,480 for A.Y. 2016-17, arguing that the salary payments to specified persons under Section 13(3) were reasonable and justified. The Revenue, however, argued that these payments were excessive and constituted undue benefits, thus attracting the provisions of Section 13(1)(c)(ii) read with Section 13(2)(c).

The Tribunal noted that the assessee had made similar payments in previous years, which had been accepted except for A.Y. 2014-15. The Tribunal referred to its own decision in A.Y. 2014-15, where it was held that only the unreasonable portion of the salary should be disallowed and taxed, not the entire income. The Tribunal remitted the matter back to the Assessing Officer (AO) for fresh adjudication, directing the assessee to provide evidence of the services rendered and the qualifications of the specified persons.

2. Denial of Exemption under Section 11:
The Revenue appealed against the CIT(A)'s decision to allow the benefit of exemption under Section 11, arguing that the assessee trust had provided undue benefits to specified persons. The Tribunal upheld the CIT(A)'s decision, citing its own earlier ruling that only the unreasonable portion of the salary should be disallowed, not the entire exemption under Section 11. The Tribunal emphasized that merely filing an appeal against the ITAT's decision did not invalidate the ruling unless stayed by a higher court.

3. Deletion of Surplus Amounts:
The Revenue challenged the deletion of surplus amounts of Rs. 3,52,40,552 for A.Y. 2015-16 and Rs. 3,54,42,035 for A.Y. 2016-17, arguing that the rejection of exemption under Section 11 should result in these amounts being taxed. The Tribunal dismissed this ground, reiterating that the exemption under Section 11 could not be denied in its entirety based on the alleged excessive salary payments. The Tribunal upheld the CIT(A)'s decision to delete the surplus amounts from taxable income.

4. Allowance of Capital Expenditure Claims:
The Revenue also contested the allowance of capital expenditure claims of Rs. 1,97,34,909 for A.Y. 2015-16 and Rs. 5,80,24,965 for A.Y. 2016-17. The Tribunal noted that once the exemption under Section 11 was allowed, the capital expenditure should be considered as an application of income. The Tribunal upheld the CIT(A)'s decision to allow the capital expenditure claims, finding no new facts or circumstances to warrant a different conclusion.

Conclusion:
The Tribunal dismissed the appeals filed by the Revenue and partly allowed the appeals filed by the assessee for statistical purposes. The Tribunal directed the AO to re-examine the reasonableness of the salary payments to specified persons and upheld the CIT(A)'s decisions on exemption under Section 11 and allowance of capital expenditure claims. The Tribunal's decisions were based on its own earlier rulings and the principles established therein.

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