2013 (3) TMI 97

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....oposed the following questions said to be substantial questions of law arising out of the order of the Income Tax Appellate Tribunal. "1. Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that since no part of the income or property of the trust was applied directly or indirectly for the benefit of any persons referred to in section 13(3) of the Act, as spelt out in section 13(1) (c) (ii) during the year under consideration, therefore, the benefit of section 11 could not be denied to the trust without appreciating that the assessee trust has made huge investment in construction of the building on the lease hold land owned by the trustees in their individual capacities and after the ex....

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.... public is the beneficiary as declared inclause 3(i) of the Registered Trust deed, therefore, entering into the registered lease deed dated 14.06.2005 by the assessee with their trustees in their individual capacities as land owners amounts to setting up off adverse title to the trust property, the texty of the relevant section read as under:- '14. Trustee not to set up title adverse to beneficiary:- the trustee must not for himself or another set up or aid any title to the trust property adverse to the interest of the beneficiary.' 4. Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in not appreciating that while entering into the registered lease deed dated 14.06.2005 with its trustees in ....

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....ding on the said leasehold property amounting to Rs. 4.08 crores, after expiry of the lease period, the trust would have to remove the constructions incurring huge expenses and loss or in the alternative may choose not to remove the constructions which may directly benefit the lessor who are two trustees and, therefore, did not grant exemption and brought to tax the entire income. Feeling aggrieved, the assessee preferred an appeal before the Income Tax Appellate Tribunal, Kanpur, who vide order dated 17.11.2008 had allowed the appeal and directed that the expenditure made on construction of building be treated as application of income of trust and section 13(1) of the Act does not apply. We have heard learned counsel for the parties. ....