TaxTMI 
TaxTMI 
2017 (10) TMI 1091
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....he Appellant under Section 11 of the Act. 2. The learned CIT(A) erred in confirming that the activity carried out by the Appellant is non charitable. 3. The learned CIT(A) erred in not relying upon the comparative data of fee structure of other schools submitted by the Appellant to demonstrate that the Appellant has not charged excessive fees to the students. 4. The learned CIT(A) erred in not directing the Assessing Officer to allow rent paid to Vidya Education Investment Private Limited. He further erred in disallowing the same under Section 13(2)(g) of the Act. 5. The learned CIT(A) erred in not directing the Assessing Officer to grant the exemption under Section 11 to the Appellant for the year under consideration on the ground that on a similar facts and issues the Assessing Officer granted exemption under Section 11 to the Appellant for the earlier assessment year i.e. AY 2010-11. 2. Brief facts of the case are that assessee is a Charitable Trust registered under Bombay Public Trust Act and granted registration under section 12AA. The assessee trust is registered under the provisions of Trust Act on 21.02.2008 and with Charity Commission....
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....arship etc. The activities of institution are not charitable and commercial in nature. (iii) The assessee-Trust is making payment of lease rent to a company in which the Trustee of the assessee are Director and majority shareholder, which violates section 13 of the Act. It was argued that assessee has filed its reply and given satisfactory explanation and substantiated its contention that the assessee is not working in violation of its object. The ld. counsel for the assessee submits that he has three alternative submissions to substantiate his contention and furnished a chart of his synopsis and the reliance of various decisions of Superior Courts. Firstly, the registration of the assessee/institution under section 12A is still valid and AO cannot deny the exemption under section 11 of the Act. In support of his submission, the ld. AR of the assessee relied upon the decision; (i) ACIT vs. Surat City Gymkhana (300 ITR 214) (SC), (ii) Hiralal Bhagwati vs. CIT (246 ITR 188) (Guj. HC), Stock Exchange Ahmedabad vs. ACIT (74 ITD 1) (Ahm. Trib.) & (iii) Gagan Education Society vs. ACIT (10 taxmann.com 156) (Agra Trib.). Secondly, merely charging fees, it sho....
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....on. The lease agreement on behalf of lesser as well as lessee is signed by the same person. 5. We have considered the rival submissions of ld. AR of the parties and have gone through the orders of authorities below. We have also perused the material and the two decision mainly relied by ld AR for the assessee before us. The assessee-Trust was registered on 21.02.2008. The settler of Trust is Vineet Nayyar. The other trustee in the trust is Reva Nayyar. The address of both the trustee in the trust-deed are of 5A, Friends Colony (W), Mathura Road, Delhi-65. The initial corpus fund of Rs. 1100/- was contributed by settler. The name of the Trust was given as "The Cathedral Vidya Trust". The registered office of the Trust is mentioned as 6, Purushottamdas Thakurdas Marg, Fort Mumbai-400001. Further, the membership of the Trust was restricted to minimum one and not more than three. There is further provision in the trust-deed that the trustee shall be entitled to appoint the additional trustee as and when they deem fit as per Clause-6 of Trust-Deed. It is mentioned in the trust-deed that trustee shall immediately form a Private Limited Company under the provisions of Companies Act and....
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....ities by setting up and running school and granted exemption under section 11. For fees structure, the assessee contended that the school was established and started from 03.08.2008 and imparting education from Std. IV to Std. XI and Diploma courses. The assessee is imparting world class education with strong Indian Tradition and values with advance school of modern technology. In order to get the Teachers and Faculties for imparting good education, the assessee is require to pay high amount of remuneration to Teachers of that calibre. There were 300 students and 65 teaching staff and administrative support staff. The school is not added by the Government support and entire expenditure is incurred from the fees that are charged from the students. The fee structure as compared to the other International School, the fee of the assessee is on lower side. The assessee specifically contended that no profit motive embedded in the charging of fees. For payment of lease rent at the rate of Rs. 25,00,000/- per month, the assessee contended that trust is paying lease rent to Vidya Education Investment Pvt. Ltd. for the plot of land measuring 16.93 acre. The lease deed was executed on 01.06.2....
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....(2)(g) are applicable in the year under consideration. Moreover, the principles of resjudicata are not applicable in the income tax proceedings. 7. In our view, the only question for our consideration is whether the payment of rent/ lease rent paid to the related party is reasonable or excessive. The exemption under section 11 can only be denied when the income of the trust is diverted during the previous year in favour of any person referred in section13(3). Section 13(2) (g) specifically provides that when the income of the trust is diverted during the previous year in favour of any concern as provided under section 13(3)(e) the assessee would not be entitled for exemption if the rent paid is unreasonable one. 8. The perusal of the lease deed reveals that initially the rent was payable at the rate of Rs. 5,00,000/- p.m. The lease deed was executed on 01.06.2008. The assessee has debited the rent of Rs. 2,75,00,000/- in its P/L account. Thus, the assessee claimed the payment of rent at the rate of Rs. 25,00,000/0 per month to the Company owned and managed by the Trustees. Though, the assessee within four years from the execution of lease deed increased the rent from Rs. 5.00....