TaxTMI 
TaxTMI 
2018 (6) TMI 1316
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....he provision of Section 13 (1) (c) of the Act by providing the financial benefit to the persons specified u/s 13(3) of the Act. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in allowing the benefit of Section 11 & 12 of the Act ignoring the provision of Section 13(1) which provide that even if there is a single instance of violation of Section 13(1), the trust will-lose the exemption in respect of entire income. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in allowing the claim of depreciation of Rs. 3,01,89,884/- to the assessee ignoring the fact that the assessee had claimed the amount incurred on purchase of assets in earlier years as application of income, on which depreciation is claimed now and further allowance of depreciation will be tantamount to double deduction. 5. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in allowing the claim of depreciation or Rs. 3,01,89,884/- to the assessee in view of the recent' decision of the Hon'ble Delhi High Court in the case of DIT(E) Vs. Charanjiv Charitable Trust dated 18.03.2014. 6. On ....
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.... deleted. The Tribunal in A.Y. 2009-10 in ITA No. 4182/Del/2013 dated 21st February, 2014 had discussed the issue in detail on each and every similar objection raised by the AO after observing and holding as under :- "6. We have perused the assessment order as well as the order of the CIT (A). On going through the above order of the CIT(A) we notice that each of the allegations levied by the A 0 has been examined by the CIT(A) and a finding has been given based on the facts. As regards the allegation that it has violated certain guidelines of AICTE, the CIT(A) has dealt this issue in para 5.7 of its order as under:- "5.7 For denying this benefit either the AO has to co-relate the allegation so as to make out a case under the Income Tax Act. Thus assessee is a society which is engaged in educational activity. If it has admitted students in excess of the norms prescribed by the AICTE it can be an issue connected with appellant society and AICTE and not connected with AO and that appellant society unless there is a requirement or a condition in any of the Income Tax provisions to the effect that exemption will be denied if the guidelines of AICTE is violated. Moreover in this cas....
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....s correct in holding that these allegations cannot be the basis for denying exemption under Section 11 of the Act. 8. The CIT(A) has dealt with the issue of governance in para 5.7, 5.8, 5.9 and 5.10 of the impugned order, as under:- "The other reasons for denying benefit of section 11 by the AO are violation of Registrar of Societies norms. In this regard the allegations of the AO are as under- 1. The Executive President and Director General are related to each other and holding the position in violation of the guidelines issued under Societies Registration Act. 2. Annual elections are not being conducted in the AGM of the members of the society. 3. The governing council members registered as the society did not reimburse the medical expenses of the employee. 4. No record of AGM and governing council meetings have been filed with the Registrar of Societies. 5. The balance sheet of the society are being signed only by Dr. Gaganjit Singh and Dr. Jagjit Singh. 6. The society has fabricated the seal of the Registrar of Societies. 7. The assessee has changed its bank account without the approval of the governing body. 5.8 In view of the above allegations th....
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....or denying exemption under Section 11 of the Act. Similarly, the allegation of the AO that the balance sheet and the cheques are being signed by two persons and hence it is not eligible for exemption, is incorrect. This being the internal procedure of the society about managing its affairs and operation of the bank account, it cannot be a ground for denying exemption under Section 11 of the Act. There is no prohibition or condition prescribed under Section 12A or under Section 11 regarding operation of the bank account. Similarly, the allegation of the AO that the AGM is not being properly held and amendment in the Memorandum of Association has not been properly carried out, is not correct. In this regard, we notice that the statement of Dr. Gaganjit Singh, Executive President of the Society, was also recorded and he has clarified the various issues involved including the issues on the question of governance of the society. Similarly, the allegation that two persons of the governing council have resigned because reimbursement of the medical expenses of an employee was denied, cannot be a ground for denial of exemption under Section 11 of the Act. These too are internal matters of t....
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....ffice bearers regarding cars, premises, etc., we notice that this issue got clarified during the course of the survey itself, where one of the employee, Mr. S. K. Dhall, in response to a specific question, stated that the vehicles were being used by the officers, staffers/faculty and also by other staff members, for liaison work of the society. This statement clearly addresses the concern of the AO. This statement being a statement recorded during the survey, it cannot be ignored, particularly when the AO has not brought any material to substantiate his allegation against the assessee. The survey report was also before the AO and in case he had any doubt about the same, he could have made further investigation, which he chose not to do. Having failed to do so, he cannot ignore the statement and draw adverse inference merely on the basis of assumptions. The CIT(A) has dealt with this issue in paras 5.11 and 5.12 as follows:- "The other allegation of the AO on this account is the office bearers are maintaining luxurious cars and the expenses related to their purchase, repair and maintenance being borne by the society. In this regard I have gone through the records and I notice tha....
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.... salary or the perquisites paid to the office bearers are either unreasonable, or excessive. As such, we are in agreement with the CIT(A) that no adverse inference on this account can be drawn against the society. 15. Similarly, we notice that as regards the alleged payment of Rs. 12 Lacs by the assessee Society for a plot to Haryana Urban Development Authority, this payment was made under an MOU, for construction of a hostel for the society. This payment was made directly to the Haryana Urban Development Authority and not to any office bearer of HUDA. It was only on failure to get the permission from the Haryana Urban Development Authority that the amount was received back by the society. In these circumstances, the finding of the CIT(A) that the payment was for the benefit of the society, is a correct finding of fact and it cannot be said that any benefit has been passed on to any related person, so as to violate the provisions of Section 13 of the Act. 16. Likewise, the premises in Navjeevan Vihar was taken on rent by the Society, for setting up its Global Development Centre, which the society was running from Gurgaon. Thus, the adverse inference drawn by the AO in this re....