TaxTMI 
TaxTMI 
TaxTMI 
2018 (7) TMI 1908
X X X X Extracts X X X X
X X X X Extracts X X X X
....AO was set aside by the CIT (A) in all the above cases. It was common ground between both the parties that the facts involved in all the above appeals was identical. 3. Drawing our attention to the order of the assessing officer in the said cases, it was pointed out that the assessees were societies registered under the Societies Registration Act, 1860, and had been registered as charitable trusts under the provisions of section 12A of the Income Tax Act, 1961. The assessees had claimed exemption of its income under section 11 of the Act, which was denied by the AO on the ground that the assessees had given interest-free loan to one M/s Baba Amarnath Educational Society and or other societies/trusts, which act attracted the provisions of section 13 of the Act, resulting in denial of exemption under section 11 of the Act to the assessee for the following reasons: a) That the society to whom loan was advanced was a sister concern of the assessee society and, therefore, the said transaction tantamounted to extending benefit to a person specified under section 13( 3) of the Act which was prohibited by section 13 (1) (c) of the Act for claiming exemption under section 11 of the act. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... been utilized by the other group society in fixed assets. The Assessing Officer also relied upon decision of Honorable Madras High Court in the case of CIT Vs V.G.P. Foundation reported at (2003) 183 CTR (Mad) 330/262 ITR 187 (Mad) to support its contention. On the other hand, the appellant society through its Ld. AR has submitted that the society to whom the loan has been given is not a specified person under the provisions of section 13(3) of the Act rather it is a charitable institution registered under section 12AA of the Act which is also engaged in similar activities as that of the appellant society as the group society to whom loan has been given also runs charitable institution(s) just like the appellant society. It has also been submitted that the loan given by the appellant society to another group society engaged in similar activities is in accordance with its objects and cannot be termed as investment or deposit in violation of the provisions of section 11(5) of the Act but the loan should be treated as an application of funds as the appellant society has advanced the loan for the fulfillment of its objects. It has further been submitted that none of the members of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s in all the appeals as under: " I That the order of Ld. CIT(A) is defective both in law and facts of the case. II That the order of Ld. CIT(A)-4, Ludhiana has erred in law while allowing the benefit under section 11 of the Act without appreciating that there was a clear violation of Section 13 of the Income-Tax Act, 1961. III That the order of Ld. CIT(A)-4, Ludhiana has erred in law while not considering Section 13(l)(c) of the I.T. Act, 1961, according to which, any income of the trust directly or indirectly applied for the benefit of any person referred to in Section 13(3) of the Act shall not be excluded from the total income and provisions of Section 11 shall not apply to the same. IV That the order of Ld. CIT(A)-4, Ludhiana has erred in law as the findings recorded are perverse and contrary to the evidence/material available on record & facts of the case and duly considered by the Assessing Officer. V The Appellant craves leave to add or amend the grounds of appeal on or before is heard and disposed off." 7. At the outset Ld. Counsel for the assessee pointed out that identical issue had been dealt with by the ITAT in the case of the DCIT vs Amritsar International F....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ible for exemption u/s 10(23C)(vi) is on account of the interest free loan given by it to M/s Baba Amarnath charitable trust. The fact that the impugned loan/advance pertained to A.Y 201112 and not to the year in appeal before us has remained uncontroverted, so in any case, there cannot be said to be any violation in the impugned year by the assessee either of the provisions of section 13(l)(c) read with section 13(3) or even section 13(l)(d) rws 11(5) of the Act at all. 17. Further, we find that the assessee had demonstrated by way of a detailed chart listing all relationships covered u/s 13(3), that M/s Baba Amarnath Educational Society is not a specified person as per the provisions of section 13(3) of the Act and the Revenue has not controverted the same. Ld. DR has merely reiterated the general and casual remarks of the Assessing Officer of establishing nexus between the assessee and M/s Baba Amarnath Educational Society by way of having one common member only or on account of indulging in transaction of giving loan to one another. Ld. DR has not pointed out as to how the above situations are covered u/s 13(3) to establish M/s Baba Amarnath Educational Soc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s. 90,50,000 given by the assessee-society to Nav Bharti Educational Society does not violate s. 13(l)(d) r/w s. 11(5) of Act, 1961 as the said loan was neither an "investment" nor a "deposit". This is more so as both the societies had similar objects and were registered under s. 12A of Act, 1961 and had approvals under s. 80G of the Act, 1961. The fact that the loan was interest-free and had been subsequently returned is also significant. In view of the order passed by the CIT(A) in the case of Nav Bharati Educational Society, Ms. Bansal's allegation with regard to "entry scam" also does not survive. Consequently, there is no substantial question of law involved in the present appeal and accordingly, appeal is dismissed but with no order as to costs." 20. The said proposition has been reiterated by the Hon'ble Delhi High Court in the case of CIT vs Indian National Theatre Trust (2008)305 ITR 149. Ld.Counsel for the assessee has also drawn our attention to a number of other decisions wherein it has been held that giving loans to other charitable institutions registered u/s 12A having to similar objects are not in violation ff the provisions of section 13(l)(d) read with s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ghtly pointed out by the Ld. Counsel for the assessee no disallowance/addition has been made on account of the same. The contention of the Ld. DR, we hold, therefore, has no legs to stand on and is thus dismissed. In view of the above, we hold that there was no basis at all for denying exemption to the assessee society u/s 10(23C)(vi) of the Act. We therefore uphold the order of the Ld. CIT(A) deleting the addition of Rs. 3,64,60,383/-. All the grounds raised by the revenue are dismissed. 24. In the result, the appeal of the Revenue is dismissed." 9. Ld. counsel for the assessee pointed out therefrom that the ITAT had held the denial of exemption incorrect for the reason that the loan had not been advanced in the impugned year but infact had been advanced in the earlier year and therefore it was held that the exemption in any case could not be denied in the impugned year. Ld. counsel for the assessee further stated that the ITAT had categorically upheld the findings of the CIT(appeal) that the Revenue having not established as to how M/s Baba Amarnath Educational Society was a specified person as per the provisions of section 13 (3) of the Act, the transaction of advanci....
X X X X Extracts X X X X
X X X X Extracts X X X X
....-- -- 12600000 14075000 14575000 3 Malwa Educational Society -- -- 2250000 2250000 2250000 4 Bharti Educational Society -- -- -- -- 21000 5 Global Educational Society -- -- -- -- 2000000 6 Sachdeva Educational Society 6159932 4932932 99737 1600263 4850263 Total 6159932 4932932 31549737 43525263 52046263 11. Ld. Counsel for the assessee further stated that as in the case of Amritsar International(supra) in the impugned case also it has not been pointed out by the assessing officer as to how M/s Baba Amarnath Educational Trust and or other societies were persons specified as per the provisions of section 13 (3) of the Act. Ld. counsel for the assessee stated therefore that the provisions of section 13 (1) (c) of the Act cannot be said to apply in the present case. Ld. counsel for the assessee further pointed out that both the assessee and M/s Baba Amarnath Educational and or other societies /Trust were registered under section 12A of the Act and the said loan or advance could not be said to be an investment or deposit made by the assessee and was therefore not in violation of the provisions of section 11 (5) of the Act so as to attract t....