AI Drafter 
TaxTMI 
TaxTMI 
2021 (8) TMI 453
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....rounds of appeal:- ITSS(A) No.69/Ind/2019 Assessment Year 2004-05 1 There is no jurisdiction either in law or on facts for the Ld CIT (A) to sustain the addition of Rs. 15,00,000/- as alleged unexplained expenditure for an amount allegedly paid by Dr. Sunil Kapoor to S.N Sharma. 1.1 That on the facts and in the circumstances of the case, the addition of Rs. 15 Lacs as alleged' unexplained expenditure is not sustainable in law because no incriminating material seized from the appellant during the course of search and further no assessment was pending on the date of search and therefore the impugned addition is beyond the scope of Section 153 A. 1.2 That the addition of Rs. 15 00,000/- was based on a paper seized from the residence of S.N Sharma and was not seized from the Appellant society and thus the presumption U/S 292C cannot be apply against the Appellant society. 1.3 That the Ld. CIT(A) was not justified in concluding that the amount was not recorded in the books of the Appellant society. That said finding is contrary to the material placed on record before the Ld. AO and Ld. CIT (A). 1.4 That the entire addition of Rs.....
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....d. CIT (A) erred in upholding the impugned addition of Rs. 39,77,200 on account of purchase of CBT Bars from M/s Prateek Enterprises and M/s Saluja Enterprises by making reliance' on the pre-search affidavit submitted by Sunil Khandewal & Narendra Sharma in the search case of Bharat Kothari Group wherein infact the said Sunil Khandewal and Narendra Sharma were not a key person of M/s Saluja Enterprises and M/s Prateek Enferprises respectively and also the said affidavits do not mention the name of Appellant society. 1.3 That the Ld CIT (A) failed to appreciate the settled principle that addition can only be on basis of some incriminating material unearthed during course of search which was not produced or not already disclosed or made known in course of original assessment and in the present case the purchase of CBT Bars from M/s Prateek Enterprises and M/s Saluja Enterprises was duly recorded in books of Account of Appellant for A. Y 2006-07 and copies of ledger account of both vendors, bank statement, copies of purchase bill of CBT Bars, copies of weighing slip, certificate from contractor, sub contractor and purchase order was duly placed during proceeding before Ld....
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....m M/s Prateek Enterprises and M/s Saluja Enterprises by making reliance on the pre-search dated affidavit submitted by one Sunil Khandewal & Narendra Sharma in the search case of Bharat Kothari Group wherein infact the said Sunil Khandewal and Narendra Sharma were not key persons of M/s Saluja Enterprises and M/s Prateek Enterprises respectively and also the said affidavits do not mention the name of Appellant society. 1.3 That the Ld CIT (A) failed to appreciate the settled principle that addition can only be on basis of some incriminating material unearthed during course of search which was not produced or not already disclosed or made known in course of original assessment and in fact of present case the purchase of CBT Bars from M/s Prateek Enterprises and M/s Saluja Enterprises was duly recorded in books of Account of Appellant for A. Y 2007-08 and copies of ledger account of both vendors, bank statement, copies of purchase bill of CB T Bars, copies of weighing slip, certificate from contractor, sub contractor and purchase order was duly placed during proceeding before Ld. AO and Ld. CIT (A) to prove genuineness of transaction. 1.4 That the Ld. CIT (A) was no....
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....ted affidavit submitted by one Sunil Khandewal & Narendra Sharma in the search case of Bharat Kothari Group wherein infact the said Sunil Khandewal and Narendra Sharma were not key persons of M/s Saluja Enterprises and M/s Prateek Enterprises respectively and also the said affidavits do not mention the name of Appellant society. 1.3 That the Ld CIT (A) failed to appreciate the settled principle that addition can only be on basis of some incriminating material unearthed during course of search which was not produced or not already disclosed or made known in course of original assessment and in fact of present case the purchase of CBT Bars from M/s Prateek Enterprises and M/s Saluja Enterprises was duly recorded in books of Account of Appellant for A. Y 2008-09 and copies of ledger account of both vendors, bank statement, copies of purchase bill of CBT Bars, copies of weighing slip, certificate from contractor, sub contractor and purchase order was duly placed during proceeding before Ld. AO and Ld. CIT (A) to prove genuineness of transaction. 1.4 That the Ld. CIT (A) was not justified in concluding that a material seized from a third party can also be termed 'a....
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....ot justified either in law or on facts in concluding that the payment of Rs. 17,00,000 was against the purpose of the Appellant Society. 1.4 That without prejudice to the aforesaid grounds, the alternative claim put by the Appellant society before the Ld. CIT (A) regarding the allowability of payment of Rs. 17,00,000/- as payment for protecting the assessee society from prolonged litigation should have been allowed by the Ld. CIT (A) as the necessary evidence & documents pertaining to the said submission were accepted as genuine by the Ld. CIT (A) and Ld. AO. 2. That there is no justification either in law or on facts for the Ld. CIT (A) to confirm the addition of Rs. 36,08,666/- as alleged benefit given to M/s Siddharth Kapoor Infrastructure Pvt Ltd in violation of section 13(I)(c). 2.1 That having regard to the facts and circumstances of the case, Ld. CIT (A) has erred in law and on facts in confirming the action of Ld. AO in denying the exemption u/s. 11 by holding that the case of appellant hit by section 13(I)(c) read with section 13(2)(a) and section 13(I)(d) and that too disregarding the fact that the M/s Ayushmati Educational Society, does not fal....
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....whether the Ld. CIT(A) is correct in directing the AO to allow exemption u/s 11 of the Act, even though the assessee society has violated the provisions of 13(1)(c) r.w.s 13(3) of the Act, thereby the provisions of sec 11 or 12 are not applicable to the case of assessee society? 3.On facts and circumstances of the case, whether the Ld. CIT(A) is correct in directing the AO to allow deduction u/s 11(1)(a) of the Act, even though the assessee has violated the provisions u/s 13(1)(c) r.w.s 13(3) of the act and the provisions of section 11 & 12 are not applicable to the case of the assessee society? 4.On the facts and circumstances of the case, whether the Ld. CIT(A) is correct in directing the AO to allow deduction on account of Capital expenditure even though the assessee has violated the provisions of section 13(1)(c) r.w.s 13(3) of the Act and the provisions of section 11 and 12 are not applicable to the case of assessee society? 5.Any other grounds may be adduced at the time of hearing. IT(SS) A No.127/2019 Assessment Year 2009-10 1. On the facts and circumstances of the case, whether the Ld. CIT(A) is correct in directing the AO to all....
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....ional & Social Society, both Assessee and Revenue are in appeal before us (i) Assessee has raised following grounds of appeal:- IT(SS) A No.74/Ind/2019 Assessment Year 2008-09 1.That on the facts and in the circumstances of the case, the Ld. CIT(A) and Ld. AO erred in confirming the disallowance of legitimate depreciation amounting Rs. 7,71416/- (as per SLM Method) on alleged bogus asset in the Appellate proceeding and in assessment proceedings uls.153A of the I. T. Act because during search proceedings no incriminating material or evidence was found or seized regarding the acquisition of asset during merger with M/s Vedica Education Society which could justify disallowing such depreciation. This addition is contrary to the provisions of section 153A. IT(SS) A No.75/Ind/2019 Assessment Year 2009-10 1.The learned CIT (Appeals) erred in. law and on facts in confirming the action of the learned AO in denying the benefit of exemption u/s 10 (23c) (vi) of the ITA, 1961 . 1.1 The learned CIT (Appeals) failed to appreciated that the Appellant society for the year under consideration was exempted u/s 10 (23c) (vi) of the Income tax Act,....
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....relied upon and has not given an opportunity to the appellant to cross examine the farmers whose statement the Assessing Officer has relied upon. 3.That on the facts and in the circumstances of the case, the Ld. CIT(A) and Ld. AO erred in confirming the disallowance of legitimate depreciation amounting Rs. 7,71416/- (as per SLM Method) on alleged bogus asset in e Appellate proceeding and in assessment proceedings s.153A of e I. T. Act because during search proceedings no incriminating material or evidence was found or seized regarding the acquisition of asset during merger with M/s Vedica Education Society which could justify disallowing such depreciation. IT(SS) A No.76/Ind/2019 Assessment Year 2010-11 1.The learned CIT (Appeals) erred in law end on facts in confirming the action of the learned, AO in denying the benefit of exemption u/s 10 (23c) (vi) of the ITA, 1961 . 1.1 The learned CIT (Appeals) failed to appreciated that the Appellant society for the year under consideration was exempted u/s 10 (23c) (vi) of the Income tax Act, 1961 and the appellant had specifically mentioned the factum of availability of such exemption in its return of in....
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....ugh no proper explanation or details submitted before the A. O during the assessment proceedings? 5.Any other ground may be adduced at the time of hearing IT(SS) A No.130/Ind/2019 Assessment Year 2010-11 1.Whether on facts & circumstances of the case, Ld. CIT(A) is correct in deleting the denial of exemption u/s 11 of Rs. 20,35.53.275/- for A.Y. 2010- 11 even though the assessee society has applied income of the society for the benefit of the persons referred to section 13(3) of the Act and the said violation is held to be correct in view of the section 13(1)(c) of the Act? 2.Whether on facts & circumstances of the case, Ld. CIT(A) is correct in directing the A.O to allow deduction of Rs. 7,83,19,820/- in A.Y 2010-11 u/s 11(1)(a) of the act, even though the assessee society has violated the provisions of sec 13(1)(c) r.w.s 13(3) of the Act and hence exemption u/s 11 are not applicable to the assessee society? 3. Whether on facts & circumstances of the case, Ld. CIT(A) is correct in directing the A. O to allow deduction of Rs. 17,41,75,826/- in A. Y 2010-11 as application of income as capital expenditure, even though the assessee society ....
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.... 17.10.2011 NIL 3 2006-07 31.10.2006 17.10.2011 NIL 4 2007-08 25.10.2007 17.10.2011 NIL 5 2008-09 30.09.2008 17.10.2011 NIL 6 2009-10 23.03.2010 17.10.2011 NIL 7 2010-11 14.10.2010 17.10.2011 NIL 8. During the pendency of assessment proceedings assessee filed writ petition before Hon'ble jurisdictional High Court challenging the assessment proceedings but the same was subsequently dismissed as withdrawn by the Hon'ble Court vide order dated 21.03.2014. In the past for A.Y. 2004-05 & 2005-06 certain additions were made by the Ld. AO u/s 143(3) of the Act vide order dated 29.12.2006 and 28.12.2007 and the issue relating to the additions went up to the Hon'ble jurisdictional High Court and same were decided in favour of the assessee. 9. In the instant appeal at the instance of assessee pertaining to A.Ys.2004-05, 2006-07 to 2009-10, during the course of assessment proceedings various observations were made by the Ld. AO alleging that the assessee society has directly or indirectly used or applied the Sciety's, fund for the benefit of persons referred to in section 13(3) of the Act, which....
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.... issues. 13. On the other hand, Ld. Departmental Representative (DR) apart from supporting the finding of the Ld. AO and Ld. CIT(A) where the issues have been decided in favour of the revenue and finding of Ld. AO, where ld. CIT(A) has given relief to assessee, also referred to Paper book dated 11th June 2021 containing letter dated 3rd June 2019 and various documents filed by the Revenue in support of the grounds raised in their appeals. 14. We have heard rival contentions and perused the records placed before us and carefully gone through the detailed submissions filed by the both the parties and also considered the judgments referred and relied by Ld. Sr. Counsel for the assessee. We will first take up issues raised in the assessee's appeal 15. First issue raised by the assessee for A.Y. 2004-05 relates to addition of Rs. 15,00,000/- for alleged unexplained expenditure for the amount paid to Shri S.N. Sharma. 16. Facts pertaining to this issue are that during the search a loose paper Annexing A-1/1/6, page no.38 was seized from the residence of Shri S.N. Sharma which was a deposit slip of State Bank of Indore in the account in the name of Shri S.N. Sharma wherein ....
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....arch, the addition is beyond the scope of section 153A. Thus, in our view on this legal aspect itself the impugned addition of Rs. 15,00,000/- deserves to be deleted. 19. However, for academic purpose, we will deal on the merits of this issue. We, note that the facts remain undisputed that the alleged transaction is through banking channel. Accounts of the society are regularly audited and income Tax Returns stood filed on 01.11.2004 which was subsequently assessed u/s 143(3) on 29.12.2006. The fact is that the alleged amount was given on loan to Shri. S.N. Sharma is accepted by S.N. Sharma also in his statement. This amount was repaid by the Mr. S.N. Sharma to the assessee society subsequently. It is contended that there was a mistake in punching the transaction in the account books as the accountant inadvertently debited the building construction account, rather then debiting the account of S.N. Sharma to be shown as loan given to Mr. S.N. Sharma. This mistake was subsequently rectified. 20. We, find merit in the submission of the Ld. Sr. counsel for the assessee and are of the considered view thatsince there was a mistake on the part of accountant and transaction carrie....
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....t society made payments to these persons to obtain bills of bogus purchases. In F.Y. 2005-06 appellant showed purchase of CTD Bars of Rs. 40,77,000/- from M/ s. Prateek Enterprises and Rs. 68,66,000/- from M/s. Saluja Enterprises. In F.Y. 2006-07, assessee showed purchase of Rs. 5,27,000/- from M/s. Saluja Enterprises and in F.Y. 2007-08, appellant showed purchase of CTD Bars of Rs. 2,85,000/- from M/s. Prateek Enterprises. These figures hage been rounded off to the nearest multiple of Rs. 1,000/- by the A.O. As per contents of assessment order, the A.O. supplied the appellant the copies of affidavits filed by them. The A.O. has discussed in assessment order that the appellant, during assessment proceedings, submitted that it had purchased CTD Bars Irorn M/~ Prateek Enterprises & M/'$ Saluja Enterprises fur construction work in the college premises of appellant society. The appellant further contended that copy of affidavit belonged to Shri Sunil Khandelwal who was neither proprietor nor key managerial person in the firm and the name of society was nowhere mentioned in his statement. The appellant raised before the A.a. that department had not made any enquiry from the appellan....
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....087.78 91.15% Total 198670.78 100% 3. 2007-08 Pratik Enterprises 7990.76 100% Total 7990.76 100% Consolidated Chart Financial year Name of party Weight (In Kg) Total weight consumed (In %) 2005-06 To 2007-08 Pratik Enterprises 156378.39 18.58% Saluja Enterprises 226983.93 26.96% Others 458548.44 54-46% Total 841910.76 100% 25. After considering the assessee's submission Ld. CIT(A) partly allowed the claim of 60% of bogus purchase and sustained the remaining 40% observing as follows: 14.9 I have carefully observed the written submission of the appellant, the case laws quoted by it and oral argume/nts put- forth in the matter. It is well known fact that the consumption of the CTD Bars in any construction bears a large part of cost. Even in the case, the appellant-is found to be in possession of bogus bills, the fact that it may have consumed large quantity of CTD Bars in construction cannot be denied. However two case laws quoted above are also related to the Bharat Kothari Group in which M/s Prateek Enterprises & M/s Saluja Ente....
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....nsumed Rs. 61,28,416/- in CTD Bars, the consumption of which still remains unallowable. The total purchase from M/ s Prateek Enterprises and M/ s Saluja Enterprises'" in. F.Y. 2005-06 to 2007-08 arnves to Rs. 1,07,54,610/-. Therefore, the appellant is allowed to take credit of purchases made from M/ s Prateek Enterprises and M/ s Saluja Enterprises @ 56.98% (Rs. 61,28,416/- multiplied by 100, divided by Rs. 1,07,54,610/-). To adopt the liberal approach, the purchases made ~rom M/ s Prateek Enterprises and M/ s Saluja Enterprises is allowed to the extent of 60% and the purchases are disallowed @ 40%. In view of the above discussion, the Trustees of the appellant Trust obtained bogus purchase bills from the abo~~_ concerns in inn~tt.~d rates with a motive to take back cash in unaccounted manner for the personal benefit. Therefore. the appellant has benefited related persons which is not allowable as per the provisions of 13(1) (c) r.w.s .. 13(3) of the Act. Therefore, the additions made by the A.O. are restricted to Rs. 39,77,200/- (40% of purchases of Rs. 1,09,43,000/- after deducting Rs. 10,00,000/- on account of two DDs of Rs. 5,00,000/- each being cancelled) in A.Y. 2006- 07,....
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.... Based on this information assessee was asked to furnish following details: "It has been found from enquiries that you have made payments accounting to Rs. 38 lacs during F.Y. 2005-06 to M/s Saluja Enterprisess, Indore and M/s Prateek Enterprisess of Indore through your bank account at IDBI bank. Copies of letters of the IDBI bank in this regard giving details of the payments are enclosed wherewith as Annexure A. It has been confirmed by the proprietors of M/s Saluja Enterprises and M/s Prateek Enterprisess on affidavit to the department that they had been engaged in providing bogus purchase bills on commission basis and no steel etc. had been actually supplied by them to the parties. Copies of same affidavit are enclosed herewith as Annexure A. You are, therefore, enquired to explain/justify the said transactions with M/s. Saluja Enterpises, Indore and M/s Pratik Enterprises, Indore and reconcile the same with your regular books of accounts. You are also required to give details of all transactions made with aforesaid parties i.e. M/s Saluja Enterprises, Indore and M/s Pratik Enterprises from F.Y. 2003-04 to F.Y. 2009-10. You are also required to show cause as to....
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.... Sunil Khandelwal in your presence so that we can also discuss specifically our matter with him. On the law point, justice can only be done when both the parties are given the chance to cross examine. Once again we would like to reiterate that the Assessee Society has genuinely purchased the material and all the payments have been made through its bank account. Following documents are attached at Annexure-A for your ready reference. *Certified copy of ledger account of Mis Prateek Enterprises in the books of Assessee Society for the F. Y 2005-06 and 2007-08 at Annexure A-I. *Copy of bank statement reflecting all the payments at Annexure A-2. *Copy of bills of Mrs Prateek Enterprises at Annexure A-J. *Copy of weighing slips issued by the weigh bridge at Annexure A-4. *Certificate from the main contractor Mohd. Anee~ Khan about the consumption of CTD bars during F. Y 2005-06 to 2007-08 at Annexure A-5. *Certificate from the sub-contractor Ameen Khan about the consumption of CTD bars during F.Y 2005-06 to 2007-08 at Annexure A-6. *Certificate from the architect Mr.Manoj Mishra about the consumption of CTD....
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.... again we would like to reiterate that the Assessee Society has genuinely purchased the material and all the payments have been made through its bank account. Following documents are attached at Annexure- B for your ready reference. Certified copy of ledger account of Mis Saluja Enterprises in the books of Assessee Society at Annexure- B-l. Copy of bank statement reflecting all the payments Annexure- B-2. Copy of bills of Mis Saluja Enterprises Annexure- B-3. Copy of weighing slips issued by the weigh hridge at Annexure B-4. Certificate from the main contractor Mohd. Anees Khan about the consumption of CTD bars during F. Y. 2005-0610 2007-08 Annexure- B-5, Certificate from the sub-contractor Ameen Khan about the consumption ~f CTD bars during F. Y 2005-06 to 2007-08 Annexure- B-6. Certificate from the architect JvIr.Manoj JvJishra about the consumption of CTD bars during F. Y 2005-06 to 2007-08 Annexure- B-7. Copy of approved plan of building by Nagar Nigam, Bhopal Annexure- A-8. Ledger account of Ameen Khan clearly showing the amount of bill booked during the y~ which TDS has been properly done and deposited i....
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....chases. Thereafter, Tribunal held that Assessing Officer could not bring on record any material evidence to show that the purchases were bogus. Mere reliance by the Assessing Officer on information obtained from the Sales Tax Department or the statements of two persons made before the Sales Tax Department would not be sufficient to treat the purchases as bogus and thereafter to make addition under Section 69C of the Act. Tribunal has also held that if the Assessing Officer had doubted the genuineness of the purchases, it was incumbent upon the Assessing Officer to have caused further enquiries in the matter to ascertain genuineness or otherwise of the transaction and to have given an opportunity to the assessee to examine /cross examine those two parties vis-à-vis the statement made by them before sales tax department. Without causing such further enquiries in respect of the purchase, it was not open to the assessing officer to make the addition under Section 69C of the Act. 18. We are in agreement with the view expressed by the Tribunal. In fact, Tribunal has only affirmed the finding of the first Appellate authority. Thus, there is concurrent finding of f....
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....e principles of nature justice as the information of the 3rd party has been used against the assessee. The decision of Coordinate Bench Mumbai in the case of ACIT vs. Tristar Jewellery Export Pvt. Ltd. ITANO.7593/Mum/2011 supports this view that the assessee should be provided an opportunity of cross examination, if addition in its hands is based on 3rd party information. The relevant finding of the Coordinate Bench reads as follows: 8. Having heard the parties and having perused the material on record, we find that the completed assessment of the assessee was reopened on the basis of the statement of Shri Hiten L. Rawal, the proprietor of M/s Zalak Impex. In this statement recorded u/s 131 of the Act, Shri Rawal confessed to have provided accommodation entries in the form of sales and purchases, to various parties. The assessee was stated to have obtained bills for non existing parties, amounting to Rs. 4,09,12,718/-, during the year under consideration. The assessment order dated 21-12- 2010 was passed pursuant to the said reopening. 9. It remains undisputed that the assessee was never provided any opportunity to cross examine Shri Hiten L. Rawal, though he spec....
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....gly order so and thus assessee's appeal for A.Y. 2006-07 to A.Y. 2008-09 are allowed. 37. As regards the addition of Rs. 17,00,000/- for the alleged unexplained payment to Shri S.D. Tomar during A.Y. 2009-10 raised by assessee in ground no. 1, facts in brief are that the sum of Rs. 17,00,000/- was paid by the assessee society to Shri Anees Khan. Ld. AO enquired about this transaction and found that Shri Anees Khan after receiving the payments of Rs. 17,00,000/- from assessee society on 14.12.2008 immediately gave this sum of Rs. 17,00,000/- to Mr. S.D. Tomar. When asked about this transaction, the assessee submitted that sum was paid to Mr. Anees Khan for construction and the amount is debited in construction account. Ld. AO was not satisfied as he was of the view that the alleged sum is not spent for the objects of the assessee society. 38. When the matter came up before the Ld. CIT(A) assessee society was not able to satisfy him with the submissions and addition made by the ld. AO was confirmed. 39. Before us Ld. Sr. Counsel for the assessee submitted that the alleged sum was a payment towards contract charges for construction. Tax had been deducted at source and the rel....
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....ssee society directly to the following farmers for the purchase of land made by SKIPL Sr. No. Name of seller(Framer) Date Cheque No. Amount in Rs. 1 Pratap Singh 20.01.2009 184672 1,00,000 2 Om Prakash 23.01.2009 184671 1,00,000 3 Om Prakash 22.11.2008 223110 11,000 4 Mannu Lal 17.01.2009 227431 21,000 5 Mannu Lal 23.03.2009 186968 3,18,000 6 Mannu Lal 22.03.2009 186862 17,55,000 7 Anokhi Prasad 25.03.2009 186965 6,01,833 8 Brijmohan 23.03.2009 186966 7,01,833 Total 36,08,666 42. Ld. AO was of the view that the assessee society has violated the provision of section 13(3) of the Act by making payment to farmers on behalf of the SKIPL. Assessee failed to get any relief by ld. CIT(A) as he was also of the view that the alleged sum is only for the benefit of SKIPL in which Mr. R.N. Kapoor and his grandson Shri Siddharth Kapoor are having equal shares and thus there is a clear violation of provision of section 13(1)(c) r.w.s 13(3) of the Act. 43. Before us, Ld. Sr. counsel for the assessee submitted that the land....
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....t in the case of Acme Educational Society (supra) wherein Hon'ble Court have made reference to other judgments namely Director of Income Tax (Exemption) Vs. Alarippu, (2000) 244 ITR 358, Baidya Nath Plastic Industries (P) Ltd. & Ors. Vs. K.L. Anand, (1998) 230 ITR 522 (Delhi) and the judgment in the case of Director of Income- Tax (Exemption) Vs. Priwar Sewa Sansthan, (2002) 254 ITR 268 wherein it was held that "interest free loan of Rs. 90,50,000/- given by the assessee society to Nav Bharti Educational Society does not violate Section 13(1)(d) read with Section 11(5) of Act, 1961 as the said loan was neither an "investment" nor a "deposit". 46. We, therefore, in the given facts and circumstances of the case and respectfully following the judgment of jurisdictional High Court in the assessee's own case in ITANo.236/2012 dated 14.09.2015, and the judgment of Hon'ble Delhi High Court in the case of Acme Educational Society, (supra), are of the considered view that the alleged sum of Rs. 36,08,666/- is not a payment to SKIPL but actually it is in the nature of loan by assessee society to the other group society AESS which is running education institution and is registered u/s ....
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....lding and thus have held that M/s Prateek Enterprises & M/s Saluja Enterprises are not bogus concerns. Disallowance of purchase of CTD(Bars) for various years was deleted both on merit as well as legality. Since, we have already decided this issue, our finding shall apply mutatis mutandis on this common issue raised by the Revenue for A.Y. 2008-09 and accordingly hold that since purchase of CTD bars are not bogus, no disallowance was called for by the Ld. AO. Finding of Ld. CIT(A) is set aside and ground no.1 of the Revenue for A.Y. 2008-09 is dismissed. 53. Now we take up ground no.2 of revenue's appeal for A.Y. 2010-11 in ITANo.127 & 128/Ind/2019 challenging the finding of Ld. CIT(A) deleting the addition of Rs. 1,53,30,530/- which was made by the ld. Assessing Officer observing that the income of the society in the form of fixed deposit with bank was utilized by the society for the benefit of its members. We note that during the year under appeal the assessee society entered into transactions of providing school buses on hire with a company namely Homebound Travels Pvt. Ltd. (in short HTPL) Smt. Sadhna Kapoor who is a member of the society and also relative of other members/o....
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....appellant has produced bank account statement of Mj s Ayushmati Education and Social Society in which it is clearly visible that on 27.07.2009, two amounts Rs. 22,63,759/- and 36,802/- (equivalent to Rs. 23,00,561/-) are visible as withdrawal with the narration as closer proceeds: 537106390000012 which is the term loan account of HTPL. Therefore, it is clear that the proceeds of closed FDR of Rs. 23,00,561/- in the term loan account of HTPL was credited by M/s Ayushmati Education and Social Society and not by the appellant's society. 20.2 Regarding other two amounts of Rs. 1,07,78,792/- and Rs. 22,51,177/-, it has been submitted by the appellant that the said amounts have been shown debited in the ledger of HTPL in the books of the appellant. On perusal of this ledger, it is observed that on 27.07.2009 two entries of similar amounts have been shown debited as 'INTEREST RECEIVED'. Regarding the narration 'INTEREST RECEIVED', it is submitted by appellant that this is due to the fact that in Tally Software, the narration of only one entry appears in case of multiple entries. To explain the same assessee has produced two copies of journal vouchers dated 27.....
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....dition for notional interest on the sum advanced to HTPL at Rs. 2,18,048/- and Rs. 41,84,920/- for A.Y. 2009-10 & 2010-11. We are also of the view that Ld. CIT(A) has rightly deleted both these additions on observing that there was no unsecured loan given to HTPL during A.Y. 2009-10 and for the advance/loans given during A.Y. 2010-11. Assessee society has already charged interest of Rs. 43,59,500/- which is duly reflected in the books of account. Though Ld. CIT(A) has rightly deleted both these additions but revenue has not challenged this issue of addition of notional interest before us. 57. We, therefore, in the given facts and circumstances of the case find no justification in the action of the Ld. AO making addition of Rs. 1,53,30,530/- in the hands of assessee and thus the finding of Ld. CIT(A) stands confirmed. Accordingly ground no.2 of Revenues appeal for A.Y. 2010-11 is dismissed. 58. Now we take up the common issue raised by the Revenue for A.Ys. 2008-09, 2009-10 & 2010-11 challenging the finding of Ld. CIT(A) allowing the benefit of exemption u/s 11 of the Act. We observe that the assessee society is registered u/s 12AA of the Act since 13.08.1999. It was originall....
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....aining to allowing of benefit u/s 11 of the Act becomes infructuous, since there remains no disallowance u/s 13 of the Act. 61. However, for academic purpose we will deal with this issue raised by the revenue. We observe that Ld. CIT(A) while granting the benefit of exemption u/s 11 of the Act, Ld. CIT(A) referred to various judgments and decisions and CBDT Circular observing as follows: 17.11 Now I take up another issue by which Assessing Officer denied exemption u/s 11 to the appellant society from AY2009-10 and AY 2010-11 and by virtue of this, whole excess of income over expenditure amounting to Rs. 11,18,18,138/- in AY 2009-10 & Rs. 12,61,18,145/- in A.Y. 2010-11 have been brought to tax. The appellant has quoted sec 13(1)(c), 13(2), sec 164(2), circular no. 387 dt. 06.07.1984 issue by CBDT under the heading ' Levy of income tax at maximum marginal rate in the case of charitable and religious trusts which forfeit tax exemption' and various legal precedents in its favour. 17.12 For the sake of convenience and to analyse applicability of sec 13(1)(c), relevant provision of sec 13(1)(c) are reproduced as under_ Nothing contained in section 11 3 or se....
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.... only such income which is directly or indirectly used for the benefit of any person referred to in sub section(3). 17.14 In sub section (2) of section 13 even, 'any part of such income or property' phrase has been used which also supports the claim of the appellant. 17.15 The appellant has also quoted sec 164(2) In favour of its claim. Sec 164(2) is reproduced as below- (((2) In the case of relevant income which is derived from propertij he~d under trust wholly for charitable or religious purpose or which is of the nature referred to in sub-clause (iid) of clause (24) of section 2, or which is of the nature referred to in sub section (4A) of section 11, tax. shall be charged on so much of the relevant income as is not exempt under section 11 or section 12 as if the relevant income not so exempt were the income of an association of persons. Provided that in a case where the whole or any part of the relevant income is not exempt u/ s 11 or section 12 by virtue of the previsions contained in clause (c) or clause (d) of sub- section (1) of section 13, tax shall be charged on the relevant income or part of relevant income at the maximum margi....
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....portion would fall in the net of tax as if it was the income of an A.O. P. The phrase 'relevant income or part of the relevant income' in the proviso is required read in contradistinction to the phrase 'whole income' under s. 161(lA). In this case, the SLP filed by the revenue in Supreme Court was dismissed. Citation- Commissioner of Income Tax, Mangalorc vis Fr. Mullcrs Charitable Institutions [2014) 51 taxmann.com378(SC) (ii) Director of Income Tax(Exemptions) vis Sheth Mafatlal Gagalbhai Foundation Trust P001J 114 taxman 0019, Bombay- In case of contravention of s. 13(1)(d), maximum marginal rate of tax under s. 164(2), proviso is applicable only to that part of income of the trust which has forfeited exemption and not the entire income. (iii) Jamshetji Tata Trust vis Joint Director of Income Tax(Exemption) , ITAT, Bombay, [2014J 148 lTD 0388(MUMjBreach of section 13(1)(d) and 13(2)(h) would lead to forfeiture of exemption of income derived from such investment and not entire income would be subjected to maximum marginal rate of tax uls 164(2). (iv) Commissioner of Income Tax vis Red Rose School [2007J 75 CCH 0138 All HC- Profi....
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.... of the previous year of the person in receipt thereof- (c) in the case of a trust for charitable or religious purposes or a charitable or religious institution, any income thereof- (i) if such trust or institution has been created or established after the commencement of this Act and under the terms of the trust or the rules governing the institution, any part of such income enures, or (ii) if any part of such income or any property of the trust or the institution (whenever created or established) is during the previous year used or applied, directly or indirectly for the benefit of any person referred to in sub-section (3) :" Thus from the aforesaid provisions of section 13(1)(c)(ii), it may be seen that if any part of income or any property of the trust is applied directly or indirectly for the benefit of any trustee, etc, then the benefit of exemption under section 11 of the Act, will not be available to the trust, in respect of such income. Provisions of section 13(2) of the Act. In the present context, section 13(2) of the Act is also relevant. For the sake of ready reference, section 13(2) of the Act, is reproduced as fol....
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....to remain, invested for any period during the previous year (not being a period before the 1st day of January, 1971), in any concern in which any person referred to in sub- section (3) has a substantial interest." From the aforesaid provisions of section 13(2), it may be seen that in respect of various circumstances referred to in clauses (a) to (h) thereof, the income or property of the trust or institution or any part of such income or property shall, for the purposes of section 13(1)(c) and 13(1)(d), be deemed to have been used or applied for the benefit of the trustee, etc. It clearly implies that section 13(2) is nothing but an extension of section 13(1)(c) / 13(1)(d). Section 164(2) of the Act. In the present context, the provisions of section 164(2) are also relevant, which are reproduced as follows : "164.Charge of tax where share of beneficiaries unknown. (2) In the case of relevant income which is derived from property held under trust wholly for charitable or religious purposes, or which is of the nature referred to in sub-clause (iia) of clause (24) of section 2 or which is of the nature referred to in sub-section (4A) of section 11 t....
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....ection 13(1)(c) of the Act, the maximum marginal rate of income tax will apply only to that part of the income for which contravention is made under the provision of section 13 and not on the remaining income of trust/society. This view also stands taken in the following judgments/decisions: 1. DIT(E) Vs Sheth Mafatlal Gagalbhai Foundation Trust [2001] 249 ITR 533 (Bom). 2. JAMSETJI TATA TRUST VS JDIT (E) [2014] 101 DTR (TRIB) 305 (MUM 3. CIT VS. RED ROSE SCHOOL [2007] 163 TAXMAN 19 (ALL.) 4. ITO VS. VIRENDRA SINGH MEMORIAL SHIKSHA SAMITI [2009] 18 DTR (TRIB.) 502 (LUCKNOW). 5. ARVIND BHARTIYA VIDHYALYA SAMITI VS. ACIT [2008] 115 TTJ 351 (JP.) 6. DY.CIT VS. COSMOPOLITAN EDUCATION SOCIETY [2000] 244 ITR 494 (RAJ.) 67. We, therefore, in view of the settled judicial precedents find merit in the finding of Ld. CIT(A) holding that if there is some mis-utilization or mismanagement of the income/fund of the charitable society, the exemption u/s 11 of the Act cannot be denied to the assessee trust on the remaining income. Thus, it is clearly established that only the relevant income falling within the mischief u/s 13(1)(c)/13(1)(d) w....
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....application of income. 72. We observe that ld. CIT(A) has allowed this claim observing as follows: 22. These grounds are raised against not allowing the deduction of Rs. 2,43,75,990/- in A.Y. 2008-09, Rs. 11,06,15,735/- in A.Y. 2009-10 and Rs .. 2,OO!48,975/- in A.Y. 2010-11 as application of income as capital expenditure. 22.1 Appellant in the return of income/computation of income claimed the deduction of similar amounts as application of income as capital expenditure. In the assessment order, the A.O. has stated nothing about this deduction. On perusal of the tables prepared in the assessment order while concluding the assessment order for determination of the total income, the A.O. has not deducted the said amounts. For A.Y. 2008-09, as discussed in the preceding paras, the A.O. has not denied exemption u/s 11 to the appellant. Therefore the appellant is also entitled for deduction of Rs. 2,43,7~990/-, For A.Y. 2009-10 & A.Y. 2010-11, the A.O. denied the exemption vi] s 11 of the Act to the appellant and therefore, added the excess of income over expenditure (gross receipts less revenue expenses) i.e. Rs. 12,18,18,138/- in A.Y. 2009-10 and Rs. 12,61,18,145/- in A....
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....tions. The assessee society filed an application seeking approval u/s 10 (23C)(vi) of the Act from A.Y. 2006-07 but was finally accorded approval u/s 10(23C)(vi) of the Act from A.Y. 2009-10 and onwards. Assessee society is running around 26 educational institutions (list mentioned in the assessment order at page 3 & 4) which are engaged in imparting education in the field of pharmacy, engineering, Research & technology, hotel management, Polytechnic college and others. As per the bylaws /Rules & Regulations of the society filed with the Registrar of Societies, M.P. at the time of registration, the objectives of the society are social service activities, educational activities, import medical, paramedical, nursing, dental & school education by opening of medical, paramedical, nursing, dental, ayurvedic, homeopathic colleges hospitals and schools. 76. Search action u/s 132 of the Act was carried out on 23.07.2009 at various premises of RKDF group which also included the assessee society (AESS) which is part of the same group. Assessment proceedings were initiated by serving notice u/s 153A of the Act to file the return for A.Ys. 2004-05 to 2009-10. In compliance to the notice ....
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....tion 13 of the Act. Ld. AO accordingly made the addition for Rs. 19921,499/- to the income of assessee and also denied benefit of exemption u/s 11 for the alleged violation of section 13 of the Act for directly using or applying the income of the assessee society for the benefit of person referred to in section 13(3) of the Act. 78. Second issue raised by the Ld. AO to A.Y. 2008-09 was regarding the payment of Rs. 15,00,000/- to Shri Aneesh Khan. Ld. AO alleged that there was a transaction of purchase of land from Shri Gyan Chand Jain & Shri Amar Chand Jain. The amount was given by cheque by the society for the amount appearing in the registered sale deed but the 'on money' was paid through Shri Anees Khan by way of issuing bearer cheque which were encased by the power of attorney holder name of Shri Shyam Lal Patidar and Tulsiram Patidar on behalf of Shri Gyan Chand Jain & Shri Amar Chand Jain. The assessee however contended that Mr. Anees Khan is a contractor and had carried out construction activities round the year. Payments were made against bills issued and tax at source was deducted. Ld. AO was not satisfied with this reply and disallowed a sum of Rs. 15,00,000/- as un....
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....mers on behalf of family concern SKIPL as discussed in para 10.2 Add: Benefit of interest passed on to Home Rs. NIL 34,07,25,659/- Bound Travels Private Limited as discussed in para 10.4 Add. On account depreciation on bogus Asset as discussed in para 10.5 1,99,21,499/- 25,83,030/- 7,71,416/- Total income assessed Rs. 36,40,01,604/- A.Y. 2010-11 Income shown in the return Add: Excess of income over expenditure Add: Benefit of interest passed on to Home Bound Travels Private Limited as discussed in para 10.4 Add. On account depreciation on bogus Asset as discussed in para 10.5 Rs. NIL 20,35,53,275/- 9,39,890/- 7,71,416/- Total income assessed Rs. 20,52,64,581/- 83. Aggrieved assessee preferred an appeal before Ld. CIT(A) and partly succeeded and now the assessee is in appeal before this Tribunal for A.Y. 2008-09 to 2010-11 by the assessee and cross appeals for A.Y. 2009-10 & 2010-11 by the revenue. First we take up assessee's appeal 84. The first common issue raised in ground No.1 for A.Y. 2008-09, ground no.3 for A.Y. 2009-10 and ground No.2 for A.Y. 2010-11 for disallowance of depreciation e....
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....bogus claim in case of Vadica Education Society. 91. We, therefore, in the given facts and circumstances of the case absence of any finding for the alleged bogus assets found during A.Y. 2004-05 to 2001-08 and respectfully following the judgment of Hon'ble Delhi High Court in the case of Kabul Chawla(supra) are of the considered view that Ld. AO erred in making disallowance for depreciation at Rs. 7,71,416/- for each year from A.Y. 2008-09 to 2010-11. The finding of Ld. CIT(A) is set aside and this common issue is decided in favour of the assessee. Thus ground no1, Ground no.3 and Ground no.2 of assessee's appeal for A.Y. 2008-09 to 2010-11 are allowed. 92. Now we take up ground No.1 & 2 for A.Y.2009-10 wherein the assessee has raised two fold contentions, firstly that Ld. CIT(A) erred in confirming the action of the Ld. AO by making addition at Rs. 1,99,21,499/- on account of land purchased by SKIPL for the amount given by the assessee society. Secondly it is contend that the assessee society was granted the approval u/s 10(23C)(vi) of the Act and ld. AO denied the benefit exemption without following the procedure provided in Proviso to section 143(3)(e) of the Act. 9....
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.... exemption u/s 10(23C)(vi) of the Act it was submitted that Ld. AO failed to comply to the procedure laid down in proviso to section 143(3) of the Act and denied the benefit of exemption u/s 10(23C)(vi) of the Act without intimating Central Government or the prescribed authority about the contravention if any of u/s 10(23C)(vi) of the Act. It is only after such intimation that exemption u/s 10(23C)(vi) of the Act can be withdrawn. No such contravention of this provision has been stated by Ld. AO or Ld. CIT(A). Activities of the assessee society running primarily for educational activities have not been doubted. Only on the basis of some disallowances benefit of section 11 of the Act has been denied. However, Ld. AO has not given any reason as why the assessee is not entitled to the benefit of exemption u/s 10(23C)(vi) of the Act. It was also submitted that prior to Finance Act 2020, the appellant can claim the exemption both u/s 10(23C)(vi) and section 11 of the Act simultaneously. This amendment is prospective in nature. Reliance was placed on the following decisions: 1. Peoples Education Society [2014] 42 taxmann.com 353 (Karnataka) 2. Commissioner of Income-....
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....]« 1 0(23C) (vi) and also u/s 153A after obtaining approval u/s 1 0(23C) (vi) as appellant submitted before A.O. during the assessment proceedings that returns filed by it uls 139(1) may be treated as returns filed in response to notice u/ s 153A. 12.1 In view of the aforesaid points mentioned in the preceding para, I am of the view that appellate proceedings should also be concluded on the basis of exemption claim u/s 11 by the appellant for all assessment year 2004-05 to 2010-11, in respect of which a composite assessment order has been passed by the AO. However, benefit u/s 11 and u/s 10(23C)(vi) of the Act cannot be claimed simultaneously. Hence, these grounds of appeal are hereby dismissed. 98. We have heard rival contentions and perused the records placed before us and carefully gone through the decision referred by Ld. counsel for the assessee and the finding of Ld. CIT referred by Ld. DR. 99. As regards the quantum addition of Rs. 1,99,21,499/- confirmed by Ld. CIT(A) on account of land purchase by SKIPL measuring 10.17 hectare located at village- Gondarmau, registered on 20.03.2009, we note that this property is purchased by SKIPL. A sum of Rs....
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....er of immovable property is not effective or completed under the general law. In the present case, there is a fine distinction which remained un-noticed at the end of the ld. AO. According to the appellant, the rights which have been acquired by it by virtue of lease agreement are the rights of capital nature. These rights have been alienated in favour of the appellant by SKIPL. The ld.AO has referred to sections 17 and 49 of the Indian Registration Act, but, failed to notice the proviso appended to section 49 which has been incorporated by way of amendment subsequently. Thus, it is pertinent to take note of section 49 along with proviso which reads as under: "49. Effect of non-registration of documents required to be registered.--No document required by section 17 or by any provision of the Transfer of Property Act, 1882 (4 of 1882), to be registered shall-- (a) affect any immovable property comprised therein, or (b) confer any power to adopt, or (c) be received as evidence of any transaction affecting such property or conferring such power, unless it has been registered : Provided that an unregistered document affecting immovable prope....
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....nt to sell, that records delivery of possession or is executed in favour of a person to whom possession is delivered and the ITA No.2414/Ahd/2013 proviso to section 49 of the Indian Registration Act, 1908, put paid to any argument to the contrary. 14. We, therefore, hold that : (a) a suit for specific performance, based upon an unregistered contract/agreement to sell that contains a clause recording part per- formance of the contract by delivery of possession or has been executed with a person, who is already in possession shall not be dismissed for want of registration of the contract/agreement; (b) the proviso to section 49 of the Registration Act, legitimises such a contract to the extent that, even though unregistered, it can form the basis of a suit for specific performance and be led into evidence as proof of the agreement or part performance of a contract." 103. Thus, if SKIPL refused to honour the lease agreement the appellant has a right to get this agreement enforced by way of suit for specific performance. The validity of this agreement under general law viz. Specific Relief Act as well as Indian Registration Act has not been effected. This ....
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....g cross examination of the said farmers was denied by the Ld. AO and this action in itself leave no room for the Ld. AO to make addition in the hands of assessee. We find support from various judgments including that of Hon'ble Apex Court in the case of Andman Timber Industries v. CCE (2015) 281 CIR 241 (SC). 107. We, therefore, in the given facts and circumstances of the case and factual matrix and the judicial precedents are of the considered view that the alleged sum of Rs. 1,99,21,499/- has been rightly and legally utilized for the attainment of the objects of the society and has been spent for the development of land in the sports activities and other land development in the interest of the students studying at the educational institutions run by the assessee society duly supported by legal term and conditions provided in lease deed dated 20.04.2009. 108. In our considered view Ld. AO erred in making the addition for Rs. 1,99,21,499/- treating it as an amount given for the benefit of members of the society and also erred in holding that the assesse had violated the provision of section 13(1)(c) r.w.s. 13(2)(a) and section 13(1)(d) of the Act. Thus, this issue raised ....
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....-10 and for subsequent year. 112. When the matter came up before LD CIT (A) he also confirmed the action of Ld. AO stating that "In view of the aforesaid points mentioned in the preceding para, I am of the view that Appellate proceedings should be concluded on the basis of exemption claimed u/s 11 by the Appellant for all the assessment years 2004-05 to 2010- 11, in respect of which a composite assessment order has been passed by AO. However, benefits of exemption u/s 11 and u/s 10 (23C) (vi) of the Act cannot be claimed simultaneously." 113. We however on perusal of proviso to section 143(3) of the Act find that the LD AO is not empowered to deny the benefits of Section 10 (23C) (vi) once it is granted as per the procedure prescribed under the statue. The LD AO is bound by law to give effect to the exemption order passed under Section 10 (23C) (vi) of the Act. Further if the LD AO at the time of assessment proceedings was of opinion that Appellant society has contravene with object of society for making profit or the main object and the purpose of the society was not imparting education for which such certificate is issued, then in such circumstances the LD AO has to follow ....
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....er educational institution or hospital or other medical institution has been withdrawn or notification issued in respect of such news agency or fund or trust or institution has been rescinded : Provided further xxxxxxxxxxxxxxxxxxxxxxxxx 114. That as per proviso to Section 143(3) it is evident no order making an assessment shall be made by the Assessing Officer without giving effect to the provisions of Section10 unless the Assessing Officer has intimated the Central Government or the prescribed authority, the contravention of the provisions of clause (23C) of Section10. Only after such approval granted has been withdrawn, he can proceed to pass an order, denying the benefit of exemption on the ground of contravention. 115. In light of above, we find that in the instant case the Ld. Assessing officer without giving intimation or recommendation to the Central Government or the prescribed authority to withdraw the order under Section 10 (23C) (vi) of the Act issued to Appellant, has directly denied the benefits of Section 10 (23C) (vi) of the Act in the assessment proceeding, and this finding of Ld. AO is in contravention to 1st Proviso to Section 143 (3) of the Act. ....
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....h association, news agency, association or institution or fund or trust or university or other educational institution or any hospital or other medical institution, where in his view such contravention has taken place, and (ii) the approval granted to such scientific research association or other association or institution or university or other educational institution or hospital or other medical institution has been withdrawn or notification issued in respect of such news agency or fund or trust or institution has been rescinded)". The aforesaid provision makes it clear that no order making an assessment shall be made by the Assessing Officer without giving effect to the provisions of Section10 unless the Assessing Officer has intimated the Central Government or the prescribed authority, the contravention of the provisions of clause (23C) of Section10. Only after such approval granted has been withdrawn, he can proceed to pass an order, denying the benefit of exemption on the ground of contravention. Having regard to the language employed, the said provision is mandatory. Without complying with the requirement of the said provision, the Assessing Authority gets ....
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....will be no bar to seek exemption under s. 11. a) Conversely, while claiming the exemption u/s 10(23)(vi), it is not required to fulfill the conditions mentioned u/s 11 as also exemption u/s 10(23)(vi). Exemption u/s 10(23)(vi) can be claimed by the assessee without applying for registration us 12A. See Commissioner Of Income tax and Another Vs. Society Of Advanced Management Studies (2013) 352 ITR 269 (All) wherein it has been held that Exemption u/s 10(23C)(vi) of the Act can be claimed by an assessee without applying for registration u/s 12A of the Act as it is not required to fulfil the conditions mentioned u/s 11 of the Act while claiming exemption u/s 10(23C) (vi) of the Act. 120. Further as regarding the issue that whether prior to Finance Act 2020 the assessee society can claim exemption both u/s 10(23C)(vi) and section 11 Simultaneously. We find that LD AO and CIT (A) were not justified in reaching a finding that for the year under consideration the benefit under section 11 and u/s 10 (23c) (vi) cannot be claimed simultaneously without appreciating the fact that the amendment for taking benefit either under section 11 or u/s 10 (23c) was introduced only by Finan....
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....oth provision and further there was no condition prior to amendment introduced by finance Act 2020 to claim exemption under either of the two. 123. Thus In light of above we hold that learned CIT (Appeals) failed to appreciate that the income of Appellant society for the year under consideration was exempt u/s 10 (23C) (vi) of the Income tax Act, 1961 and the appellant had specifically mentioned the factum of availability of such exemption in its return of income and has also made submission before the Ld assessing officer regarding exemption u/s 10(23C)(vi). Thus, Ld CIT (A) and LD AO failed to take into consideration that after giving effect to exemption under Provisions of section 10(23C)(vi) there cannot be any income of the appellant trust which can be charged to tax. In view of exemption been already granted u/ s 10(23C)(vi) there can't be any income of the appellant trust which is liable to tax even ignoring the Provisions of section 11 of the Act. Therefore, even if the benefits of section 11 is denied than too there can be no income of the appel1ant trust on which tax can be collected from it in view of the provisions of section 10(23C)(vi) of the Act considering th....
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....to HTPL. This fact remains un-rebutted by the Ld. DR. Therefore, in our considered view Ld. AO failed to appreciate the facts of the case properly and therefore no interference is called for in the following finding of Ld. CIT(A) deleting the impugned addition: 16. These grounds have been raised by the appellant against the additions of Rs. 25,83,030/- in A.Y. 2009-10 and Rs. 9,39,890/- in A.Y. 2010-11 as benefit of interest passed on to M/s. Homebound Travels Pvt. Ltd. The A.O. has stated in the assessment order that the appellant gave interest free unsecured loan to M/s. HomebO'\.mo Travels Pvt. Ltd. (herein after called HTPL). The A.O. found that Smt. Sadhna Kapoor, a member of the appellant society was director in the HTPL holding more than 20% shares. During assessment proceedings, the A.O. noticed that closing. debit balance of HTPL in the books of appellant society as on 31.03.2009 and 31.03.2010 was Rs. 2,15,25,251/- and Rs. 78,32,406/respectively. Therefore, the HA.O. applied notional interest rate 12% on closing balance and made additions accordingly. 16.1 During appellate proceedings, the appellant has submitted the advance amount was not interest f....
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....0-11 respectively whereas the appellant has charged interest of Rs. 26,90,656/L in F.Y. 2008- 09 & Rs. 9,50,000/- F.Y. 2009-10 respectively; Therefore, the additions of Rs. 25,83,030/- in A.Y. 2009-10 and Rs. 9,39,890/- in A.Y. 2010-11 are hereby deleted. Consequently , these grounds of appeal are allowed. 129. In the result this common issue raised by revenue in ground no.4 in appeal for A.Y. 2009-10 & 2010-11 stands dismissed. 130. Now we take up the next common issue raised in ground no.1 for A.Y. 2009-10 & 2010-11 challenging the finding of Ld. CIT(A) allowing the benefit u/s 11 of the Act. 131. We observe that the Ld. AO on the basis of his examination of the issues made certain disallowance and additions concluded that the assessee society has applied some of its fund for the benefit of officer bearers/members/relative and violated the provisions of Section.13 of the Act and therefore the assessee society is not eligible to claim exemption u/s 11 of the Act. It is noteworthy that while denying this exemption u/s 11 except for the additions/disallowances made in the assessment order. Ld. AO has not referred to any other instance which could show or prove that the asse....
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.... tax deducted at source. Though this issue addition of Rs. 15,00,000/- is not before us by the assessee since it was directed by Ld. CIT(A) to be taxed in A.Y. 2007-08. However since no incriminating material was found with regard to this addition and the assessment for A.Y. 2007- 08 is a non-abated assessment, thus no addition was called for by the Ld. AO towards the payment of Rs. 15, lacs to Anees Khan in view of the judgment of Hon'ble High Court in the case of Kabul Chawla(supra). 135. In this way all the additions/ disallowances which were the foundation of the action of the Ld. Assessing Officer denying benefit u/s 11 of the Act has already been held to be unjustified/deleted by us on the basis of facts of the case as observed in the preceding paras. Accordingly there is no hurdle left for the assessee to claim the benefit of exemption u/s 11 of the Act. Even otherwise for A.Y. 2009-10 & 2010-11 as held by us in the preceding paras while dealing with assessee appeal that it is eligible for exemption of income earned during the year from educational work as it has necessary approval u/s 10(23C)(vi) of the Act. 136. Now though we have already decided that the asse....
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....hile concluding the assessment order for determination of the total income, the A.O. has not deducted the said amounts. For A.Y. 2009-10 & A.Y. 2010-11, the AO denied the exemption u/s11 of the Act to the appellant and therefore, added the excess of income over expenditure (gross receipts less revenue expenses) i.e. Rs. 34,07,25,659/- (Rs. 55,17,17,918/- less Rs. 21,09,92,259/-) in A.Y. 2009-10 and Rs. 20,35,53,275/- (Rs. 52,21,32,132/- less Rs. 31,85,78,857/-) in A.Y. 2010-11. Since A.O. disallowed exemption ix] s 11 to the appellant, deduction on the amount of application of money ii] s 11 (l)(a) was .not allowed. 17.2 Certain grounds raised by appellant during appellate proceedings have been allowed in the preceding paras which have effect of allowing exemption u/ s 11 of the Act to the appellant and accordingly additions made by AO bringing whole excess of income over expenditure have been deleted. Therefore, appellant is also entitled for deduction u/s 11(1)(a) in respect of application of income. Hence, these grounds of appeal are allowed. 138. Accordingly common ground no.2 raised by the revenue for A.Y. 2009-10 & 2010-11 is dismissed. 139. As r....