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2021 (11) TMI 33

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....l. Apart from the primary activity of providing Education, the Trust also provides Medical Aid and Relief to the Poor. The return of income for the Asst Year 2015-16 was filed on 28.9.2015 declaring total income of Rs Nil. The return of income was accompanied with Income & Expenditure Account, Balance Sheet and Audit Report in Form 10B. The case was selected for scrutiny and in response to hearing notices, the assessee trust filed all the requisite details from time to time. The ld AO even acknowledges this fact in Para 3 of his assessment order that the requisite details called for were duly furnished by the assessee from time to time. The ld AO specifically makes a mention in para 4 of his assessment order that the expenditure incurred for the objects of the trust as detailed in income and expenditure account has been examined by him before framing the assessment and ultimately the assessment was completed u/s 143(3) of the Act on 12.6.2017 by categorically stating that the application of income for the objects of the trust of Rs. 13,90,77,143/- was more than the gross receipts of the trust at Rs. 13,84,79,292/-. 3.1. This assessment was sought to be revised by the ld PCIT by in....

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....ake of brevity. The main argument of the ld. AR is that relevant and sufficient enquiries were indeed carried out by the ld. AO in the original assessment proceedings on the impugned issues involved in the show-cause notice u/s.263 of the Act. To buttress this argument, he drew our attention to the questionnaire issued by the ld. AO in the original assessment proceedings and the replies filed before the ld. AO by the assessee vide letters dated 09/03/2017, 05/05/2017, 23/05/2017, 30/05/2017 & 05/06/2017 together with the relevant annexures. We find that the return of the assessee filed for the A.Y.15-16 was selected for 'limited scrutiny' to examine the following issues:- i) Accumulation of income by trust ii) Receipts of Trust iii) Deposits in Co-operative bank iv) Mismatch in income / capital gain on sale of land or building v) Tax credit mismatch vi) Charity expenses. 3.4. We find that assessee during the course of original assessment proceedings vide its letter dated 09/03/2017 had explained all the aforesaid six issues. The assessee had also vide letter dated 05/05/2017 furnished the details in response to AIR statement furnished by the ld. AO to the assessee. The....

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....  Education Expenses 2,12,022   Examination Expenses 1,09,980   Function & Festival Expenses 9,87,016   Housekeeping Expenses 1,94,754   Expenses 80,564   Laboratory Expenses 1,643   Library Expenses 3,100   Online Admission form Fees 10,720   Pta Expenses 7,022   Sports & Games 14,69,668   Workshop Expenses 1,56,561   Advertisement Expenses 83,817   Bank Charges / Money order Charges 7,846   Conveyance Expenses 2,06,792   Electricity Charges 16,17,545   General Expenses 1,40,881   Infirmary Expenses 2,08,321   Late payment Charges of PT 24,000   Legal & Professional Fees 1,685   Magazine & Periodicals 3,30,981   Medical Expenses 7,376   Mediclaim Insurance 5,56,171   Motor Car Expenses 1,89,483   Motor Car Insurance 29,303   Printing, Stationery & Postage 17,49,447   Security Charges 22,53,306   Telephone Expenses 1,17,815   Water Charges 1,22,530 1,14,70,452     9,19,39,199 3.5. The educational expenses totalling to Rs. 9.19 Crores includes donat....

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....e, 2014 State Bank of India 11045085801 20,00,000 229 3. 23rd June, 2014 15,00,000 242 24th June,2014 State Bank India 11045085801 15,00,000 229 4. 21st July, 2014 15,00,000 242 24th July, 2014 State Bank 11045085801 15,00,000 229 5. 22nd August, 2014 12,00,000 248 27th August, 2014 State Bank of India 11045085801 12,00,000 229 6. 18th September 2014 15,00,000 248 24th September, 2014 State Bank of India 11045085801 15,00,000 229 7. 9th October, 2014 10,00,000 248 13th October, 2014 Bank of India 000110100006129 10,00,000 229 8 2nd January 2015 9,76,440 256 6th January, 2015 Bank of India 000110100006129 9,76,440 230 9. 23rd January, 2015 15,00,000 257 28th January, 2015 ________ State Bank of India 11045085801 15,00,000 230 10. 11 th February, 2015 20,00,000 257 13th February, 2015 Bank of India 000110100006129 20,00,000 230 11. 23rd February, 2015 20,00,000 257 25th February, 2015 State Bank of India 11045085801 20,00,000 230   TOTAL : 1,61,76,440         1,61,76,440   'Wrongly stated in Paper Book as 17th May, 2014. 3.8. The above facts clearly prove ....

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.... ld. AO with regard to the non-chargeability of capital gains on sale of two plots of land are reproduced hereunder:- 1) The assessee Trust is the owner of a plot of land which forms part of the larger property described in the Indenture of Lease dated 14th April, 1950 duly confirmed by the Hon'ble Bombay High Court in its order dated 12th March, 1951 in Suit No. 202 of 1951. In other words the said Property was given on lease in 1951. The said Lessees in turn created various Sub-Leases and also created third party rights, resulting in the entire property being encumbered by duly developed societies as also slum dwellers. 2) Due to various breaches committed by the Lessees, the assessee Trust filed a Suit in the Small Causes Court against 41 Defendants. Due to the intervention of various parties, the suit was settled out of Court and consent terms were executed between the parties on 23rd December, 2014. 3) Under the said consent terms, a lumpsum consideration of Rs. 65 crores is to be received by the Trust for sale of Reversionary Rights of the property in favour of the Purchasers. The entire amount of Rs. 65 crores has been received at the time of execution of the consent....

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....thereafter and accordingly, there was no taxable capital gain that arises in A.Y.2015-16. Based on this explanation, the ld. AO on due examination of the documents, took a plausible view and the correct view that capital gains does not arise in A.Y.2015-16 to the assessee. Hence, we hold that the order of the ld. AO in this regard cannot be termed as erroneous so as to invoke revision jurisdiction u/s.263 of the Act. These facts were further explained before the ld. PCIT in the 263 proceedings by the assessee. The ld. AR before us filed a note mentioning the event together with the note submitted before the ld. AO and the details of the relevant page of the paper book as under:- Sr No. Event Facts/Material before the A.O. Page Nos. of Paper Book 1. In terms of the Indenture of Lease dated 14th April 1950 the Assessee Trust demised land admeasuring 1,02,242 sq. yds, situate at Lalbaug, Mumbai ("the Larger Property") in favour of 7 Lessees for the rent thereby reserved and upon the terms and conditions therein contained. Accordingly, the 7 Lessees were placed in possession of the Larger Property. Note submitted to A.O. Pages 227 and 228 2. The aforesaid 7 Lessees sub-le....

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....the said Consent Terms: i. the said 6 Defendants agreed to purchase the reversionary rights of the Plaintiff i.e. the Assessee Trust in respect of the Larger Property save and except the Slum Portion ('the Remaining Property') for a total consideration of Rs. 65 crores subject to.the sanction of the Charity Commissioner u/s 36 of the Maharashtra Public Trusts Act 1950. (para 5 (b) internal page 16 of Consent Terms) ii. it is the obligation of the said 6 Defendants to obtain the sanction of the Charity Commissioner (Para 13 internal page 20 of the Consent Terms) Note submitted to A.O. Pages 227 and 228 Consent Terms, pages 97 to 120 Order dated 22/06/2016 of Charity Commissioner Pages 90 to 96 7. Pursuant to an application made by the Assessee Trust the Charity Commissioner, Maharashtra State, Mumbai sanctioned the sale of the Remaining Property i.e. the revisionary rights of the Trust therein for the total consideration of Rs. 65 crores Order dated 22/06/2016 of Charity Commissioner Pages 90 to 96 3.11. We find that though the remaining property is in possession of 41 Lessees/sub-lessees/their purported assignees, the purchase of the reversionary rights in respect....

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.... basis' i.e. subject to the possession of the 41 Lessees/sub-lessees. This is not a case where the property in its entirety is sold to a sitting Lessee. Even otherwise Section 53A of Transfer of Property Act, 1882 , refers to possession in part performance of the very same contract under which the transfer is agreed to take place. Here the possession is under the Lease of 1950 and not in part performance of the Consent Terms, the same being subject to the sanction of the Charity Commissioner. 3.13.1. We further find that Sub-section (1A) was inserted in the Indian Registration Act of 1908 with effect from 2002, which provides that- "the documents containing contracts to transfer for consideration any immovable property for the purpose of Section 53A of the Transfer of Property Act 1882 shall be registered if they have been executed on or after the commencement of the Registration and other Related Laws (Amendment) Act 2001 and if such documents are not registered on or after such commencement then they shall have no effect for the purposes of the said Section 53A. (emphasis supplied). 3.14 In the present case, the agreement i.e the Consent Terms is not registered and hence the ....