TaxTMI 
TaxTMI 
2021 (12) TMI 369
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....ered under Section 12AA, the assessee claims that the income of the Trust for the Assessment Year up to and including the Assessment Year 201011 is exempt from the computation of total income of the assessee. The assessee for the subject assessment year, on 01.01.2013, filed the return under the Act declaring the total income of the assessee as 'Nil'. The assessee, admittedly, established and running four educational institutions. The case of the assessee was selected for scrutiny and statutory notices under Section 143(2) and 142(1) were issued by the Assessing Officer. The Assessing Officer issued notice calling upon the assessee to explain the advance of a sum of Rs. 72,45,000/- in favour of M/s.VUS Timbers. M/s. VUS Timbers is a proprietary concern of Mrs. K Sainaba. The Proprietrix K Sainaba is the wife of Managing Trustee Sri V U Sidhik of the assessee/Educational Trust. The advance made in favour of M/s. VUS Timbers since is not compliant with the general purpose of running the Trust, the Assessing Officer called upon the assessee to show-cause as to why the provisions of Section 13(1)(c) of the Act should not be invoked and disallow the advances made by the assessee in favo....
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....is shown as expenses incurred for construction work and payment made without TDS to the contractor Varghese Innocent. Substantial Question Nos. 1 to 3 3. Substantial question nos. 1 to 3 read thus: "(i) Whether on the facts and in the circumstances of the case, the Appellate Tribunal is justified in dismissing the appeal by rejecting all the claims for exemption/deduction in the Assessment Order Annexure-A? (ii) Is the Appellate Tribunal justified in making addition of Rs. 72,45,000/- and estimating interest thereon as diversion of funds of the Trust amounting to violation of exemption u/s.11 of the Act r.w.s. 13(1)(c) and in levying tax at maximum marginal rate thereon? (iii) Whether on the facts and in the circumstances of the case, the assessing and Appellate Authorities, including the Appellate Tribunal are justified in estimating and adding Rs. 13,04,700/- as income of the Trust and assessing the same at maximum marginal rate as stated in the ground above? Are not the above additions arbitrary, illegal and unsustainable in law?" 4. Senior Advocate Mr T M Sreedharan contends that the assessee was granted registration under Section 12AA of the....
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....ry basic reply given by the assessee, acceptance of reply given by the assessee would be illegal and the Officers do not enjoy so much discretion under the Act to accept unsupported reply. He invited our attention to each one of the findings recorded by all the three authorities and argued that the questions raised, firstly, do not arise for consideration and secondly, there is no perversity in any of the findings recorded by the orders in Annexures-A, B and D. This Court ought not to decide the legality of the conclusions recorded by the authorities by looking at fresh material now placed by the assessee before this Court. Even, such material does not inspire confidence for the limited purpose of remitting the matter to the Tribunal. He prays for answering all the three questions in favour of the Revenue and against the assessee. 6. The argument of assessee proceeds to convince this Court that the reply given by the assessee is not considered and led to a finding which resulted in the inclusion of Rs. 72,45,000/as income of the assessee. The further argument is that the orders did not consider the material placed by the assessee in support of its plan to establish a medical col....
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....ust during the previous year is used or applied directly or indirectly to any person referred to in subsection (3) of section 13, provisions of section 11 will not have application. Admittedly, the amount has been advanced to M/s. VUS Timbers, a proprietory concern of wife of the Managing trustee. Therefore, the advance clearly comes within the mischief of section 13(1)(c) of the I.T.Act unless it is proved that the said advance is for the purpose of assessee-trust itself. It is the claim of the assessee that the amount has been advanced for purchase of timber for the proposed construction of a medical college. It is an admitted fact that permission was given for the setting up of medical college. The assessee has also not produced any application or other documents which ought to have been submitted to the Governmental authorities or Medical Council of India for the proposal for setting up of medical college. The story of the assessee is far from convincing that the advance has been made for the purchase of timber. The timber is normally purchased only subsequent to the construction of the building and even without constructing any building, the assessee had made the advance for p....
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.... 8.1 The statutory obligation of the assessee to conform to the requirement of Section 40(a)(ia) of the Act is not in dispute. The fact that no TDS was effected while making the payment of Rs. 21,27,846/- in favour of one Varghese Innocent towards consideration for contract works is also not in dispute. The explanation, in the understanding of this Court, does not deal with any of the relevant aspects of law or fact for independently examining the question to find out whether the findings recorded by the orders referred to above warrant interference. It is sufficient to refer to the findings recorded by the Tribunal in this behalf which read as follows: "4.4 We have heard the rival submissions and perused the material on record. Admittedly, no tax was deducted on the payment of Rs. 21,27,846. The assessee has not proved that the provisions of section 40(a)(ia) of the I.T.Act does not have any application on the said payment of Rs. 21,27,846. Hence, the A.O. was correctly disallowed the expenditure by invoking the provisions of section 40(a)(ia) of the I.T.Act, which was confirmed by the CIT(A). Hence, we see no reason to interfere with the order of the CIT(A) and we confi....