TaxTMI 
TaxTMI 
2023 (5) TMI 793
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.... 10G. The CIT(Exemption) issued a letter on 12-10-2020 through ITBA portal requesting to upload certain other information/clarification for the purpose of verifying the genuineness of the activities carried out during the process of above said application. According to the CIT(Exemption), the assessee has shown value of building of Rs.14.62 lacs as on 31-03-2017 and no corresponding land is reflected in the Balance sheet for construction of building. The CIT(Exemption) sought explanation from the assessee to furnish the proof of ownership of immovable properties on which the building was constructed. It is noted that the CIT(Exemption) opined that the assessee constructed the said building deriving funds from the trust on the land owned by the four trustees i.e. Shri balkrushna Dnyanoba Khandve, Shri Ashok Dnyanoba Khandve, Shri Bhausaheb Dnyanoba Khandve and Shri Tanaji Dnyoba Khandve. Therefore, according to the CIT(Exemption) that whatever educational activities are carried out, building constructed, funds invested in construction of building by the assessee are not protected and denied the registration u/s. 80G(5)(vi) of the Act. 5. The ld. AR submitted that admittedly, the sa....
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....y vests in the lessors of the property. There will be no change in the ownership, that is, the ownership rights will still vest in the original owners of the property. But, the lessors cannot refrain the enjoyment and possession rights of the lessee. 5. The 'agreed property, being the property of the lessors is registered in lessors' name in government records. The 'agreed property' is in possession of the lessors. 6. Lesseee is in need of land for establishing educational institution. As such, the "agreed property has been leased to the lessee by the lessor. As per the discussion between the lessors and the lessee, the following terms and conditions have been agreed and approved by the lessee on the basis of which, this agreement has been executed. 7. The lease agreement of the 'agreed property will-commence from the date of establishment of an educational institution for a period of 30 years. 8. This lease deed of the "agreed property' is executed with a prior discussion between the lessors and the lessee. In case, some technical constrain! of obtaining license for the establishment of the educational institution arises, then, in such a case, the l....
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....ible for the said venture. 17. Above mentioned terms and conditions will be completely binding on the descendants of the lessee. Every term and condition shall be consciously followed. No term or condition shall be violated. In case of any violation of the terms and conditions of the agreement, the lessee will be bound to pay the damages, due to such violation. 18. The consideration for this lease agreement will be payable by the lessee on or before every 10th of the month as per the English calendar. Accordingly, you are willingly, with your free consent executing this lease agreement which is and will be binding on you is executed by you today." On perusal of the above agreement it can be seen that the monthly rent of Rs.1,00,000/- has been agreed upon. The L'd AR during. the course 'of hearing on 30.01.2023 has stated that no rent has been received by the trustees till date. However, it is a matter of fact that as- per the mercantile system of accounting, the rent-remains payable to the trustees and outstanding liabilities has to be reflected in the books of accounts of the assessee. Since the aforesaid liabilities are not found into the balance sheet of the assess....
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....the Income Tax Act 1961, does not automatically exempt the income of the Trust. The registration u/s 12AA of the Income Tax Act 1961 does not confer any exemption u/s 80G & therefore, a separate application may be filed for grant of registration u/s 80G of the Income Tax Act 1961." Both the sections 12AA and 80G are exclusive of each other and approval of 12AA do - not tantamount to automatic approval of 80G. 5. The L'd AR has relied upon the judgement of High Court of Bombay in the case of CIT-II, Pune Vs National Education Foundation. The facts of the referred citation do not match vis-a-vis facts of the present case. In the referred case law, the 80G approval was already existent and subsequent denial of 80G by the CIT-II, Pune has been on the issue of non-compliance of financial statements of the preceding years and the denial of 80G has been primarily on procedural non-compliance. Contrary to the facts of the referred case law, the application of 80G in the present case has been already rejected twice before on 27.08.2019 and 08.08.2020. Further, there is nothing on record in the paper book submitted by L'd AR as to post amendment of section 12A w.e.f. 01.04.2021, ....