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TaxTMI 
TaxTMI 
TaxTMI 
2023 (9) TMI 264
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....ling the order passed by the Income Tax Appellate Tribunal, Hyderabad Bench (B) (for short, "the Tribunal") in I.T.A.T. No. 1067/HYD/2005 decided on 30.06.2006 for the Assessment Year 2002-2003. 3. Vide the impugned order, the Tribunal dismissed the appeal of the appellant-assessee affirming the order passed by the Commissioner of Income Tax (Appeals) - IV, Hyderabad, dated 07.04.2005, who in turn had affirmed the order passed by the Assessment Officer dated 14.03.2005 after completion of the assessment under Section 143(3) determining income of Rs. 7,16,56,700/-. 4. The appellants are primarily aggrieved of the refusal of exemption claimed under Section 11 of the Income Tax Act. 5. The appeal was admitted on 22.09.2014 on the question of law, viz., "whether the exemption claimed by the appellant under Section 11 of the Income Tax Act is acceptable?" 6. However, during the course of hearing of the appeal finally, the learned Senior Counsel appearing for the appellants also stressed hard for considering the question of law, viz., "whether on facts and in the circumstances of the case, the word 'fund' in Section 13(1)(f) of the Income Tax Act, 1961 can apply only to service incom....
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....t the time of raising of bills and its remittance. In addition, certain other State Government bodies, viz., Urban Development Authority, the Municipal Corporation of Hyderabad, Cyberabad Development Authority, the Department of Tourism, were also invited to be participants in this project. It is noteworthy to mention here that the financial participation of Larsen & Toubro Infosity was to the extent of Rs..8.12 crores, i.e., around 11% of the equity share. 9. The appellants in between incorporated a joint stock company under the Companies Act, 1956. The said company was known as Hyderabad International Expositions Limited (HITEX). The said company was incorporated with an intention of holding exhibitions and also to promote object and mission of the appellant's society. The appellants have been filing their returns periodically claiming for exemption on its net service from income tax for the Assessment Year 2002-2003, and they have filed returns claiming exemption of its service amounting to Rs. 7.16 crores. 10. During the course of assessment, the Assessing Officer found that the appellant-N.A.C. has made an investment of Rs. 1.50 crores in the equity of HITEX. This, according....
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....became part of the Corpus. Further, whatever contributions that have been made by the appellant to M/s. HITEX was from the aforesaid corpus and was not from the funds of the company. Therefore the appellant could not have been denied exemption under Section 11, as sought for by the appellant. That the contribution made from the corpus to M/s. HITEX cannot be in violation of Section 11 (5) of the Act. 14. It was the further contention of the learned counsel for the appellant that the appellants were entitled to accumulate 25% of their income which in the instant case comes to around Rs. 2.2 crores and it is only an amount of Rs. 1.5 crores which has been invested by the appellant. Hence, the provision of Section 11 (5) of the Income Tax Act would not had been attracted in the instant case. It was also the contention of the learned counsel for the appellant that even otherwise, the amount of Rs. 1.5 crores spent by the appellant towards HITEX was the amount collected by way of membership fees and which again is a capital receipt and therefore both, section 11 (5) and Section 13 (1) (d) of the Act, would not be applicable. 15. Learned counsel appearing for the department on the othe....
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....f achieving the mission and object of the society in a better manner as is claimed by the appellant. 19. However, in contravention to the aforesaid mission and objects, what is apparently visible from the pleadings of the appellants is that, the Government initially had allotted Rs. 167 crores of land to the appellants in achieving the goal. However, the appellants in addition to the establishment of a joint venture - M/s. HITEX, also parted hundred acres of their land to M/s. HITEX. The newly established joint venture i.e. M/s. HITEX started utilizing the land for purpose of holding exhibitions of all natures and in the process, has been earning huge amounts in the form of rental on the same. It is also learnt that HITEX has also used the said land for commercial purpose by allotting the land to other commercial establishments. Thus, earning profits is in clear violation of the purpose, mission and object of the society. It was this aspect, which was duly considered by the assessing officer at the first instance and by the CIT Appeals later on, and the two orders were further also affirmed by the ITAT. Thus, there is a concurrent finding of the two appellant forums based on factu....
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....contravention, disentitles the society from claiming the benefit/exemption under Section 11 of the Act. It is pertinent to note that Section 13 (1)(d) as amended by the Finance Act, 1983, provides that the income of any charitable or religious trust or institution will not be entitled to exemption under Sections 11 and 12, if certain conditions stipulated therein are not complied with. 23. In 1998, the Government of Andhra Pradesh established the National Academy of Construction (NAC) by orders in G.O. Ms. No. 103, Transport, Roads & Buildings (R.III) Department, dated 16.6.1998, with the objective of achieving development of the construction industry, and engaging in activities for the promotion of education, training, research, professionalism and skill formation in the construction industry. So as to ensure adequate availability of funds to NAC, the Government of Andhra Pradesh issued G.O. Ms. No. 92, T.R&B (B.I) Department, dated 19.5.1998 directing the Executive Engineers to conclude supplemental agreements with the contractors for works under execution, and for those works to be entrusted in future, to deduct 0.25% of the gross amount of the bill and remit it to the ICTI. 2....
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....bjects of the society, an amount of Rs. 1.5 crore was invested in HITEX, the objects of which are not similar to that off the appellant society and in fact, it is also involved in using the land for commercial purpose. Apart from investment of Rs. 1.5 crore in HITEX, the appellant society had also transferred 100 acres of land on lease out of 167.30 Acres of land which was allotted by the Government to the Appellant. The Assessing Officer had taken note of transfer of 100 acres by the appellant society to HITEX, however, in his wisdom, he did not further enquire into the terms and conditions of such transfer and as to whether lease rental or any amounts are being received by the appellant society. 29. Thus, investment of Rs. 1.5 crore and transfer of 100 acres of land by the Appellant to HITEX squarely covered under Section 13(1)(d) of the Act, 1961 and, therefore, the appellant society made themselves disentitle to the benefit under Section 11 of the Act, 1961 in view of violation of section 11(5) of the Act, 1961. 30. The Delhi High Court in DIT (Exemption) v. Charanjiv Charitable Trust [(2014) 43 taxmann.com 300 (Delhi)] dealt with an issue of whether the assessee violated Sec....