TaxTMI 
TaxTMI 
TaxTMI 
2024 (6) TMI 726
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....d in law in failing to consider the binding judgments of the High Court/the Supreme Court. 4. That the Ld. CIT(A) erred on facts and in law in confirming that the entire income Rs. 74,49,530/- is to be taxed at maximum marginal rate. 5. That the impugned order is arbitrary, illegal, bad in law and the violation of rudimentary principle of contemporary jurisprudence. 6. That the appellant craves leave to add, amend, alter, vary and / or withdraw any or all the above grounds of appeal before or at the time of hearing of the appeal." 3. As both the Appeals are involved with similar issues, brief facts of the case as mentioned in the order of the Ld. CIT(A) for A.Y 2014-15 are taken into consideration, which are as under: "Return of income was filed on 29/09/2014 declaring nil income. The case was selected for scrutiny through CASS and notice under section 143(2) dated 28/08/2015 was issued. The assessee is society which is registered under the Societies Registration Act, 1860 and is also registered under section 12A vide order dated 23/10/2001. The main objects of the society are as under: (i) To run educational/professional institutions from nursery onwards for the pr....
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....27,455 9,55,300 18,03,595 2015-16 18,03,595 44,39,799 - 62,43,394 2016-17 62,43,394 29,78,374 - 92,21,768 2.3 Ledger account of Divine Real Build Private Limited in the books of accounts of the assessee pertaining to the head 'Property Account for the year ending 31/03/2014 revealed that there was brought forward balance of Rs. 97,10,000/- as on 01/04/2013. On being asked to explain, it was submitted that it had entered into an Agreement dated 27/12/2012 with Divine Real Build Private Limited for purchase of plot of land from it and the said balance was the advance payment made by the assessee to Divine Real Build Private Limited stop on being asked to produce the documents in original relating to the plot of land for which the advance was made, land documents worth Rs. 6,72,500/- were furnished which were for an agricultural land. The Assessing Officer concluded that the assessee, in order to pass benefit to its related party, ie., Divine Real Build Private Limited, who is a specified person under section 13(3) deliberately advanced Rs. 97,10,000/- for a plot of land which was agricultural land worth Rs. 6, 72,500/-. It was also noted that subsequen....
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....ot produced any written agreement and only produced approved plan for increased FAR, the Assessee has not even produced any of the details even before the CIT (A) to substantiate the claim of the Assessee. The Ld. Departmental Representative relying on the findings and the conclusions of the Lower Authorities sought for dismissal of the Appeals of the assessee. 7. We have heard the parties perused the material. In the present case, the sole issue for consideration as to whether the CIT(A) is right in confirming the assessment orders by denying the exemption u/s 11 of the Act holding that there was a violation u/s 13(1)(c) (ii) of the Income Tax Act, ('Act' for short). The Assessing Officer denied the Exemption u/s 11 of the Act by invoking the provisions of Section 13(1)(c) since the interest free advance had been made to Divine Real-build Pvt. Ltd. which was 'specified person' within the meaning of Section 13(3) of the Act. It was the case of the assessee that the assessee had entered into an agreement with Divine Real Build Pvt. Ltd. for purchase of plot of land in respect of which land documents worth Rs. 6,72,500/- which was an agriculture land and the assessee had applied for....
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.... Delhi High Court have held that in case of a charitable trust, where it is found that provisions of section 13(1)(c)(i) read with section 13(3) are not followed, the trust would lose its exemption in entirety, with result that assessment of its income will be made according to the other provident of the Income Tex Act. It has also been held that where the trust, advanced certain money for purchased of land to a person provided under section 13(3), in view of fact that sale agreement was cancelled after a long time of paying advance money without charging any readout charging any interest on said advance money; it being a case of volition of Section 13(1)(c). Assessee's claim for exemption under section 11 was to be rejected. In the said case, the Hon'ble Court have held as under: 21. We may first take to the fundamental question as to whether the assessee was ineligible for the exemption under Section 11 on the ground that there was contravention of the provisions of Section 13(1)(c)(u) read with Section 13(3) of the Act. It is necessary for briefly notice the statutory provisions in this regard Section 11 exempts any income derived from property held under trust who....
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....struction pursuant to Agreement dated 08/03/2013 whereas no construction could be undertaken till August, 2016 when the plans were approved. It is also to be noted that this is not a case of violation within the meaning of section 13(1)(d) but a case which falls under section 13(1)(c)(ii). 4.2.5 In the case of Budha Vikas Samity v. CIT [(2011) 11 taxmann.com.234/199 Taxman 395 (Patna)] it has been held that interest free advance given to a Trustee for construction of building was covered within the meaning of section 13(2)(a). In New Noble Educational Society v. CCIT [(2011) 334 ITR 303 (AP)], the High Court of Andhra Pradesh have held that where a society had given interest- free advance to its secretary, provisions of section 13(1)(c) were attracted and society would not be entitled to exemption under section 10(23C)(vi). In CIT v. Gurukul Ghatkeswar Trust [(2011) 332 TUR 611 (AP)] the trust advanced money to an organisation in which the President of the trust was interested, it also gave loan to the widow of a founder who was one of the trustees of the trust. It was held that the amount so advanced did not fall within the modes of approved investments prescribed in section 11....
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....onsideration. (iv). It is submitted that nomenclature given by the assessee in its Books of Account under the head loan & advances does not mean that the amount was loan and advances without there being any consideration. The fact of the matter is that the Agreement was entered on 8.03.2013 and the plan was approved by the DDA on 08.08.2016 & thereafter full fledged construction was carried out by the Divine Real Build Pvt. Ltd. and the building was completed on 09.12.2020 (Please see P. No. 78 of Paper book Vol.1) However, all the above facts have been ignored by the A.O. as well as by CIT(A) and the exemption to the assessee have been denied without any cogent reason and material. (v) It is submitted that in present case A.O, has made a passing remark in para 4.4 "the said amount must have been utilised by the company Divine Real Build for its business activities". In this regard it is submitted that there are just passing remarks made by the A.O. without analysing the agreement for construction as well as without specifying the benefit which the specified person could have earned. Therefore, these observations are not relevant. (vi) It is submitted that making subjectiv....
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.... following judgments: * Relaince Industry, 313 ITR 340 (SC) * CIT v. DD Industry Ltd., 323 ITR 596 (DHC) * CIT v. Bhartiya Televenture, 331 ITR 532 * CIT v. Hero Cycle, 311 ITR 349 (P&H HC)" 9. The Ld. A.O. observed that there were outstanding balances in the name of M/s Divine Real Build (P) Ltd. at Rs. 18,03,595/- in A.Y 2014-15 and Rs. 62,43,394/- for A.Y 2015-16 and also narrated the breakup of the said amount as under:- A.Y Opening Balance (In Rs.) Payment (in Rs.) Receipts (In Rs.) Closing balance (In Rs.) 2014-15 25,31,140/- 2,27,455/- 9,55,300 18,03,595 2015-16 18,03,595 44,39,799 - 62,43,394 10. It is seen from the above, the Ld. A.O. invoked the provision of Section 13(1)(c) of the Act to deny the exemption of Section 11 of the Act and brought the entire surplus income at Rs. 74,49,529/- for A.Y 2014-15 and Rs. 78,63,639/- for A.Y 2015-16 to tax which were confirmed by the CIT(A). It is to be noted that there is no dispute regarding the fact that M/s Divine Real Build (P.) Ltd. is a specified person as per Section 13(1) (c) of the Act. The contention of the Ld. AR is that the transaction took place on commercial expediency and business transa....