TaxTMI 
TaxTMI 
2024 (6) TMI 794
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....11 in the teeth of provisions of section 13(2)(a) of the Income-tax Act, 1961, which allows lending subject to adequate security and interest. 3. In the facts and circumstances of the case and in law, the Ld. Commissioner of Income-tax (Appeals) has erred in confirming addition of Rs. 45,26,830/- on the ground of non-charging of interest on advance paid for purchase of property. 4. The impugned order is bad in law and on facts. 5. The appellant reserves the right to addition, after or omit all or any of the grounds of appeal in the interest of justice. 2. The Brief facts of the case and submissions of the assessee, as furnished by the Ld. AR in the form of synopsis are extracted as under: a) The appellant is a charitable institution set up for advancement of education and registered u/s.12A and u/s.80G of the IT Act, 1961. b) Return of income for A.Y. 2016-17 was filed on 15/10/2016, declaring total income at Rs. NlL after claiming exemption u/s.11. c) Assessment u/s 143(3) was completed on 28/12/2018 and total income was assessed at Rs.2,36,88,981/-. d) The enhancement relates to (i) Rs.1,82,62,151/- being surplus of income over expenditure made after denying....
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....on co. vs. CIT [199 ITR 702- (Gau)]- interest income on notional basis cannot be subjected to tax. (iv) ClT vs. Shoorji Vallabhdas and co., [1962] 46 ITR 144 (SC)- income-tax cannot be levied on hypothetical income. Accordingly, it is humbly prayed that the appeal may kindly be allowed in the interest of justice. 3. Grounds of appeal no. 1, 2 and 3 raised by the assessee, are inter linked, thus are discussed and deliberated commonly as follows: 4. At the outset on this issue, it was the submission of Ld. AR that the entire surplus i.e., excess of income over the expenditure of the assessee society has been treated as assessable income. Ld. Assessing Officer, on the basis of certain disallowances on arbitrary basis without considering the facts that the interest on outstanding advances was not charged by the assessee from the person specified u/s 13(3), thus, the same was notionally calculated @12% p.a. amounting to Rs. 45,26,830/-. It is the submission of Ld. AR that whether the entire surplus of the Assessee's society can be charged to tax only on the basis of certain disallowances. Ld. AR further submitted that the issue pertaining to advances given for purchase of land ....
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....rging of interest on such transaction is out of question, moreover, the calculation of notional interest on such transaction and to bring the same in the ambit of assessable has income is extraneous, thus, not justified. In support of contention raised by the Ld. AR following case laws were relied upon. i. Satna Diocesan Society vs. ACIT- ITA No.124/Nag/2018 dt. 08/11/2019- when payment for land was accepted by the Revenue in earlier years and in subsequent years, a different view in isolation is not called for- provisions of sec. 13(1)(d) cannot be invoked. Relevant observations of the Tribunal in the said order was as under: It is Assessee's contention that the advance for purchase of land was given in earlier years i.e., 2011-12, 2012-13 and 2013-14 and in the assessment framed u/s. 143(3) of the Act, the same has been accepted by the Revenue. It is further contention of assessee that for subsequent years also, advance paid by the assessee towards purchase of land has been accepted. The aforesaid contention of assessee has not been controverted by Revenue. Further, before us, the Ld. AR has also relied on the decision cited here in above in support of the contention that th....
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....tances of the present case, wherein certain advances were extended by the Assessee's society to specified person covered u/s 13(3) of the Act for the purchase of land without any interest or security, which according to Ld. AO was in the nature of transaction attracting provisions of section 13(1)(c) r.w.s. 13(2)(a). It is also an admitted fact that the transaction of purchase has been accepted by the department in the earlier years when the advance was actually provide, for which no disallowances was imposed either in the earlier AYs or in the relevant AY. Only a notional amount of interest @12% has been computed on the outstanding advance and added to the Income of the assessee, which for the year under consideration was Rs. 45,26,830/-, considering the transaction in violation of provisions of section 13(1)(c) r.w.s. 13(2)(a) of the Act. Ld AO under his on belief have utilized, such so called violation of provisions of section 13(1)(c) r.w.s. 13(2)(a), as the foundation for denying exemption u/s 11 of the Act. On the contrary, on perusal of the order of Ld. CIT(E), Bhopal dated 28.12.2020 (supra) a/w replies of the assessee before the Ld. CIT(E), wherein it is evident that the i....