TaxTMI 
TaxTMI 
2024 (10) TMI 922
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.... "1. Grounds of Appeal in the case of M/s Rajasthan Vikas Sansthan(AAATR3975P) for the A.Y. 2016-17 against the order of Ld. CIT(A)(NFAC) dated 15.12.2023 issued vide DIN & order no. ITBA/NFAC/S/250/2023- 24/1058801967(1): (a) "Whether order passed by the Ld. CIT(A) is justified, ignoring the facts and circumstances of the present case and without applying the correct preposition of law". (b) Whether the Id. CIT(A) was justified in holding that there is no violation of section 13, while facts of the case shows clear violation by various means like making loans & advances to related parties, thus, applying income and assets of assessee trust for benefit of trustees. (c) Whether Id. CIT(A) was justified in holding non applicability of section 13 of Income-Tax Act for loans/advances given another trust while both the trust has common trustees?" (d) Whether ld. CIT(A) is justified in allowing exemption u/s 11 of the Income-tax Act while assessee trust violated provision of section 13(1)(c) of the Income-tax Act by giving interest free loans, advances and security deposits to persons covered u/s 13(3) of the Income- tax Act". (e) Whether l....
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....:- i. assessee has advanced receipt a sum of Rs. 3,35,00,000/- to M/s Samarth Vivdhlaxi Seva Trust, the Assessing Officer was of the view that this is an advance in violation of Provisions of Section 11(5) and section 13 of the Act because of common trustees and accordingly he charged interest on the same @ 12% per annum and made the addition. The learned AO rejected the explanation of the assessee that advance is given to the Trust which is also having the object of the education executing the Memorandum of Understanding. The Assessing Officer noted that there are common trustees and therefore provisions of section 13 (3) (cc) are also covered in the definition of and, therefore, there is violation of Provisions of Section 13(1)(c) and 13(1)(d) of the Act, He further held that even the provisions of Section 13(3)(e) is also violated.it was the claim of the learned assessing officer that in the trust to whom the loans are given, the trustees of the assessee trust are also the trustees of that trust. Therefore, according to the provisions of section 13 (1)(c)(ii) if part of such income or any property of the trust or institution is used or applied directly or indirectly for....
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....e learned Assessing Officer is aggrieved with the appellate order and has preferred the appeal before us. 13. The learned Departmental Representative (DR) vehemently supported the order of the learned Assessing Officer and submitted that assessee has violated the provisions of section 13 of the income tax act wherein the funds are diverted for the benefit of the trustees and the associates concerns of the trustee. 14. The Learned A.R. filed a paper book containing 218 pages and also submitted a written note. The contention of the learned A.R. is that. i. in ITA No. 255/Jodh/2019 dated 26.05.2020 at Page Nos. 99 to 122 of the paper book wherein the exemption and registration granted to the assessee u/s. 10(23C)(vi) of the Act was challenged and by that order the Coordinate Bench agreed that the assessee has not violated the third proviso and 14th proviso u/s. 10(23C)(vi) of the Act. ii. He further referred to Paragraph 17 of that order wherein the issue of security deposit paid to the trustee of Rs. 3,05,00,000/- was held to be neither unreasonable nor excessive nor in violation of third and 14th proviso to Section 10(23C) of the Act. iii. With respe....
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....ed the cancellation of registration u/s. 12AA (3) of the Act on 03.01.2020 in ITA No. 44/Jodh/2020 which was decided by the Coordinate Bench on 01.02.2021 and it was held that assessee is entitled to registration u/s. 12AA of the Act and cancellation of such registration is not tenable in facts and circumstances of the case. The assessee, therefore, benefit of Section 10(23C)(vi) and Section 12AA of the Act was once again restored to the assessee by the above orders of the Coordinate bench. 18. We find that for assessment year 2016 - 17 the order of the assessment was passed on 22/8/2019 for assessment year 2016 - 17 and on 23/12/2019 for assessment year 2017 - 18 wherein the order of the coordinate bench in restoring the registration under section 12 AA of the act was passed on 3/1/2020 and the order of the coordinate bench in granting recognition under section 10 (23C) was passed on 26/05/2020 and therefore, these orders of the coordinate benches were not available before the assessing officer at the time of passing the assessment order. The order of the learned CIT - A was passed on 15/12/2023 and therefore the learned CIT - A had the benefit of these two appellate orders pas....
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.... the decision of the of Hon'ble Delhi High Court in the case of Keshav Charitable was followed. The facts wherein were that where the money is given to another Institute for similar objects that amount given cannot be treated as investment or deposit u/s. 13(1)(d) of the Act and Section 11(5) of the Act. Therefore, so far as the issue of Section 11(5) of the Act and Section 13(1)(d) of the Act is concerned with respect to the investment with M/s Samarth Vivdhlaxi Seva Trust and his wife Smt. Asha Vyas are also trustee and, therefore, the provisions of Section 13(3)(e) of the Act are impacted. According to Section 13(3)(e) will apply only if there is right to 20% of the profit of such concerned. As both the trusts are existing or not for profit, even the provisions of Section 13(3)(e), 13 (3) (cc) of the Act are not hit and, therefore, for this reason also it cannot be said that by giving the advance to that trust there is a direct or indirect benefit to the trustee of assessee trust. Accordingly, we do not find that the provisions of the income tax act are violated when the assessee has given an advance to another trust having the common object and also registered under section 12 ....
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....bmitted wherein the market value of the property was substantiated at Rs. 5.45 crores. For the comparable rent the assessee looked into the magicbricks.com and referred to the comparable rates of rent of the similar properties. This is stated at page number 16 - 17 of the order of the learned AO. 24. The learned AO also gave a comparable when the trust itself has given its own land at the Jodhpur on a nominal rent of Rs. 180,000 per annum to Rajasthan because company in which money Shri Hassan same at a severe Saab both the trustees the value of the land is per the valuation report submitted by the assessee is Rs. 26.23 crores. It was also stated that this assessee trust has not given any security deposit on such a huge value of land given to another trust or nominal rent. Therefore, the claim of the assessing officer is that when the comparable property is taken on rent, the amount of security deposit given by the assessee to the trustees is diverse and of course-in of the funds of the trust for the benefit of the trustees. 25. Findings of the Coordinate Bench bind us judicially unless the facts are found to be different. 26. However, in this case we found that the facts ....
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....into by the learned CIT - A not brought to the attention of the coordinate bench by either deciding the provisions of section 10 (23C) or section 12AA of the act. There is no argument from the side of the assessee on the comparable cited by the learned AO. 29. In view of the above facts, we restore back this issue to the file of the learned assessing officer with a direction to the assessee to put a comparable case before the assessing officer wherein similar kind of property, such a huge security deposit is paid, and rent is comparable. For the purpose of deciding the benefit one has to compare the Apple with the Apple and not oranges with the Apple. Against this the learned assessing officer has categorically cited a comparable instance of the property having four times more value than the impugned property at substantially lower and without deposit. The learned assessing officer, on submission of such details by the assessee of comparable instance, then decide the issue afresh whether there is any benefit to the trustees or not. If, no benefit is found to be accruing to the trustees on comparable of similar instance, the denial of exemption to the assessee is not permissible.....
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.... the above issue has been considered and held that the above advance given to Mr. Manish Vyas is not violative of Section 10(23C)(vi) or Section 11 and 12 of the Act. 33. We have carefully considered the above arguments finds that the finding of the Coordinate Bench in Paragraph No. 8. On reading of the order passed by the coordinate bench, we find that the following facts which are extracted in the subsequent paragraphs were not brought to the notice of the bench. In view of the distinguishing facts, the decision relied upon by the assessee does not apply. We proceed to give over reasons in subsequent paragraphs. 34. On careful consideration of the decision of the coordinate bench we find that assessee has placed before us at page number 94 - 98 of the paper books the Ledger account of ceremonies from the books of the assessee. This Ledger account is extracted as under:- 35. On careful perusal of the Ledger account, it is apparent that the credit to the account of Mr. Manish we is of rent as well as transfer of balances from other branches. For the assessment year ending on 31/3/2016 the total debit to the account of the trustee is 1,73,04,000 and credit is only 78,08,939....
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....dition made by the learned assessing officer of interest on the above sum. The learned assessing officer has not understood the provisions of the act. The interest is not to be imputed and then to be taxed in the hence of the assessee, the impugned amount itself is to be charged as income of the assessee trust not utilized for the object of the trust but for the direct benefit of the trustees. 41. Similar is finding given to Mr. Asha Vyas of Rs. 42,000/- it is stated by the assessee that it is adjusted against next month and, therefore, it is not the case of the diversion of the fund. We find the fact of this advance is identical, and also requires similar tax treatment as in case of advance by the trust to Mr. Manish Vyas. 42. In view of the above facts, we restore this issue back to the file of the learned assessing officer to consider that amount paid by the assessee as a loan to Mr. Manish Vyas and Mrs.Asha Vyas is a direct benefit to the trustees of the trust which is in clear-cut violation of the provisions of section 13 (1) (c) of the act. However as only opening and closing balances are considered by the assessing officer, the peak amount of loan for each year is requ....
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.... sum the assessee is entitled for relief under those sections. 49. Ground number 1 (f) is dismissed as the learned assessing officer has computed the interest on the amount utilized by the assessee trust in violation of the provisions of section 13, which is deleted by the learned CIT - A, because such addition is not supported by law. In fact, whatever is the amount utilized by the assessee in violation of the provisions of section 13 is required to be charged to tax in the hands of the assessee trust at the maximum marginal rate. The learned assessing officer has not acted in accordance with the provisions of the income tax act. We also like to note that when the assessment of the assessee trust is made at the total taxable income of Rs. 115,707,997/- how the taxes computed applying the maximum marginal rate at Rs. 8,764,447/-. This clearly shows that the learned assessing officer has failed to understand the provisions applicable to the trust. 50. Ground number 1 (g) is with respect to allowing the capital expenditure of Rs. 62,140,304 to the assessee. We find that the learned assessing officer is not correct in not granting benefit of this capital expenditure to the asses....
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....214 958139 1 50,000.00 4,50,000.00 1:50.000.00 70.000.00 958152 Payment 305109 Payment 305111 305114 2,10,000.00 5,00,000.00 4.00.000.00 4,00,000.00 305113 305115 958038 958041 958053 958067 Payment H Cr Canara Bank: 3053 10-12-2015 Cr Canara Bank: 3063 16-12-2015 Cr Canara Bank CC 1088256050453 31-12-2015 Dr RENT 5-1-2016 C Canara Bank: 3053 13-1-2016 Cr Canara Bank: 3053 Canara Bank: 3053 25-1-2018 C Canara Bank: 3053 9-2-2016 C Canara Bank CC 1088256050453 18-2-2016 Cr Canara Bank: 3053 4-3-2016 Dr VYAS INSTT. OF ENGG. & TECHNOLOGY Dr WAS COLLEGE OF ENGINEERING & TECHNOLOGY Dr VYAS INSTITUTE OF MANAGEMENT 16-3-2016 Cr Canara Bank: 3053 28-3-2015 C Canara Bank: 3053 Cr Canara Bank CC 1088256050453 Payment Payment Payment Payment Payment Journal Payment Payment Payment Payment Payment Payment Jaumal Joumal Journal Payment Payment Payment 305130 958100 958525 958526 958540 305151 058584 958744 958737 305197 1 3,45,000.00 50,000,00 1,20,000.00 15,000.00 2,62,000.00....
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.... 214764 1,00,000.00 5,00,000.00 16-1-2017 Cr Canara Bank : 3053 Payment 214771 1,50,000.00 $-2-2017 Cr Canara Bank: 3053 Payment 214334 1,00,000.00 14-2-2017 Gr Canara Bank CC 1088256050453 Payment 306060 15,75,000.00 16-2-2017 Cr Canara Bank CC 1088256000453 28-2-2017 Dr VYAS INSTT. OF ENGG. & TECHNOLOGY 27-3-2017 Cr Canara Bank CC 1088256050453 Payment 306062 4,50,000.00 Joumal 41,710,00 31-3-2017 Dr RENT Cr Canara Bank: 3053 Cr Canara Bank: 3053 Dr Closing Balance Payment Joumal 305072 3,00,000.00 1 4.05.000.00 Payment Payment 214672 214673 24,706.00 25,000.00 1,53,50,096.53 1,53,58,896.53 39,22,710.00 1,14,36,186,53 1.53.58.896.53 1-4-2017 Cr Opening Balance 10-4-2017 Cr Canara Bank: 3053 1,14,36,186.53 Payment 214506 1,50,000.00 10-6-2017 C Canara Bank: 3053 Payment 215036 9,000.00 17-6-2017 Cr Canara Bank: 3053 Payment 214547 1,50,000.00 Cr Canara Bank CC 1088256050453 Payment 306004 2.50,000.00 Carried Over 1,19,95.188.53 JAIPUR continued... RAJASTHAN VIKAS SANSTHAN "ANIS....
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....Canara Bank: 3053 Payment Payment 1.50,000.00 3,00,000.00 30.6.2018 Dr RENT Journal 4,86,000.00 11-7-2018 C Canara Bank: 3053 Payment 3.00.000.00 23-7-2018 C Carara Bank : 3053 Payment 30-7-2018 Cr Canara Bank: 3063 Payment 2,00,000.00 2.50,000.00 31-7-2018 Dr RENT Journal 1.62,000.00 4-5-2018 Cr Canara Bank CC 1088258050453 Payment 3,00,000.00 14-8-2018 Canara Bank CC 1088256050453 Receipt Dr Canara Bank CC 1088256050453 Recent 25.03,000.00 25,00,000.00 JAIPUR Bar Dr Canara Bank CC 1088256050453 Receipt Dr Canara Bank CC 1088256050453 Receipt Dr Canara Bank CC 1088256050453 Receipt Dr Canara Bank CC 1088256050453 Carried Over 7 RAJASTHAN VIKAS SANSTHAN MANISH VYAS Ledger Account : 1-Apr-2015 to 31-Dec-2020 25.00.000.00 25,00,000.00 25,00,000.00 Recept 25,00,000.00 1,68,16.404.53 1.50.48.000.00 continued. Date Particulars Brought Forward Vch Type Vch No. Debit Credit 1,68,16,404.53 1,56,48,000.00 14-8-2018 Dr Canara Bank CC 1088256050453 Receipt 11,11,404.00 C Canara Bank: 3053 31-8-2018 Dr RENT ....