TaxTMI 
TaxTMI 
2024 (11) TMI 871
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....f appeal: "1. The order of the National Faceless Appeal Centre (NFAC) is wrong, illegal and is opposed to law. 2. The National Faceless Appeal Centre (NFAC) erred in disposing the appeal without providing adequate opportunity to the appellant. The said order is opposed to the provision of law and principles of natural justice. 3. The NFAC erred in denying exemption u/s. 11 to the appellant trust by invoking the provisions of section 13(1)(C) rws 13(2)(a) of the Income Tax Act without looking into the substance of the transaction and without ascertaining the real nature of the transaction. 4. The NFAC erred in confirming the disallowance made by the assessing officer by treating the entire rental amount of Rs. 1,75,02, 909/- as income of the appellant by invoking section 40(a)(ia) of the Income Tax Act. 5. The NFAC ought to have seen that the appellant was not treated as assessee in default in term of section 201(1) and in accordance to the first proviso of the aforesaid section. The learned Commissioner ought to have seen that as per the second proviso to section 40(a)(ia) the appellant is deemed to have deducted and paid the tax on such sum and therefore disallowance....
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....ancials for the A.Y. 2015-16, it was seen that total loans and advances outstanding as on 31/03/2015 was Rs. 53,22,05,560/. The assessee furnished details of "loans due from related parties" and on perusal it was observed by the AO that loan to the extent of Rs. 47.10 Crores was lent by the assessee society to the related parties since 2008 without any security or interest and that the same is outstanding for over a period of 8 years. Further it was observed that the loan account with Ocher Studios Pvt Ltd, Sultan Production(P) Ltd. and Ashram Educational Consultancy (P) Ltd. are running accounts and that the funds of the society is being used by the interested persons on regular basis. Thus, the AO observed that there is a clear violation of section 13(1)(c) r.w.s. 13(2)(b) of the IT Act. 2. Transportation fees received by M/s. Ashram Educational and Consultancy Pvt Ltd (AECPL). During the year under consideration the assessee society borrowed a sum of Rs. 1,29,21,224/- from M/s.Cholamandalam Finance Ltd. for purchase of vehicles for transportation of its school children. On oral agreement made between the assessee and Ashram Educational and Consultancy Private Ltd (AECPL) the ....
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....e AO & the Ld. CIT(A) erred in treating 'corpus donations' as income of the Trust without appreciating the fact that the 'corpus donations' forming part of corpus of the Trust, is capital receipt which cannot be included in the income of the Trust'. The assessee submits that the AO and the Ld. CIT(A) without appreciating the relevant facts simply treated 'corpus donations' as income of the Trust. 10. With respect to the loans and advances to the related party the assessee submits that a) no part of the trust funds has been diverted as loan to the interested parties, more so in the impugned assessment year, for the purpose of invoking section 13(1)(c) r.w.s. 13(2)(b) of the Act. As observed by the AO loan to the extent of Rs. 47.10 Crores was lent by the assessee society to the related parties in the past years without any security or interest and the same is outstanding for over a period of 8 years. The case of the assessee is that it is not the case of the AO that the alleged loan amounts were advanced during the impugned assessment year for the purpose of invoking section 13(1)(c) r.w.s. 13(2)(b) of the Act. b) The assessee submits that the source of the loans mentioned afor....
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....nder section 11 of the Act. We find that section 13(1)(c) applies when income or property of the trust is used to benefit persons referred to in Section 13(3). In the present case, it is not disputed that the loans were advanced in earlier years and were not extended during the relevant assessment year. The AO failed to demonstrate how any income of the assessee society was used to confer a benefit during A.Y. 2015-16. Further, the assessee's claim that the loans were given out of advance received against proposed property sale and do not form income of the assessee, has merit. In our considered view the advances, being liabilities, do not constitute income of the society. Hence, the invocation of Section 13(1)(c) for AY 2015-16 is legally untenable. Further, with regard to the 'Transportation Fees' involving AECPL the assessee drew our attention to the audited financial statements as on 31/03/2015 of the company AECPL showing that after deducting operating expenses and agreed amount of Rs. 40.00 Lakhs to the assessee Trust as vehicle lease charges, the net income of the Company from transportation fees was very nominal i.e. Rs. 2.46 Lakhs for the whole year. There is no evidence t....