ASST COMMISSIONER OF INCOME TAX, DELHI V. SAKET EDUCATION SOCIETY, DELHI

ITA 4446/DEL/2024

AI Insights

The case involves the Assistant Commissioner of Income Tax (ACIT) appealing against the Saket Education Society concerning the denial of tax exemptions under sections 11 and 12 of the Income Tax Act, 1961, for the Assessment Year 2018-19. The primary contention was whether the transactions between Saket Education Society and Nirbhay Realtors Pvt. Ltd. (NRPL), a specified person, violated provisions under section 13(1)(c) and section 13(1)(d) of the Act. The Tribunal referenced its earlier rulings which favored the Saket Education Society, noting that the society had utilized the land for educational purposes and did not pass any benefits to NRPL, thus not contravening the Act.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474870 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2018-2019
• Other Referred Cases: Chiranjiv Charitable Trust
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAYA CHAUDHARY
• Assessee Lawyers: NEERAJ JAIN; P.K
• Keywords: Set aside; Charitable institution
• Section: 143(3); 11; 13; 12

Judgement Text

" 1 ITA No. 4446/Del/2024 ACIT Vs. Saket Education Society IN THE INCOME TAX APPELLATE TRIBUNAL DELHI (DELHI BENCH ‘G’ NEW DELHI BEFORE SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER ITA No. 4446/DEL/2024 (A.Y. 2018-19) Assistant Commissioner of Income Tax Room No. 295, 2nd Floor, ARA Centre, Jhandewalan Extension New Delhi Vs. Saket Education Society A-153, New Friends Colony Souht West Delhi New Delhi PAN: AACTS5460Q Appellant Respondent Assessee by Sh. Neeraj Jain, Adv and Sh. P.K. Mishara, Adv Revenue by Ms. Jaya Chaudhary, CIT DR Date of Hearing 19/02/2025 Date of Pronouncement 27/02/2025 ORDER PER YOGESH KUMAR, U.S. JM: The present appeal is filed by the Department of Revenue against the order of the Commissioner of Income Tax (Appeals)-26, New Delhi [‘Ld. CIT(A) ’ for short] dated 10/07/2024 for the Assessment Year 2018-19. 2. The grounds of Appeal are as under:- “1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred by ignoring the facts that the assessee has setup a school in collaboration with DPS Society at the land 2 ITA No. 4446/Del/2024 ACIT Vs. Saket Education Society owned by M/s. Nirbhay Realtors Pvt. Ltd. (NRPL), which is a specified person as defined in section 13(3) of the Income Tax Act, 1961 and the entire cost of land was paid by the assessee-society to NRPL as interest free long term deposit and thereby unreasonable benefit was passed on to the specified person in violation of the provisions of section 13(1)(c) of the Act. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred by ignoring the facts that the assessee has constructed the building on the land owned by NRPL which is violation of provision of section 13(1)(d) of the Act. 3. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred by ignoring the facts that the entire payment of security deposit to related person is based on forged document i.e. a Memorandum of Undertaking (MOU) dated 03.09.2012 as established by the Ld. CIT(A) in his order for AY 2014-15 and is therefore unreasonable in terms of section 13(1)(c). 4. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred by ignoring the facts that the Ld. CIT(A) in its order for A.Y. 2014-15 has recorded on page 27 para 7.2.4 (V- VIII) that the entire transactions of taking the land on long term lease and furnishing the cost of land as interest free security deposit to NRPL is through MOU dated 03.09.2012 in which the details of land registered with sub-registrar on 28.09.2012 and 16.11.2012 have been entered, which proves that the MOU is a forged document. 5. On the facts and in the circumstances of the case, the Id. CIT(A) has erred by ignoring the facts that the Balance Sheet and annual accounts of NRPL clearly establish that it is not having any substance and is merely a shell company. The only asset, owned by NRPL, is the land that has been leased to the assessee, which proves the non-genuineness of the transaction. 6. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred by ignoring the facts that the assessee entered into an agreement with the Delhi Public School Society 3 ITA No. 4446/Del/2024 ACIT Vs. Saket Education Society without entering into any agreement with NRPL which proved that NRPL does not have any separate existence & is just a conduit to facilitate the diversion of profit to the owners of the group. 7. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred by ignoring the fact that both the assessee- society and NRPL have same management and that NRPL has been used by the members of the society to get the ownership of the land at the cost of the funds of the society. 8. (a) The order of the Ld. CIT(A) is erroneous and not tenable in law and on facts. (b) The appellant craves leave to add, alter or amend any / all of the grounds of appeal before or during the course of the hearing of the appeal.” 3. Brief facts of the case are that, the Assessee filed return of income for Assessment Year 2018-19 declaring the income as ‘NIL’ after claiming deduction u/s 11 & 12 of the Income Tax Act, 1961 (‘Act’ for short). The case of the Assessee was selected or scrutiny and notices were issued, the assessment order came to be passed on 15/06/2021 by computing the income of the Assessee at Rs. 30,70,22,453/- u/s 143(3) of the Act, wherein denied the exemption u/s 11 & 12 of the Act claimed by the Assessee by computing the income of the Assessee under the head of ‘income from business/profession’. Aggrieved by the assessment orderdated 15/06/2019, the Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 10/07/2024, by following the order of the Tribunal in Assessee’s own case for Assessment Year 2014- 4 ITA No. 4446/Del/2024 ACIT Vs. Saket Education Society 15,allowed the Appeal of the Assessee and directed the A.O. to allow the exemption u/s 11 & 12 of the Act. Aggrieved by the order of the Ld. CIT(A) dated 10/07/2024, the Department of Revenue preferred the presentAppeal on the grounds mentioned above. 4. The Ld. Departmental Representative by relying on the orders of the Lower Authorities, submitted that the Department has challenged the order of the Tribunal for other Assessment Years before the Hon'ble High Court, thus, sought for allowing the appeal of the Revenue. 5. Per contra, the Assessee's Representative submitted that the issue involved in the present Appeal is squarely covered by the order of the Tribunal for Assessment Year 2013-14 to 2015-16 and 2017-18, therefore, submitted that the Grounds of appeal of the Revenue deserves to be dismissed. 6. We have heard both the parties and perused the material available on record. The Co-ordinate Bench of the Tribunal vide order dated 18/06/2018 for Assessment Year 2014-15, while deciding the very same issue held that the denial of exemption u/s 11/12 of the Act to the Assessee is uncalled for, accordingly allowed the exemption to the Assessee in following manners:- 5 ITA No. 4446/Del/2024 ACIT Vs. Saket Education Society “18. It is not the case of the Revenue that the assessee has not started operation of the school on the leasehold land. It is also not the case of the revenue that the assessee has not utilised the money in furtherance of its objects of the trust. No doubt, NRPL is a specified person but then the Act does not bar any normal transaction done with a specified person. All that is provided in the provisions of section 13 of the Act is that any transaction with specified person should not enure any benefit to that person directly or indirectly. If we consider the transaction with NRPL in its right perspective, the only logical conclusion comes is that no benefit has been passed on to NRPL by the assessee-society. 19. The decision relied upon by the Revenue in the case of Chiranjiv Charitable Trust [supra] is misplaced in as much as in that case the assessee paid 95% of the price of the land to its specified person and yet after a lapse of more than one year, sale could not be completed and no registered document was executed. In that case, real motive was to advance its surplus money to its specified person without charging any interest which was directly hit by section 13(3) of the Act whereas the facts of the case in hand show that the assessee paid interest free deposit only when NRPL has purchased the land and leased out to the assessee on which the assessee constructed the school building and started its operation. 20. Considering the facts in totality, we are of the considered opinion that since no benefit has been enured to the specified person from the impugned transaction, denial of exemption u/s 11/12 of the Act is uncalled for. We, accordingly, set aside the findings of the CIT(A) and direct the AO to allow exemption u/s 11/12 of the Act.” 6 ITA No. 4446/Del/2024 ACIT Vs. Saket Education Society 7. Further the order of the Tribunal dated 18/06/2018 for Assessment Year 2014-15 in ITA No. 1166/Del/2018has also been followed by the Tribunal for Assessment Year 2013-14, 2015-16 and 2017-18 in ITA Nos. 822/Del/2023, 823/Del/2023 and 824/Del/2023 vide order dated 28/08/2023. By respectfully following the orders of the Tribunal (supra) and also following the principal of consistency, we find no merits in the Grounds of Appeal of the Revenue. Accordingly Appeal of the Revenue is dismissed. Order pronounced in the open court on 27th February, 2025 Sd/- Sd/- (S. RIFAUR RAHMAN) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Date:- 27.02.2025 R.N, Sr.P.S* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI 7 ITA No. 4446/Del/2024 ACIT Vs. Saket Education Society "