M/s Om Prakash Bansal Charitable Trust, Jammu V. D.C.I.T.,Circle-1(Exemption), Chandigarh

CO 3/CHANDI/2021

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 9412 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 18 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 19-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 02-03-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHOK KHANNA
• Keywords: Charitable institution; Valuation report
• Section: 11; 10B; 13; 22; 101; 20

Judgement Text

आयकर य कर , य य “ब ”, IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH ‘B’, CHANDIGARH BEFORE: SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI R.L. NEGI, JUDICIAL MEMBER आयकरअपील सं./ITA No.339 /Chd/2020 र / Assessment Years : 2015-16 The D.C.I.T., Circle-1, (Exemptions), Chandigarh. ब म M/s Om Prakash Bansal Charitable Trust, C/o G.D. Goenka Public School, Akhnoor Road, Jammu. यील सं./PAN NO: AAATO1533A अपील /Appellant य /Respondent & C.O. No.3/Chd/2021 In आयकर अपील सं./ ITA No.339/Chd/2020 र / Assessment Year : 2015-16 M/s Om Prakash Bansal Charitable Trust, C/o G.D. Goenka Public School, Akhnoor Road, Jammu. ब म The D.C.I.T., Circle-1,(Exemptions), Chandigarh. यील सं./PAN NO: AAATO1533A अपील /Appellant य /Respondent आयकरअपील सं./ITA No.340 /Chd/2020 र / Assessment Years : 2016-17 The D.C.I.T., Circle-1,(Exemptions), Chandigarh. ब म M/s Om Prakash Bansal Charitable Trust, C/o G.D. Goenka Public School, Akhnoor Road, Jammu. यील सं./PAN NO: AAATO1533A अपील /Appellant य /Respondent ITA Nos.339 & 340/Chd/2020 & C.O. Nos.3 & 4/Chd/2020 A.Ys. 2015-16 & 2016-17 Page 2 of 22 & C.O. No.4/Chd/2021 In आयकर अपील सं./ ITA No.340/Chd/2020 र / Assessment Year : 2016-17 The D.C.I.T., Circle-1,(Exemptions), Chandigarh. ब म M/s Om Prakash Bansal Charitable Trust, C/o G.D. Goenka Public School, Akhnoor Road, Jammu. यील सं./PAN NO: AAATO1533A अपील /Appellant य /Respondent र ी क! ओर स /Assessee by : Shri P.N. Arora, Adv. र # क! ओर स / Revenue by : Shri Ashok Khanna, Addl. CIT स ु ई क! र& /Date of Hearing : 04.08.2021 उदघो क! र& /Date of Pronouncement: 20.09.2021 (Hearing through webex) आदेश/Order Per Annapurna Gupta, Accountant Member: The captioned appeals of the Revenue relate to the same assessee and are against separate orders passed by the Commissioner of Income Tax (Appeals), Jammu [(in short ‘CIT(A)’] u/s 250(6) of the Income Tax Act, 1961 (hereinafter referred to as ‘Act’) both dated 16.07.2020 pertaining to assessment years 2015-16 and 2016-17 respectively. The ITA Nos.339 & 340/Chd/2020 & C.O. Nos.3 & 4/Chd/2020 A.Ys. 2015-16 & 2016-17 Page 3 of 22 assessee has filed Cross Objections against the said appeals. It was common ground that the issues involved in both the appeals were common. They were therefore heard together and are being disposed off by this consolidated order for the sake of convenience. 2. We shall be dealing with the appeal of the Revenue in ITA No.339/Chd/2020 relating to assessment year 2015- 16 and our decision rendered therein shall apply mutatis mutandis to the other appeal of the Revenue in ITA No.340/Chd/2020 relating to assessment year 2016-17 also. 3. The effective grounds of appeal raised read as under: “ii. That the Ld.CIT(A) couldn't consider the fact that assessee was dummy face for diverting of receipts to M/s G.D. Goenka Pvt. Ltd. By paying 10% of receipts and fixed payment in the name of royalty. iii. That the Ld.CIT(A) couldn't consider that the payments being made to M/s G.D. Goenka have no relevance with promotion/ imparting of education (the specific object of the assessee trust) and that such payments only show the commercial intention of the assessee trust and is purely diversion of huge receipts/funds. iv. That the Ld.ClT(A) erred in approving the contention of the assessee that no addition has been made in previous years on account of payment of lease rent to one of its trustees member Smt. Suman Bansal ignoring the ITA Nos.339 & 340/Chd/2020 & C.O. Nos.3 & 4/Chd/2020 A.Ys. 2015-16 & 2016-17 Page 4 of 22 fact that additions were made on similar ground for A.Y.2014-15 as well on the amount of lease rent paid to the same Smt. Suma Bansal by holding it to be in violation of section 13(l)(c) r.w.s. 13(3) of the Income Tax Act, 1961. v. That the Ld.CIT(A) couldn't consider the findings given by the AO that the assessee society is using funds for the benefit of the specified persons in the name of lease rent. vi. That the Ld.CIT(A) erred in deleting the addition made on by the AO on account of the applicability of the proviso to the section 2(15) of the Income Tax Act, 1961.” 4. As is evident from the above, the Revenue is aggrieved by the order of the Ld.CIT(A) allowing the assesses appeal against the order passed by the Assessing Officer (AO) on two issues as under ; i) denying exemption u/s 11 of the Act to the assessee holding that the activities carried out by it as not being charitable in nature but on the contrary being commercial;(ground no ii, iii, vi) ii) making addition of rent paid to one of the members of the society on the ground that it was not genuine and also for the reason that it was paid to a related person and was not at arms’ length in accordance to the provisions of section 13(1)(c) read with section 13(3) of the Act.(ground no iv,v) 3. Taking first the issue raised in ground no ii, iii & vi, the facts are that the AO denied exemption u/s 11 of the ITA Nos.339 & 340/Chd/2020 & C.O. Nos.3 & 4/Chd/2020 A.Ys. 2015-16 & 2016-17 Page 5 of 22 Act, claimed by the assessee on its income allegedly earned from property held for charitable purposes, for the reason that he found that the assessee was doing commercial activities by collecting huge amounts from students under various heads some of which were not incidental to its objectives and was earning huge profits which were ploughed back to create assets in the form of capital investments. He also noted that the assessee had entered into an agreement (MOU) with M/s G.D. Goenka Pvt. Ltd. making huge royalty payments to it ,which he held was nothing but a profit sharing arrangement. The AO noted that as per the agreement the control of the day-to-day working of the school was given to M/s G.D. Goenka Pvt. Ltd., and the assessee was only a dummy, accordingly he held that the assessee was only diverting profits to M/s G.D. Goenka Pvt. Ltd. in the form of Royalty. He further found that the assessee had set apart its profits of the year, remaining unutilized upto the statutorily required limit for its stated charitable objective of imparting education, for no specific purpose, which was not in accordance with the requirements of law. Accordingly for the aforestated reasons he held that the assessee was not entitled to claim exemption u/s 11 of the Act and denied the same to the assessee subjecting the ITA Nos.339 & 340/Chd/2020 & C.O. Nos.3 & 4/Chd/2020 A.Ys. 2015-16 & 2016-17 Page 6 of 22 surplus earned by the assessee during the impugned year of Rs.2,46,45,118/-to tax as an AOP. The Ld.CIT(A) has summarized the findings of the AO as above in para 3 of its order as under: “3. I have considered the facts of the case and the above said written submissions filed by the Authorized Representative of the appellant. After reading the assessment order, it is observed that the Assessing Officer has based his decision to deny exemption to the appellant trust on the following three grounds:- • That the assessee is doing commercial activities in the garb of running educational institution in the name of G.D. Goenka School, Jammu which is violation of section 11 r.w.s. 2(15) of the Income Tax Act, 1961. The assessee is collecting huge amounts from the students under various heads, some of which are not incidental to its objectives. The assessee is earning huge profits and the fee structure is not commensurate with that of any charitable establishment. There is increase in fees every year and the admission fee is very high, thus, making the school beyond approach of common man, The above is in contravention of the principles laid in CBDT Circular No.14/2015 dated 17.08.2015, whereby educational institutions were allowed to raise small reasonable amounts under heads like application fee, examination fee. The focus of the assessee is to accumulate huge surplus and create assets in the form of capital investments. Large scale surplus generated is not ploughed back into stated objectives mainly education. • The assessee has entered into a profit sharing agreement (MoU) with M/s G.D. Goenka Pvt. Ltd. on the basis of which huge royalty payments are made to the latter. The conditions of the said agreement are business in nature. As per the agreement, the assessee is paying 10% of its receipts each year and also paid Rs.25 lakhs to M/s G.D. Goenka Pvt. Ltd. Further, M/s G.D. Goenka Pvt. Ltd. is having full control over the day ITA Nos.339 & 340/Chd/2020 & C.O. Nos.3 & 4/Chd/2020 A.Ys. 2015-16 & 2016-17 Page 7 of 22 to day working of the school including fixing of fees, nature of the same, selection of teachers, training of teachers etc. thereby making the assessee only a dummy face. The greater the profits made from the school, the greater the diversion of the said profits to M/s G.D. Goenka Pvt. Ltd. • The assessee has used section 11(2) of the Act to set apart Rs.1,66,22,187/- to just bring surplus just under 15% of total revenue receipts. If the set apart would have been made for some specific purpose then the amount would have been definitely in round figure. Further, the purpose for which the funds have been set apart u/s 11(2) of the Act mentioned in Form 10 of the assessee is not specific. In view of the above observations, the Assessing Officer treated the appellant as an AOP and taxed the of surplus amount of Rs.2,46,45,118/-.” 4. The Ld.CIT(A) deleted the addition so made holding as under: “3.2. The appellant has vide the instant appeal vehemently opposed the above said additions and raised various grounds of appeal which are interconnected. The grounds no. 1 to 9, 11 and 13 agitate the observations made by the A.O. leading to denial of exemption to the appellant trust and treatment of the same as AOP for taxation purposes. Regarding the above said first observation of the AO, I find that the amounts collected under various heads are all incidental to the purpose for which the trust exists. Further, the reasonableness of amounts collected under various heads leading to generation of huge surplus in case of the appellant are beyond the ambit of the taxation authorities so far as concluding whether the trust is sticking to its core objectives or is following commercial model in view of the following judgements:- (i) Decision of Supreme Court of India in the case of Chief Commissioner of Income Tax vs. St. Peter's ITA Nos.339 & 340/Chd/2020 & C.O. Nos.3 & 4/Chd/2020 A.Ys. 2015-16 & 2016-17 Page 8 of 22 Educational Society reported in [2016] 385 ITR 66 (SC) wherein it was held as under:- "Where an educational institution carries on the activity of education primarily for educating persons the fact that it makes a surplus does not lead to the conclusion that it ceases to exist solely for education purpose and becomes an institution for the purpose of making profit." (ii} CBDT Circular No. 14/2015 dated 17-08-2015 in which the Board has clarified that merely generation of surplus out of the gross receipts would not necessarily be breach of threshold condition that the educational institution should exist solely for education purpose and not for the purpose of profit. It has been clearly mentioned in the circular that some generation of surplus by educational institution from year to year basis cannot made the basis for denying the exemption if it is used for educational purpose. The relevant portion is reproduced hereunder:- "3. Generation of surplus out of gross receipts A doubt has been raised whether generation of surplus out of gross receipts would necessarily 'breach' the threshold condition that the educational institution should exist 'solely for educational purpose and not for the purpose of profit'. Perusal of prescribed provisions clearly reveal that mere generation of surplus cannot be a basis for rejection of application u/s 10(23C){vi) on the ground that it amounts to an activity of the nature of profit making, tn fact, the third Proviso to the said clause clearly provides that accumulation of income is permissible subject to the manner prescribed therein provided such accumulation is to be applied "wholly and exclusively to the objects for which it is established". Hence, it is clarified that mere generation of surplus by educational institution from year to year cannot be a basis for rejection of application u/s 10(23C)(vi) if it is used for educational purposes unless the accumulation is contrary to the manner prescribed under law/' ITA Nos.339 & 340/Chd/2020 & C.O. Nos.3 & 4/Chd/2020 A.Ys. 2015-16 & 2016-17 Page 9 of 22 (iii) Decision of Punjab & Haryana High Court in the case of Pinegrove International Charitable Trust vs. Union of India and Others reported in 230 CTR 477 (Punj & Haryana) wherein it has been clearly held that merely because there is some surplus with the assessee it should not be the ground for denying the exemption. The decision of the Punjab and Haryana High Court has been followed by the Delhi High Court in St. Lawrence Educational Society (Regd.) Vs. CIT [2013] 353 ITR 320 (Delhi). Also in Tolani Education Society Vs Dy. DIT (Exemptions) [2013] 35 ITR 184 (Bombay), the Bombay High Court has expressed a view in line with the Punjab and Haryana High Court view, following the judgments of the Apex Court in the case of Surat Art Silk Cloth Mfrs. Association case [1980] 121 ITR 1 (SC). In view of the aforementioned judicial decision, I hold that the application of surplus for capital investment is no ground to deny exemption to the appellant trust in so far the Assessing Officer could not point out any instance where the capital investment had been made for objectives other than those of the appellant trust. Further, the Hon'ble High Court of Delhi has in the case of DIT (Exemption) Vs. Delhi Public School Society [2018] 92 taxmann.com 132 (Delhi) held the following:- "where assessee society was set up with object of imparting education and it had entered into franchise agreements with satellite schools and also used gains arising out of these agreements in form of franchisee fees for furtherance of educational purposes, it fulfilled requirements to qualify for exemption under section 10(23C)(vi)." The department filed appeal against the said order before the Supreme Court of India and the department SLP was dismissed by their Lordships reported in [2018] 100 taxmann.com 80 (SC). No instance of generated surplus being used for objectives other than those of the appellant has been commented upon by the A.O. in his assessment order. I am in agreement with the Ld. Authorized Representative that the A.O. did not appreciate that the provisions of section 13{l)(c) under these circumstances cannot be invoked and the surplus of the trust cannot be added back even for the purpose of assessment. ITA Nos.339 & 340/Chd/2020 & C.O. Nos.3 & 4/Chd/2020 A.Ys. 2015-16 & 2016-17 Page 10 of 22 3.3. The second observation of the Assessing Officer that huge royalty payments made to M/s G.D. Goenka Pvt. Ltd. is basically diversion of profits in view of the facts that (i) as per the profit sharing agreement (MoU) entered into by the appellant with M/s G.D. Goenka Pvt. Ltd., on the basis of which the assessee is paying j j.0% of its receipts each year and also paid Rs.25 lakhs to M/s G.D. Goenka Pvt. Ltd and (ii) M/s G.D. Goenka Pvt. Ltd. is having full control over the day to day working of the school including fixing of fees, nature of the same, selection of teachers, training of teachers etc., thereby, making the assessee only a dummy face, does not hold good in my considered opinion in view of the following submission of the appellant "there is nothing to show that the assessee trust had any direct or indirect relation with M/s G.D, Goenka (P) Ltd. and both the entities are at armed length and the fees is being paid to them as their brand name being used, thus it cannot be said that merely because the amount of royalty varies from year to year it would not be constitute as royalty, tt was also clarified that no member of the trust or its relative is member of Private Limited Company or having any interest directly or indirectly in the company. The AO has tried to give colour to an entry of royalty as business proposition which is baseless and the same should have been accepted." (page no. 10 and 11 of the paperbook). 3.4 Regarding the third observation, the undersigned opines that it is the prerogative of only the appellant to set apart an amount which is in round figure or otherwise and the A.O. has no say over the same. The amount of Rs.1,66,22,187/- set apart u/s 11(2) of the Act by the appellant in the assessment year under consideration does not seem to violate any provision of the Income Tax Act, 1961. The appellant has submitted copy of duly filed Form 10B (page no. 50 & 51 of the paperbook) dated 29.09.2015 and as per the same, deposited the above said amount in a Scheduled Bank, thereby complying to the provisions of the section 11(2) of the Act. If the Assessing Officer wanted further specifics of the amount set apart, she could have asked for the same during the assessment proceedings which is not the case as apparent from the assessment order. 3.5 As discussed above, all the observations made by the Assessing Officer in the assessment order to deny ITA Nos.339 & 340/Chd/2020 & C.O. Nos.3 & 4/Chd/2020 A.Ys. 2015-16 & 2016-17 Page 11 of 22 exemption to the appellant assessee trust are either contrary to the decisions of higher judicial authorities or do not hold substance in the considered opinion of the undersigned. Further, all other conditions laid down in the Act are satisfied by the appellant to be treated as trust, therefore, the A.O. is directed to allow claim of exemption u/s 11 of the Act to the appellant. The grounds no. 1 to 9, 11 and 13 are answered in affirmative and therefore, allowed.” 5. Before us the Ld. DR relied upon the order of the AO, pointing out from para 5 of the order the tabulated figures of fees collected in various modes showing the huge quantum so collected on non educational heads like admission and registration fees, insurance claim refund, interest charges, penalty charges, etc. He also referred to a chart at para 5.2 of AO’s order wherein the surplus earned was tabulated pointing out therefrom that the assessee had been generating surplus to the extent of 30% in the impugned assessment year and also the preceding two assessment years and utilizing the same for capital expenses and creating assets in the form of capital investments. He also drew our attention to the findings of the AO at para 6.1 of the order where the issue of royalty paid to M/s G.D. Goenka Pvt. Ltd. was discussed, pointing out therefrom that it was a mere business agreement as per which M/s G.D. Goenka Pvt. Ltd. had full control over day-to-day working of the school and the assessee was, therefore, only a dummy ITA Nos.339 & 340/Chd/2020 & C.O. Nos.3 & 4/Chd/2020 A.Ys. 2015-16 & 2016-17 Page 12 of 22 face for earning profits, diverting it to M/s G.D. Goenka Pvt. Ltd.. 6. The Ld.Counsel for the assessee, on the other hand, relied upon the order of the CIT(A). 7. We have gone through the order of the Ld.CIT(A). The Ld.CIT(A) has, we find, exhaustively dealt with all adverse findings of the AO for the purposes of denying exemption u/s 11 to the assessee and has given factual findings while doing so. Vis-à-vis the issue of huge fees collected under non educational heads, the Ld.CIT(A) has found the heads to be incidental to the purpose for which the trust existed. On considering the facts relating to the issue, as outlined in the order of the AO in the table at para 5 where various amounts collected by the assessee are tabulated, we see no reason to disagree with the Ld.CIT(A).We find that the heads listed therein, which form major part of the fee collection, are by way of admission fees, art & crafts expenses, educom charges, transport charges, printing & stationary charges, etc. They are no doubt related to the educational activities of the assessee. Remaining collections in the form of discount & rebate, penalty charges, insurance claim refunds, etc. are very minor collections and in any ITA Nos.339 & 340/Chd/2020 & C.O. Nos.3 & 4/Chd/2020 A.Ys. 2015-16 & 2016-17 Page 13 of 22 case are normal collections incidental to the carrying of the activity of imparting education. The Ld. DR was also unable to point out how the heads under which the amounts were collected were not related or incidental to the activities of imparting education carried on by the assessee. Therefore, we do not find any infirmity in the findings of the Ld.CIT(A) vis-a-vis this aspect. 8. As for the reasonableness of the amount collected , the Ld.CIT(A) has stated that to be beyond the ambit of taxation and drawn support from decisions of the Hon'ble Supreme Court in the case of St Peters Education Society, CBDT Circular No.14/2015 and the decision of the Jurisdictional High Court in the case of Pinegrove International Charitable Trust Vs. Union of India & Others, 230 CTR 477 (P&H), all to the effect that mere generation of surplus would not lead to the conclusion that the assessee does not exist solely for educational purpose. Ld.DR was unable to controvert the same before us .we therefore do not find any infirmity in the findings of the Ld.CIT(A) in this regard also. 9. As far the next aspect regarding the payment of royalty to M/s G.D. Goenka Pvt. Ltd., the Ld.CIT(A) has pointed out that the said finding has no relevance because there is ITA Nos.339 & 340/Chd/2020 & C.O. Nos.3 & 4/Chd/2020 A.Ys. 2015-16 & 2016-17 Page 14 of 22 nothing to demonstrate any direct or indirect relation of the assessee with M/s G.D. Goenka Pvt. Ltd, that both the entities are at arms’ length and the royalty is being paid to them for the usage of their brand name. The Ld. DR has been unable to controvert the aforesaid findings of the Ld.CIT(A). The Revenue has been unable to make out a case of there being any relationship between the assessee and M/s G.D. Goenka Pvt. Ltd. Also perusal of the MOU signed by the assessee with M/s G.D. Goenka Pvt. Ltd., reproduced at page Nos. 16 to 18 of assessment order, reveals that as per the said agreement M/s G.D. Goenka Pvt. Ltd. was to only provide guidance to establish, manage and develop the school by way of providing preopening guidance & support, providing guidelines for documentation of records, supporting in marketing and advertisement of the school, providing manual for operations in alignment with the core standards, support in recruitment of Principal & staff, training & support for staff development and providing continuous support in all areas. These services, we find, are merely support services so as to ensure that the education being imparted in the assessee’s school is in consonance with the standard established by the brand M/s G.D. Goenka Pvt. Ltd as per the agreement entered into with ITA Nos.339 & 340/Chd/2020 & C.O. Nos.3 & 4/Chd/2020 A.Ys. 2015-16 & 2016-17 Page 15 of 22 them. The Ld.DR was unable to show as to how these services could be read as M/s G.D Goenka having control over the day-to-day activities of the running of assessee’s school. Therefore, we do not find any infirmity in the findings of the Ld.CIT(A) that, there being no relationship between the assessee and M/s G.D. Goenka Pvt. Ltd. and the services being provided to maintain the brand name of M/s G.D. Goenka Pvt. Ltd., it cannot be said that the royalty paid by the assessee to M/s G.D. Goenka Pvt. Ltd. tantamounted to diversion of its profits. 10. As for the aspects of accumulation of profits the findings of the Ld.CIT(A) are to the effect that the assessee has complied with the provisions of law in this regard. The Ld.DR was unable to controvert the same before us. 10.1 In view of the above, therefore, we do not find any reason to interfere in the order of the Ld.CIT(A) allowing assessee’s claim of exemption u/s 11 of the Act. Ground of appeal No.ii, iii & vi are accordingly allowed 11. Ground No.iv & v relate to the issue of disallowance of rent paid to one Smt.Suman Bansal. which was allowed by the Ld.CIT(A). ITA Nos.339 & 340/Chd/2020 & C.O. Nos.3 & 4/Chd/2020 A.Ys. 2015-16 & 2016-17 Page 16 of 22 12. The facts relating to the issue are that the assessee had paid lease rent of Rs.12,35,434/- to one Smt.Suman Bansal, a member of the society . The AO noted that in the preceding assessment year it had been found that there was no written agreement between the assessee and Smt.Suman Bansal, that the land was not in the name of Smt.Suman Bansal and that the documents showed that the rent belonged in fact to Shri Dewan Chand Bansal who was having lease agreement with the assessee. The AO accordingly, held that the rent payment to Smt.Suman Bansal was not genuine and not allowable expenditure u/s 13(1)(C) r.w.s. 13(3) of the Act since the assessee had failed to justify the transaction and also the reasonableness of the transaction. He held that it was clear from the facts that the assessee had been providing undue benefit to a member and accordingly, he invoked the provisions of section 13(1)(c) r.w.s. 13(3) of the Act ,adding the rent so paid amounting to Rs. 12,35,434/- to the income of the assessee. 13. The Ld.CIT(A) deleted the addition made and his findings with regard to the same are at para 3.6 to 3.8 of the order as under: ITA Nos.339 & 340/Chd/2020 & C.O. Nos.3 & 4/Chd/2020 A.Ys. 2015-16 & 2016-17 Page 17 of 22 “3.6. The grounds no, 14, 15 and 16 agitate the addition of Rs.12,35,434/- u/s 13(l)(c) r.w.s. 13(3) of the Income Tax Act, 1961. The appellant contends that on 05/02/2010 the land measuring 46 Kanals 10 marlas was leased out by Rahul Bansal to Om Parkash Bansal Charitable Society. Copy of lease deed was submitted as Page No.87 to 90 of the paper- book. Similarly Shri Dewan Chand Bansal vide lease deed dated 05/02/2010 also leased out his land measuring 30 Kanals 17 marlas to Om Parkash Bansal Charitable Society, copy of lease deed submitted as Page No.82 to 86 of the paper-book. Thereafter, a family settlement deed was executed on 27/12/2012 by virtue of which the whole land measuring 77.07 kanals was transferred to Smt. Suman Bansal. The copy of the family settlement deed submitted by the appellant is available at Page No.91 to 97 of the paper- book. In addition to the above, the appellant contends that the Collector (Deputy Commissioner of Stamps, Jammu) had estimated the value of the impugned land at Rs.5,74,55,000/- and as per the order of the DC, Jammu, the stamp duty at Rs.11,95,100/- was paid by Smt. Suman Bansal and the necessary proof was made available as Page No.98 to 101 of the paper-book. Thereafter, a fresh lease deed was executed on 01/04/2013 by Smt. Suman Bansal in respect of land measuring 77.07 kanals in favour of the said old trust M/s Om Parkash Bansal Charitable Trust on which rent of Rs.12,35,271/- was paid. Copy of lease deed is submitted as Page No.102 to 105 of the paper-book. 3.7. The appellant further contended that the department should not have objected to the payment of lease rent to Smt. Suman Bansal which is quite reasonable and consistent with the past history of the case. The following details of lease rent were submitted by the appellant which is at page no. 68 of the paperbook:- S.No. Assessment Year Lease Rent 1. 2017-18 14.94.875.00 2. 2016-17 SUMAN BANSAL 13,58,977.00 3. 2015-16 12,35,434.00 4. 2014-15 11,23,122.00 5. 2013-14 10,21,020.00 DEWAN CHAND – 3,05,415.00 RAHUL BANSAL – 54,60,350.00 ITA Nos.339 & 340/Chd/2020 & C.O. Nos.3 & 4/Chd/2020 A.Ys. 2015-16 & 2016-17 Page 18 of 22 SUMAN BANSAL – 2,55,255.00 6. 2012-13 9,15,240.00 DEWAN CHAND – 3,62,040.00 RAHUL BANSAL – 5,53,200.00 The appellant submitted that under the same and similar circumstances, no addition was made in earlier years. In addition to the above, the lease rent of Rs.12,35,434/- paid to Smt. Suman Bansal, is far less considering the market value of the land which amounts to Rs.5,74,55,000/- as assessed by the Revenue Authorities. This view has been upheld by Hon'ble Supreme Court of India in the case of CIT (Exemptions) Vs. Bholaram Educational Society [2019] 101 taxmann.com 193 (SC) in which it was held as under:- "Where High Court upheld Tribunal's order that rent paid by assessee-trust to a trustee for using land and building was not excessive and, thus, exemption could not be denied to assessee under section 11 by invoking provisions of section 13(l)(c), SLP filed against said order was to be dismissed." The Apex Court made these observations while dismissing departmental SLP filed against the order of the Hon'ble Gujarat High Court reported at [2018] 100 taxmann.com 508 (Guj.). The High Court has observed as under:- "2. The multiple questions relate to different disallowances made for the benefit under section 11 with the aid of section 13(3) of the Income Tax Act, 1961, The principal issue however concerns the rent paid by the assessee to the trustees or to the-- where the karta was the trustee of the respondent-trust. Assessing Officer was of the opinion that payment of such rent would fall foul of section 13(l)(c) of the Act and resultantly, in view of sub-section (3) of section 13, income of the trust would not qualify for exemption. The Assessing Officer therefore, disallowed such exemption for the rest of the income of the trust also. 3. We would first address the question of payment of rent to the trustees or their HUF. Respondent-assessee ITA Nos.339 & 340/Chd/2020 & C.O. Nos.3 & 4/Chd/2020 A.Ys. 2015-16 & 2016-17 Page 19 of 22 is a trust running a school at Gandhinagar, For the period relevant to the assessment year 2010-11, the assessee had paid a rent of Rs. 1.98 crores for land and building which was used for the purpose of the school. The Assessing Officer held that such payment breached section 13(l)(c) of the Income Tax Act. In appeal, the CIT (Appeals) however, examined the issue at considerable length and noted that the Assessing Officer had held that such rent was excessive without any comparison. The materials on record suggested that the trust had utilized 36,355 sq. mtrs of NA land and further 1 lac sq. mtrs of agriculture land for the purpose of running the school. NA land also carried construction carried out at a cost of Rs. 1.10 crores and 3.56 crores totaling to Rs. 4.67 crores. Such land and building were leased to the trust for a period of 30 years. The assessee had also produced a valuation report obtained from the government approved valuer. As per this report, the valuation of the NA land was Rs. 9.10 crores and the value of construction would come to Rs. 13.08 crores. Thus, a total amount of valuation of land and building came to Rs. 25.66 crores. It was pointed out that the current fair market value of the property would come to Rs. 3G.28,crores and the rent had been valued as per the prevailing rate fixed for the purpose of stamp duty. The assessee also pointed out that if 10% fair return on the investment was considered, the rent would come to Rs. 3.60 crores per annum as against which, rent of Rs. 1.98 crores was paid. The CIT (Appeals) was also influenced by the fact that the lease had a locking period of 30 years. Primarily on such grounds, the CIT (Appeal) was prompted to reverse the view of the Assessing Officer. Tribunal confirmed the view. Thereupon, the appeal has been filed. 4. It can be seen that the entire issue is in the realm of appreciation of materials on record. CIT (Appeals) and the Tribunal concurrently came to the conclusion that the rent was not excessive. The application under section 13{l)(c) of the Income Tax Act therefore would be ruled out. Remaining disallowances being consequential to the main one, no further discussion is ITA Nos.339 & 340/Chd/2020 & C.O. Nos.3 & 4/Chd/2020 A.Ys. 2015-16 & 2016-17 Page 20 of 22 necessary when we do not find any reason to interfere in connection with the main issue." 3.8. In view of the aforementioned judicial decisions and irrefutable documentary evidences including government documents (referred above as part of the paper book) submitted by the appellant in support of its contentions, I hold the contention of the Assessing Officer that land for which rental payments were made belonged to Sh. Dewan Chand Bansal and that he was having lease agreement with the assessee as ill founded. The evidences furnished before me clearly establish the ownership of the land for which rental payments were made by the appellant being with Smt. Suman Bansal who was having a valid lease agreement with the appellant during the year under consideration. Further, in absence of any proof that the land leased out by Smt. Suman Bansal was utilized by the appellant trust for purposes other than education and the rental payments being consistent with the past history of the ca,se and reasonable for such huge chunk of land in a capital city like Jammu, I find the addition of Rs.12,35,434/-made u/s 13(l)(c) r.w.s. 13(3) of the Income Tax Act, 1961 unreasonable and unjustified. The A.O. is directed to delete the above said addition. The grounds no. 14, 15 and 16 are, therefore, allowed.” 14. We have gone through the order of the Ld.CIT(A). The factual findings of the Ld.CIT(A) that the ownership of Smt.Suman Bansal of the land leased to the assessee was established by documentary evidences, has not been controverted before us. Therefore, the findings of the AO that there was no evidence of ownership of land by Smt.Suman Bansal, merits no consideration. The findings of the Ld.CIT(A) to the effect that the land had been leased by the assessee consistently for educational purpose and the rental payments were consistent with the past history of the ITA Nos.339 & 340/Chd/2020 & C.O. Nos.3 & 4/Chd/2020 A.Ys. 2015-16 & 2016-17 Page 21 of 22 assessee had also remained uncontroverted before us. He has also stated that the rental payment, in his view, was reasonable payment for such a huge chunk of land in a capital city like Jammu. The assessee had justified the same by stating the market value of the land as assessed by the Revenue Authorities was Rs.5,74,55,000/- and, therefore, the rent paid of Rs.12,35,434/- was much less considering its huge market value. The Revenue has been unable to controvert this factual finding of the Ld.CIT(A). 14.1 In view of the above, we see no reason to disagree with the Ld.CIT(A) whose order we find is based on appreciation of facts, which the Revenue has been unable to controvert before us. Grounds of appeal No.iv & v raised by the Revenue also stand dismissed. In effect the appeal of the Revenue is dismissed 15. Both the appeals of the Revenue are dismissed. 16. The CO, it was contended was only in support of the order of the CIT(A). ITA Nos.339 & 340/Chd/2020 & C.O. Nos.3 & 4/Chd/2020 A.Ys. 2015-16 & 2016-17 Page 22 of 22 17. In the result, both the appeals filed by the Revenue are dismissed and both the Cross Objections filed by the assessee are allowed. Order pronounced on 20 th September, 2021. Sd/- Sd/- (R.L. NEGI) (ANNAPURNA GUPTA) /Judicial Member /Accountant Member Dated: 20 th September, 2021 *रती* आदेश ! , - .े- / Copy of the order forwarded to : • / The Appellant • / The Respondent • आ रआ $ / / CIT • आ रआ $ / ( )/ The CIT(A) • - 0 1 2 , आ र & आ2 र , 345 16/ DR, ITAT, CHANDIGARH • 1 5 फ ई / Guard File आदेश $ स र/ By order, सह ंज र/ Assistant Registrar