DCIT, C-1 (E), Chandigarh V. Shri Guru Gobind Singh Foundation, Moga

ITA 1433/CHANDI/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0233 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 16-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Charitable institution; Source of fund
• Section: 11; 12A; 12AA; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH B, CHANDIGARH BEFORE SHRI N.K. SAINI, VICE PRESIDENT AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO. 1433/CHANDI/2018 (ASSESSMENT YEAR: 2015-16) DCIT, C-1 (E) CIRCLE- 1 (EXEMPTION) CHANDIGARH VS. SHRI GURU GOBIND SINGH FOUNDATION 601/11, TANKI WALI GALI NO. 2, DASHMESH NAGAR MOGA- PUNJAB PAN NO. AADTS0332A APPELLANT RESPONDENT CROSS OBJECTION NO. 6/CHANDI/2019 (IN ITA NO. 1433/CHANDI/2018) (ASSESSMENT YEAR: 2015-16) SHRI GURU GOBIND SINGH FOUNDATION 601/11, TANKI WALI GALI NO. 2, DASHMESH NAGAR MOGA- PUNJAB PAN NO. AADTS0332A VS. DCIT, C-1 (E) CIRCLE- 1 (EXEMPTION) CHANDIGARH APPELLANT RESPONDENT DEPARTMENT BY : SHRI. MANJIT SINGH, CIT(DR) ASSESSEE BY : NONE DATE OF HEARING :25/03/2019 DATE OF PRONOUNCEMENT :29/03/2019 O R D E R PER N.K. SAINI, VICE PRESIDENT : THIS APPEAL BY THE DEPARTMENT AND THE CROSS OBJECT ION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 2 1.08.2018 OF THE LD. CIT(A)- 4, LUDHIANA. (2) DURING THE COURSE OF HEARING NOBODY WAS PRESENT ON BEHALF OF THE ASSESSEE, NEITHER ANY ADJOURNMENT WAS SOUGHT. WE THEREFORE, PROCEEDED EX-PARTE QUA THE ASSESSEE AND THE CASE IS DECIDED ON MERIT AFTER HEARING THE LD. CIT(DR). (3) IN THE APPEAL OF THE DEPARTMENT FOLLOWING GROUN DS HAVE BEEN RAISED: PAGE 2 OF 7 I. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS E RRED IN LAW IN ALLOWING THE BENEFIT UNDER SECTION 11 OF THE ACT WITHOUT APPRECIATING THAT THERE WAS A CLEAR VIOLATION OF SECTION 13 OF THE INCOME-TAX ACT, 1961. II. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW IN NOT CONSIDERING THE PROVISIONS OF SECTION 13(1)( C) OF THE I.T. ACT, 1961, ACCORDING TO WHICH, ANY INCOME OF THE TRUST DIRECTL Y OR INDIRECTLY APPLIED FOR THE BENEFIT OF ANY PERSON REFERRED TO IN SECTION 13(3) OF THE ACT SHALL NOT BE EXCLUDED FROM THE TOTAL INCOME AND PROVISIONS OF SECTION 11 SHALL NOT APPLY TO THE SAME. III. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) IS JUSTIFIED IN ALLOWING EXEMPTION UNDER SECTION 11 OF THE I.T. ACT WITHOUT CONSIDERING THE MODUS OPERANDI OF THE ASSESSEE FOR DIVERSION OF FUNDS BEYOND THE SCOPE OF THE OBJECTS OF THE ASSESSEE. IV. THAT THE APPELLANT CRAVES TO LEAVE, ADD OR AMEND TH E GROUNDS OF APPEAL ON OR BEFORE THE APPEAL HEARD AND DISPOSED OFF. (4) FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSE E IS REGISTERED UNDER SOCIETIES REGISTRATION ACT, 1860 AND ALSO REGISTERED U/S 12A OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) WITH THE LD. CIT- 4, LUDHIANA. THE ASSESSEE FILED THE RETURN OF INCOME ON 29.09.2015 DECLARING NIL INCOME. LATER ON THE CASE WAS SELECTED FOR SCRUTINY. (5) THE AO DURING THE COURSE OF ASSESSMENT PROCEEDI NGS NOTICED THAT THE ASSESSEE HAD GIVEN INTEREST FREE LOANS WITHOUT ANY CONSIDERATION OR SECURITY TO M/S BABA AMARNATH EDUCATIONAL SOCIETY AMOUNTING TO RS. 35,00,000/- WHICH WAS COVERED U/S 13(1)(C) AND 13(1)(D) OF THE ACT. THE A SSESSEE FURNISHED THE WRITTEN SUBMISSION WHICH HAS BEEN INCORPORATED BY THE ASSES SING OFFICER IN PAGE 5 OF THE ASSESSMENT ORDER DATED 26.12.2017, FOR THE COST OF REPETITION THE SAME IS NOT REPRODUCED HEREIN. (5.1) THE AO, HOWEVER, DID NOT FIND MERIT IN THE SU BMISSIONS OF THE ASSESSEE FOR THE FOLLOWING REASONS: (I) ASSESSEE HAS GIVEN UNSECURED LOANS OF RS.5.94 CRORE TO ITS SISTER CONCERNS, WHICH IS 63.25% OF TOTAL RECEIPTS OF THE ASSESSEE WITHOUT ANY CONSIDERATION. ASSESSEE IS NOT TAKING ANY INTEREST FROM THESE SISTER CONCERNS, NEITHER HAVING ANY SECURITY AGAINST THIS, WHICH SHO WS THAT ASSESSEE IS PROVIDING UNDUE BENEFIT TO ITS SISTER CONCERNS. (II) ASSESSEE HAS GIVEN UNSECURED LOAN TO ITS SISTER CON CERN CAPITAL INVESTMENTS ONLY, ON PERUSAL OF BALANCE SHEET OF DA VINDER KAUR MEMORIAL EDUCATION & CHARITABLE SOCIETY, IT IS CLEAR THAT TH IS SOCIETY HAS TAKEN UNSECURED LOAN OF AMOUNT OF RS. 2,22,25,000/- FOR A.Y. 15-16 & INVESTED THE SAME IN CAPITAL INVESTMENTS OF RS. 3,57,08,710/. CAPITAL INVESTMENT S CANNOT BE COUNTED AS EDUCATIONAL PURPOSE. IT IS STRANGE FACT THAT AGAINS T THE UNSECURED LOAN OF RS. 2,22,25,000/. DAVINDER KAUR IS HAVING ONLY RECEIPTS OF RS. 2,19,31,054/- ONLY. THIS SHOWS THAT ASSESSEE'S INTENTION IS ONLY CREATE THE CAPITAL NOT THE EDUCATION. IN THE BOOKS OF ACE EDUCATIONAL & CHARITABLE SOCIET Y, THERE ARE UNSECURED LOAN OF RS. 6.09 CRORE FOR A.Y. 2015-16 & ACE HAS MADE F IXED ASSETS OF RS. 11.79 CRORC & ALSO GIVEN THE UNSECURED LOAN/ADVANCE TO OTHER SI STER CONCERNS NAMELY, M/S DAVINDER KAUR EDUCATIONAL & CHARITABLE SOCIETY. THE ABOVE FACT SHOWS THAT THE PAGE 3 OF 7 TRUSTEES & GROUP SOCIETIES HAVE MODUS OPERANDI TO P ROVIDE THE LOANS TO GROUP CONCERNS & INVESTED THE SAME IN FIXED ASSETS. (III) REPLY OF ASSESSEE THAT THE SISTER TRUSTS ARE NOT CO VERED UNDER 13(3) AS SPECIFIED PERSONS, IS NOT ACCEPTABLE BECAUSE THERE ARE COMMON MEMBERS, WHICH ARE HAVING INTEREST IN THE ALL SISTER CONCERNS. THE DETAILS OF THE UNSECURED LOANS IN THE BOOKS OF EACH SOCIETY SHOW THAT ALL THE SOCI ETIES ARE HAVING LOAN OR ADVANCES FROM THEIR TRUSTEES & SISTER SOCIETIES & S AME DISTRIBUTED AMONG THE SISTER CONCERNS SOCIETIES & INVESTED INTO CAPITAL A S FIXED ASSESTS. THE ABOVE FACTS SHOW THAT ALL THE TRUSTEES ARE HAVING SUBSTANTIAL I NTEREST INTO EACH SISTER SOCIETY. IT IS ALSO A FACT THAT FROM THE PERUSAL OF THEIR IN DIVIDUAL BALANCE SHEET OF TRUSTEES, IT IS SEEN THAT THEY HAVE SOURCES OF INCOME FROM SA LARY AND INTEREST FROM GROUP SOCIETIES OR GROUP COMPANIES, THE SAME THEN INVESTE D INTO GROUP SOCIETIES AS LOAN/ADVANCES. (6) THE AO DISALLOWED THE CLAIM OF THE ASSESSEE BY OBSERVING IN PARA 5-7 OF THE ASSESSMENT ORDER DATED 26.12.2017 AS UNDER: (I) ASSESSEE HAS GIVEN UNSECURED LOANS OF RS. 5.94 CRORE TO ITS SISTER CONCERNS, WHICH IS 63.25% OF TOTAL RECEIPTS OF THE ASSESSEE W ITHOUT ANY CONSIDERATIONS. DETAILS OF THE SAME AS UNDER- PARTICULARS F.Y.2010 - 11 F.Y.2011 - 12 F.Y.2012 - 13 F.Y. 2013 - 14 F.Y. 2014 - 15 ACE EDU & CHARITABLE SOCIETY 1,66,00,000/ - 2,56,00,000/ - 2,83,50,000/ - 3,45,50,000/ - 3,45,50,000/ - DAVINDER KAUR MEMORIAL EDUCATIONAL SOCIETY 1,26,00,000/ - 1,40,75,000/ - 1,45,75,000/ - 1,35,75,000/ - 1,35,75,000/ - SACHDEVA EDUCATIONAL SOCIETY 99,737/ - 16,00,263/ - 48,50,263/ - 66,69,520/ - 1,13,71,652/ - TOTAL - 2,92,99,737/ - 4,12,75,263/ - 4,77,75,263/ - 5,47,94,520/ - 5,94,96,652/ - ASSESSEE IS NOT TAKING ANY INTEREST FROM THESE SIST ER CONCERNS, NEITHER HAVING ANY SECURITY AGAINST THIS, WHICH SHOWS THAT ASSESSEE IS PROVIDING UNDUE BENEFIT TO ITS SISTER CONCERNS. (II) ASSESSEE HAS GIVEN UNSECURED LOAN TO ITS SISTE R CONCERN FOR CAPITAL INVESTMENTS ONLY, ON PERUSAL OF BALANCE SHEET OF DA VINDER KAUR MEMORIAL EDUCATION & CHARITABLE SOCIETY, IT IS CLEAR THAT TH IS SOCIETY HAS TAKEN UNSECURED LOAN OF AMOUNT OF RS. 2,22,25,000/- FOR A.Y.15-16 & INVESTING THE SAME IN CAPITAL INVESTMENTS OF RS. 3,57,08,710/-. CAPITAL INVESTMEN TS CANNOT BE COUNTED AS EDUCATIONAL PURPOSE. IT IS STRANGE FACT THAT AGAINS T THE UNSECURED LOAN OF RS. 2,22,25,000/-. DAVINDER KAUR IS HAVING ONLY RECEIPT S OF RS. 2,19,31,054/- ONLY. THIS SHOWS THAT ASSESSEE INTENTION IS ONLY CREATE T HE CAPITAL NOT THE EDUCATION. IN THE BOOKS OF ACE EDUCATIONAL & CHARITABLE SOCIET Y, THERE ARE UNSECURED LOAN OF RS. 6.09 CRORE FOR A.Y. 2015-16 & ACE HAS MADE F IXED ASSETS OF RS. 11.79 CRORE & ALSO GIVEN THE UNSECURED LOAN/ADVANCE TO OTHER SI STER CONCERN NAMELY, M/S DAVINDER KAUR EDUCATIONAL & CHARITABLE SOCIETY. THE ABOVE SHOWS THAT THE TRUSTEES & GROUP SOCIETIES HAVE MODUS OPERANDI TO P ROVIDE THE LOANS TO GROUP CONCERNS & INVESTED THE SAME IN FIXED ASSETS. (III) REPLY OF ASSESSEE THAT THE SISTER TRUSTS ARE NOT COVERED UNDER 13(3) AS SPECIFIED PERSONS, IS NOT ACCEPTABLE BECAUSE THERE ARE COMMON MEMBERS, WHICH ARE HAVING INTEREST IN THE ALL SISTER CONCERNS. THE DETAILS OF THE UNSECURED LOANS IN THE BOOKS OF EACH SOCIETY SHOW THAT ALL THE SOCI ETIES ARE HAVING LOAN OR ADVANCES FROM THEIR TRUSTEES & SISTER SOCIETIES & S AME DISTRIBUTED AMONG THE SISTER ONCERNS SOCIETIES & INVESTED INTO CAPITAL A S FIXED ASSETS. THE ABOVE FACTS SHOW THAT ALL THE TRUSTEES ARE HAVING SUBSTANTIAL I NTEREST INTO EACH SISTER SOCIETY. IT IS ALSO A FACT THAT FROM THE PERUSAL OF THEIR IN DIVIDUAL BALANCE SHEET OF TRUSTEES, PAGE 4 OF 7 IT IS SEEN THAT THEY HAVE SOURCES OF INCOME FROM SA LARY AND INTEREST FROM GROUP SOCIETIES OR GROUP COMPANIES, THE SAME THEN INVESTE D INTO GROUP SOCIETIES AS LOAN/ADVANCES. THE ABOVE FACTS SHOW THAT THE GROUP SOCIETIES, GRQU P COMPANIES & THEIR TRUSTEES & DIRECTORS/SHAREHOLDER HAVE NEXUS BETWEEN ALL OF T HEM FOR DIVERSION OF MONEY FROM ONE HAND TO ANOTHER HAND UNDER THE UMBRELLA OF GROUP CONCERNS. IN THE ABOVE FACTS REPLY OF ASSESSEE THAT THESE TRA NSACTION ARE NOT COVERED U/S 13(3) IS NOT ACCEPTED, BECAUSE ALL THE TRUSTEES, GR OUP SOCIETIES, GROUP COMPANIES HAVE FINANCIAL INTEREST AMONG THEM. PENALTY PROCEEDINGS U /S 271 (1) (C) FOR FURNISHING INACCURATE PARTICULARS ARE INITIATED ON THIS ACCOUNT. 6. ASSESSEE HAS GIVEN THIS LOAN TO ITS SISTER CONCE RN AND SHOWING THE SAME INTO THE BOOKS AS LOAN/ADVANCES RECOVERABLE. THIS AMOUNT IS FUND OF ASSESSEE, WHICH SHOULD BE PART OF CORPUS/CAPITAL AND DEPOSITED IN M ODES U/S 11(5). ASSESSEE HAS SHOWN THIS AS ADVANCE & THIS IS NOT DEPOSITED UNDER THE MODES MENTIONED U/S 11(5). THIS ACT OF ASSESSEE ATTRACT VIOLATION OF PR OVISION OF SECTION 13(L)(D) OF I.T. ACT, 191, WHICH IS AS UNDER:- (I) NOTHING CONTAINED IN SECTION 11 [OR SECTION 12] SHALL OPERATE SO AS TO EXCLUDE FROM THE TOTAL INCOME OF THE PREVIOUS YEAR OF THE P ERSON IN RECEIPT THEREOF- (D) IN THE CASE OF A TRUST FOR CHARITABLE OR RELIGI OUS PURPOSES OR A CHARITABLE OR RELIGIOUS INSTITUTION, ANY INCOME THEREOF IF FOR AN Y PERIOD DURING THE PREVIOUS YEAR (I) ANY FUNDS OF THE TRUST OR INSTITUTION ARE INVES TED OR DEPOSITED AFTER THE 28 TH DAY OF FEBRUARY, 1983 OTHERWISE THAN IN ANY ONE OR MORE OF THE FORMS OR MODES SPECIFIED IN SUB-SECTION (5) OF SECTION 11; O R (II) ANY FUNDS OF THE TRUST OR INSTITUTION INVESTED OR DEPOSITED BEFORE THE 1 ST DAY OF MARCH, 1983 OTHERWISE THAN IN ANY ONE OR MOR E OF THE FORMS OR MODES SPECIFIED IN SUB-SECTION (5) OF SECTION 11 CONTINUE TO REMAIN SO INVESTED OR DEPOSITED AFTER THE 30 TH DAY OF NOVEMBER, 1983 IT IS A FACT THAT ASSESSEE IS PROVIDING UNSECURED L OAN TO ITS SISTER CONCERN WITHOUT ANY INTEREST OR SECURITY, WHICH IS NOT REASONABLE & UNDUE BENEFIT FOR ASSESSEE'S SISTER CONCERN. SO ASSESSEE CLAIM OF EXEMPTION IS D ENIED U/S 13(L)(C) AND U/S 13(L)(D) OF I.T. ACT, 1961. THERE IS CASE LAW REGAR DING THIS WHERE HON'BLE MADRAS HIGH COURT IN CASE OF CIT VS V.G.P. FOUNDATION 183 CTR MAD 330, 2003/262 ITQ 187 HAS HELD THAT U IT CANNOT BE SAID ON THE FACTS OF THIS CASE THAT TH E MONEY HAD BEEN APPLIED BY THE ASSESSEE FOR CHARITABLE PURPOSE IN THIS YEAR. THE FACT THAT THE MONEY, INSTEAD OF LYING WITH THE ASSESSEE HAD L AID WITH THE SISTER COMPANY WOULD NOT RESULT IN THAT AMOUNT BEING REGARDED AS A PPLICATION OF FUNDS FOR A CHARITABLE PURPOSE. HAD THE MONEY REMAINED WITH THE ASSESSEE, IT CERTAINLY COULD NOT HAVE BEEN REGARDED AS HAVING BEEN UTILISE D FOR CHARITABLE PURPOSES. BY GIVING IT TO A SISTER COMPANY WHICH MERELY RETAINE D THE MONEY WITH IT FOR THE WHOLE OF THE YAAR, IT IS NOT POSSIBLE TO GIVE THE A SSESSEE THE BENEFIT REGARDING THE AMOUNT AS HAVING BEEN APPLIED FOR A CHARITABLE PURP OSE. THERE HAS ALSO BEEN CONTRAVENTION OF SECTION 13(L)(D) READ WITH SECTION 11(5) OF THE ACT INASMUCH AS THE TRUSTEES ARE ALSO DIRECTORS OF THE COMPANY AND THAT COMPANY HAD THE BENEFIT OF THIS AMOUNT THROUGHOUT THE YEAR. THE ASSESSEE DI D NOT REALISE ANY INTEREST ON THAT AMOUNT NOR DID IT HAVE ANY SECURITY FOR THE AM OUNT SO MADE AVAILABLE TO THE SISTER COMPANY. THE QUESTIONS REFERRED TO US AR E THEREFORE ANSWERED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE.' THE ABOVE FACTS SHOW THAT THE UNSECURED LOAN OR ADV ANCES GIVEN BY ASSESSEE TO GROUP SOCIETIES ARE MODE OF INVESTMENTS ONLY, BECAU SE THE TREATMENT OF THESE LOANS ARE TO INVESTED THE SAME INTO FIXED ASSETS. 7. VIOLATION OF SECTION 11(1) OF INCOME TAX AC T, 1961 THE EARLIER MENTIONED DISCUSSION IN VARIOUS PARAS S HOWS THAT ASSESSEE'S MAIN OBJECT IS EDUCATION NOT INVOLVEMENT OF LOAN/ADVANCE BUSINESS. THE BALANCE SHEET PAGE 5 OF 7 OF THESE GROUP TRUST/SOCIETIES SHOW THAT ALL THE CO NCERNS ARE INVOLVED INTO FINANCIAL TRANSACTION BETWEEN GROUP TRUST/SOCIETIES , GROUP COMPANIES & THEIR TRUSTEES OR MEMBERS. THIS SHOWS THAT THE MAIN OBJEC TS IS NOT EDUCATION, THE MAIN OBJECT IS TO CREATE CAPITAL BY TAKING & GIVING UNSECURED LOAN OR ADVANCES. THIS IS VIOLATION OF SECTION 11, BECAUSE ASSESSEE O BJECT IS EDUCATION NOT PROVIDE THE LOAN TO OTHERS. ASSESSEE HAS FILED ITS REPLY RE GARDING THIS, WHICH IS NOT ACCEPTED BECAUSE ASSESSEE'S GROUP HAS THIS MODUS OP ERANDI TO INVOLVED INTO FINANCIAL TRANSACTION WITH EACH OTHERS AND CREATE C APITAL. THEREFORE IN THE LIGHT OF THE ABOVE FACTS AND DISCU SSION, ASSESSEE'S CLAIM OF EXEMPTION U/S 11 IS DENIED & SURPLUS IS TAXED ACCOR DINGLY AS AOP U/S 13(L)(C), 13(L)(D) R.W. 13(3) OF I.T. ACT. THERE IS LOSS IN I NCOME & EXPENDITURE ACCOUNT OF A.Y. 2015-16, HENCE NO NET ADDITION IS MADE FOR A.Y . 2015-16. RETURNED INCOME RS. NIL ADDITION OF SURPLUS RS . NIL NET INCOME RS. NIL (7) BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R TO THE LD. CIT(A) AND FURNISHED THE WRITTEN SUBMISSION WHICH HAS BEEN INC ORPORATED IN PARA 4 OF THE IMPUGNED ORDER WHICH READ AS UNDER: (I) ASSESSEE HAS GIVEN UNSECURED LOANS OF RS.5.94 CRORE TO ITS SISTER CONCERNS, WHICH IS 63.25% OF TOTAL RECEIPTS OF THE ASSESSEE WITHOUT ANY CONSIDERATION. ASSESSEE IS NOT TAKING ANY INTEREST FROM THESE SISTER CONCERNS, NEITHER HAVING ANY SECURITY AGAINST THIS, WHICH SHO WS THAT ASSESSEE IS PROVIDING UNDUE BENEFIT TO ITS SISTER CONCERNS. (II) ASSESSEE HAS GIVEN UNSECURED LOAN TO ITS SISTE R CONCERN CAPITAL INVESTMENTS ONLY, ON PERUSAL OF BALANCE SHEET OF DA VINDER KAUR MEMORIAL EDUCATION & CHARITABLE SOCIETY, IT IS CLEAR THAT TH IS SOCIETY HAS TAKEN UNSECURED LOAN OF AMOUNT OF RS. 2,22,25,000/- FOR A.Y. 15-16 & INVESTED THE SAME IN CAPITAL INVESTMENTS OF RS. 3,57,08,710/. CAPITAL INVESTMENT S CANNOT BE COUNTED AS EDUCATIONAL PURPOSE. IT IS STRANGE FACT THAT AGAINS T THE UNSECURED LOAN OF RS. 2,22,25,000/. DAVINDER KAUR IS HAVING ONLY RECEIPTS OF RS. 2,19,31,054/- ONLY. THIS SHOWS THAT ASSESSEE'S INTENTION IS ONLY CREATE THE CAPITAL NOT THE EDUCATION. IN THE BOOKS OF ACE EDUCATIONAL & CHARITABLE SOCIET Y, THERE ARE UNSECURED LOAN OF RS. 6.09 CRORE FOR A.Y. 2015-16 & ACE HAS MADE FIXED ASSETS OF RS. 11.79 CRORC & ALSO GIVEN THE UNSECURED LOAN/ADV ANCE TO OTHER SISTER CONCERNS NAMELY, M/S DAVINDER KAUR EDUCATIONAL & CHARITABLE SOCIETY. THE ABOVE FACT SHOWS THAT THE TRUSTEES & GROUP SOCIETIES HAVE MODU S OPERANDI TO PROVIDE THE LOANS TO GROUP CONCERNS & INVESTED THE SAME IN FIXE D ASSETS. (III) REPLY OF ASSESSEE THAT THE SISTER TRUSTS ARE NOT COVERED UNDER 13(3) AS SPECIFIED PERSONS, IS NOT ACCEPTABLE BECAUSE THERE ARE COMMON MEMBERS, WHICH ARE HAVING INTEREST IN THE ALL SISTER CONCERNS. THE DETAILS OF THE UNSECURED LOANS IN THE BOOKS OF EACH SOCIETY SHOW THAT ALL THE SOCI ETIES ARE HAVING LOAN OR ADVANCES FROM THEIR TRUSTEES & SISTER SOCIETIES & S AME DISTRIBUTED AMONG THE SISTER CONCERNS SOCIETIES & INVESTED INTO CAPITAL A S FIXED ASSETS. THE ABOVE FACTS SHOW THAT ALL THE TRUSTEES ARE HAVING SUBSTANTIAL I NTEREST INTO EACH SISTER SOCIETY. IT IS ALSO A FACT THAT FROM THE PERUSAL OF THEIR IN DIVIDUAL BALANCE SHEET OF TRUSTEES, IT IS SEEN THAT THEY HAVE SOURCES OF INCOME FROM SA LARY AND INTEREST FROM GROUP SOCIETIES OR GROUP COMPANIES, THE SAME THEN INVESTE D INTO GROUP SOCIETIES AS LOAN/ADVANCES. (8) THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE ALLOWED THE CLAIM OF THE ASSESSEE AND DELETED THE ADDITION MADE BY THE AO BY OBSERVING IN PARA 5 IN THE IMPUGNED ORDER AS UNDER: 5. I HAVE CAREFULLY CONSIDERED THE FACTS OF TH E CASE AND SUBMISSIONS OF THE APPELLANT THE ASSESSEE TRUST IS REGISTERED U/S 12A OF THE INCOME TAX ACT, 1961 WITH CRR, LUDHIANA ON 22.05.2003. DURING FINANCIAL YEAR 2010-11 TO 2015-1 6, THE ASSESSEE HAS GIVEN A SUM OF PAGE 6 OF 7 RS.5.94 CR. TO SOME'COMMON MEMBERS THE SOCIETIES NA MELY ACE EDU. & CHARITABLE SOCIETY, DAVINDER KAUR MEMORIAL EDUCATIONAL SOCIETY, MALWA E DUCATIONAL SOCIETY, BHARTI EDUCATIONAL SOCIETY, GLOBAL EDUCATIONAL SOCIETY, SA CHDEVA EDUCATIONAL SOCIETY AS A LOAN. EDUCATIONAL SOCIETY IS REGISTERED U/S 12AA OF THE I NCOME TAX ACT, 1961. THE ASSESSING OFFICER HAS DENIED EXEMPTION U/S LLOF THE INCOME TA X ACT, 1961 TO THE ASSESSEE BY INVOKING PROVISIONS OF SECTION 13(1)(C) & 13(1)(D) R.W.S 13( 3) OF THE INCOME TAX ACT, 1961. THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS GIVEN UNSECURED LOANS TO ITS SISTER CONCERNS WITHOUT ANY CONSIDERATION. IT WAS HELD THA T THERE ARE COMMON MEMBERS HAVING INTEREST IN ALL SISTER CONCERNS AND SUBSTANTIAL CONTRIBUTION OF UNSECURED LOAN AND MEMBERS FEES. THE ASSESSEE HAS P ROVIDED UNSECURED LOANS TO ITS SISTER CONCERNS WITHOUT ANY INTEREST OR SECU RITY, WHICH WAS NOT REASONABLE AND RESULTED IN UNDUE BENEFIT TO ASSESSEE'S SISTER CONCERNS. THEREFORE THE ASSESSING OFFICER DENIED CLAIM OF EXEMPTION U/S 11 READ WITH SECTION 13(1)(C) AND 13(1)(D) OF THE INCOME TAX ACT, 1961. FURTHER THE A SSESSING OFFICER HELD THAT THE MAIN OBJECT OF THE ASSESSEE IS NOT EDUCATION, BUT T HE MAIN OBJECT WAS TO CREATE CAPITAL BY TAKING AND GIVING UNSECURED LOAN OR ADVA NCES IN VIOLATION SECTION 11. THUS, THE INCOME OF THE ASSESSEE WAS ASSESSED AT RS .NIL/- AS AOP. IT IS OBSERVED THAT ON THE SAME ISSUE THE ASSESSING OFFICER HAD MADE DISALLOWANCE OF EXEMPTION U/S 11 OF THE INCOME TAX ACT, 1961 R.W.S 13(1)(C)& 13(1)(D)OF THE INCOME TAX ACT AND ALSO BY INVOKING SECTION 11(5) OF THE INCOME TAX ACT, 1961 FOR ASSESSMENT YEAR 2013-14 . HON'BLE ITAT CHANDIGARH, IN ITA NO. 1230/CHD/20T6, FOR ASSESSMENT YEAR 2013- 14 IN THE DCIT,CIRCLE-L, (EXEMPTION) CHANDIGARH VS. SH. GURU GOBIND SINGH FOUNDATIONS, MOGA HAS DECIDED AS UNDER- 13. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTI ES AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND ALSO THE OR DER OF THE ITAT IN THE CASE OF AMRITSAR INTERNATIONAL (SUPRA). ADMITTEDLY THE FACT S IN THE PRESENT CASES ARE IDENTICAL TO THAT IN THE CASE OF AMRITSAR INTERNATI ONAL (SUPRA). NO DISTINGUISHING FACTS WERE BROUGHT TO OUR NOTICE BY THE LD. DR. THE DECISION RENDERED IN THE CASE OF WE THEREFORE SEE NO REASON TO INTERFERE IN THE O RDER OF AMRITSAR INTERNATIONAL (SUPRA) WOULD THEREFORE SQUARELY APPLY IN THE PRESE NT APPEALS ALSO. FOLLOWING THE SAME WE HOLD THAT THE LD. CIT(A) HAS RIGHTLY HELD T HAT THE PROVISIONS OF SECTION J3(I)(C) ARE NOT ATTRACTED SINCE THE AO HAS FAILED TO POINT OUT HOW PERSONS SPECIFIED AS PER SECTION 13(3) OF THE ACT. WE ALSO AGREE WITH THE LD. CIT(A) THAT THE LOAN GIVEN TO THE RESPECTIVE EDUCATIONAL SOCIET Y DO NOT QUALIFY AS A DEPOSIT/INVESTMENT FOR THE PURPOSES OF SECTION 11(5 ) OF THE ACT, AND THEREFORE THE ASSESSEE CANNOT BE SAID TO HAVE VIOLATED THE PR OVISIONS OF SECTION 11(5) SO AS TO BE DENIED EXEMPTION U/S 11, AS PER SECTION 13(1) (D) OF THE ACT. MOREOVER SINCE THE IMPUGNED LOANS/ADVANCES WERE MADE IN EARLIER YE ARS, THE PROVISIONS OF SECTION 13(1)(C)/(D) COULD IN ANY CASE NOT HAVE BEE N INVOKED IN THE IMPUGNED YEAR, WE THEREFORE UPHOLD THE ORDER OF THE ID. CLT( APPEALS) AND DISMISS THE APPEAL FILED BY THE REVENUE. RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE ITAT, CHANDIGARH IN THE CASE OF ASSESSEE AS ABOVE, AS THE IMPUGNED LOANS/ ADVANCES WERE MADE IN EARLIER YEARS AND THE HON'BLE ITAT, CHANDIGARH HAS DECIDED THE IS SUE OF EXEMPTION U/S 11 IN FAVOUR OF THE ASSESSEE, THEREFORE, THE APPEAL OF TH E ASSESSEE IS ALLOWED. GROUNDS OF APPEAL NO. 1 TO 8 ARE THUS ALLOWED. (9) NOW, THE ASSESSEE IS IN APPEAL. (10) THE LD. CIT(DR) ALTHOUGH SUPPORTED THE ORDER O F THE AO BUT COULD NOT CONTROVERT THE FINDINGS GIVEN BY THE LD. CIT(A). (11) WE HAVE CONSIDERED THE SUBMISSION OF THE LD. C IT(DR) AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CA SE, IT IS NOTICED THAT THE LD. CIT(A) DELETED THE IMPUGNED ADDITION AND ALLOWED TH E CLAIM OF THE ASSESSEE BY PAGE 7 OF 7 FOLLOWING THE ORDER OF ITAT IN CHANDIGARH BENCH, IN ITA NO. 1230/CHANDI/2016 FOR THE AY 2013-14 IN ASSESSEES OWN CASE. DURING THE C OURSE OF HEARING NOTHING WAS BROUGHT ON RECORD TO SUBSTANTIATE THAT THE SAID DEC ISION OF THE ITAT DATED 26.07.2018 FOLLOWED BY THE LD. CIT(A) IN ASSESSEES OWN CASE HAS BEEN REVERSED BY THE HIGHER FORUM. IN THAT VIEW OF THE MATTER WE DO NOT SEE ANY VALID GROUND TO INTERFERE WITH THE FINDINGS GIVEN BY THE LD. CIT (A). ACCORDINGLY, WE DO NOT SEE ANY MERIT IN THIS APPEAL OF THE DEPARTMENT. (12) IN ITS CROSS OBJECTION, THE ASSESSEE HAD RAISE D FOLLOWING GROUNDS: 1. THAT THE ISSUE RAISED BY WORTHY AO IN APPEAL FOR T HE AY 2015-16 IS THE SAME AS IN AY 2013-14 AND THERE IS NO NEW FINDINGS. IN THAT CASES WORTHY AO ARBITRARILY DENIED EXEMPTION US/11 AND ASSESSED THE SOCIETY AS AOP. THE APPEAL OF THE ASSESSEE SOCIETY IN ALL THE THREE AY 2013- 14 AND A Y 2015-16 WAS ALLOWED BY WORTHY CIT(A)-IV LUDHIANA. THE APPEAL OF THE DEPART MENT IN AY 2013-14 ( ITA 1230/CHD/2016) WITH HONBLE ITAT CHANDIGARH ALREADY STAND DISMISSED VIDE ORDER DATED 26.07.201S AND THE DEPARTMENT ACCEPTED THE SAME HAS NOT YET PREFERRED APPEAL WITH H'ABLE HIGH COURT O F PUNJAB & HARYANA. 2. THAT THE PRESENT APPEAL FILED BY THE DEPARTMENT IS BASED ON THE SAME FACTS AND FINDINGS AND THE ISSUE INVOLVED IS ALSO THE SAME AS IN AY 2013-14 (ITA 1230/CHD/2016). SINCE THE SUBJECT MATTER OF THE APP EAL FILED BY THE DEPARTMENT IS SAME WHICH HAS ALREADY BEEN HEARD AND REJECTED B Y SAME BENCH OF H'ABLE ITAT CHANDIGARH, THE PRESENT APPEAL LIABLE TO BE RE JECTED. 3. THAT SINCE THE DISPUTED TAX AMOUNT IN THE PRESENT C ASE IS NIL, THE DEPARTMENT CAN NOT FILE APPEAL AS PER CBDT CIRCULAR 3/2015. (13) FROM THE ABOVE GROUNDS IT IS CLEAR THAT THESE ARE IN SUPPORT OF THE ORDER PASSED BY THE LD. CIT(A) AND NO SPECIFIC RELIEF APA RT FROM THAT WHICH HAD BEEN GIVEN BY THE LD. CIT(A) HAD BEEN SOUGHT. SINCE WE H AVE DISMISSED THE APPEAL OF THE DEPARTMENT IN THE FORMER PART OF THIS ORDER THE CROSS OBJECTION FILED BY THE ASSESSEE BECOMES INFRUCTUOUS . (14) IN THE RESULT APPEAL OF THE DEPARTMENT AS WELL AS CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 29/03/2019). SD/- SD/- (SANJAY GARG) (N.K. SAINI) JUDICIAL MEMBER VICE PRESIDE NT DATED : 29/03/2019 BCG COPY TO: 1.THE APPELLANT, 2. THE RESPONDENT, 3. THE CIT(A), 4. THE CIT, 5. THE DR