INCOME TAX OFFICER (EXEMPTION), AJMER V. M/S. A.S. SHANTI EDUCATIONAL SOCIETY, BHILWARA

ITA 207/JPR/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6193 (ITAT-JAIPUR)
• Duration Of Justice: 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 09-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J C KULHARI
• Assessee Lawyers: P C PARWAL CA DHK
• Keywords: Question of law
• Section: 12; 11

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKWO] U;KF;D LNL; ,O A JH HKKXPUN KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, A M VK;DJ VIHY LA- @ ITA NO. 207/JP/2018 FU/KZKJ.K O'K Z @ ASSESSMENT YEARS : 2014-15. THE INCOME TAX OFFICER (EXEMPTION) AJMER. CUKE VS. M/S. A.S.SHANTI EDUCATIONAL SOCIETY, B-229, V.S. PATHIK NAGAR, BHILWARA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AABTA 4900 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI J.C. KULHARI (JCIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (CA) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 05.04.2018 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 06/04/2018. VKNS'K@ ORDER PER SHRI VIJAY PAL RAO, J.M. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 15.11.2017 OF LD. CIT (A), AJMER FOR THE ASSESSMENT YEAR 2014-15. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW THE CIT (A) HAS FAILED TO UNDERSTAND THAT THE PROVISIONS OF LAW THAT UNDUE BENEFIT PROVIDED TO THE TRUSTEES CAUSES DENIA L OF EXEMPTION U/S 11 OF THE I.T. ACT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE CIT (A) HAS FAILED TO UNDERSTAND THE THEME OF THE CHARI TABLE INSTITUTION DIRECT/INDIRECT UNDUE BENEFIT SHOULD NO T BE PROVIDED TO THE PERSONS SPECIFIED U/S 13(3) OF THE ACT. 2 ITA NO. 207/JP/2018 M/S. A.S. SHANTI EDUCATIONAL SOCIETY, BHILWARA. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE CIT (A) HAS FAILED TO UNDERSTAND THAT THERE IS NO PROTE CTION OF THE FUND IN THE EVENT OF DISSOLUTION AS THE BUILDING WI LL REMAIN ATTACHED WITH THE LAND AND WILL GO TO THE TRUSTEES. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE CIT (A) HAS ERRED IN DELETING THE DISALLOWANCE OF INTER EST AMOUNTING TO RS. 21,41,586/- PAID BY THE APPELLANT SOCIETY IN SPITE OF THE FACT THAT THE FUND ARE NOT USED FOR THE OBJECTS OF THE TRUST AS THE BUILDING IS NOT OWNED BY THE SOCIETY. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE CIT (A) HAS ERRED IN DELETING THE DISALLOWANCE OF INTER EST IN SPITE OF THE FACTS THAT ASSESSEE SOCIETY INVESTING ITS OWN F UND FOR THE BENEFIT OF THE LESSOR WHO ARE TRUSTEES OR THEIR REL ATIVES. 6. ANY OTHER QUESTION OF LAW AS DEEMED FIT IN THE F ACTS AND CIRCUMSTANCES OF THE CASE MAY ALSO BE FRAMED BEFORE THE HONBLE TRIBUNAL IN THE INTEREST OF JUSTICE. 2. IN THIS APPEAL OF THE REVENUE THE ONLY ISSUE ARI SES IS DENIAL OF EXEMPTION UNDER SECTION 11 OF THE IT ACT DUE TO THE ALLEGED V IOLATION OF PROVISIONS OF SECTION 13(3) OF THE ACT WHICH WAS ALLOWED BY THE LD. CIT ( A) BY FOLLOWING THE EARLIER ORDER OF THIS TRIBUNAL IN ASSESSEES OWN CASE. AT THE OU TSET, WE NOTE THAT AN IDENTICAL ISSUE HAS BEEN CONSIDERED BY THIS TRIBUNAL IN ASSES SEES OWN CASE FOR THE ASSESSMENT YEAR 2012-13 VIDE ORDER DATED 19.9.2017 IN ITA NO. 251/JODH/2017 IN PARA 3.2 AS UNDER :- 3.2. WE HAVE HEARD RIVAL CONTENTIONS, PERUSED TH E MATERIAL ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELO W. THE LD. CIT (A) HAS ALLOWED THE EXEMPTION BY HOLDING AS UNDER :- AFTER GOING THROUGH ALL THE DOCUMENTS (REGISTER ED LEASE DEED DATED 16.05.2008, ADDENDUM DATED 16.05.2008 AN D THE REGISTERED LEASE DEED DATED 22.07.2015), I AM OF TH E CONSIDERED 3 ITA NO. 207/JP/2018 M/S. A.S. SHANTI EDUCATIONAL SOCIETY, BHILWARA. VIEW THAT THE OBSERVATION OF THE AO THAT THE EXPEND ED CONSTRUCTION SHALL BE TRANSFERRED BY THE APPELLANT SOCIETY TO THE TRUSTEES AT NIL COST AT THE END OF THE LEASE PERIOD , IS INCORRECT AND THE CLAIM OF APPELLANT FOR EXEMPTION U/S 11 AND 12 CAN NOT BE DENIED ON THE BASIS OF SUCH OBSERVATION. THE AO HAS ALSO MENTIONED IN THE ASSESSMENT ORDER T HAT THE APPELLANT SOCIETY HAS GIVEN ADVANCE OF RS. 9 LA C TO SHRI AMIT TAK AND SMT. SHANTI DEVI TAK (TRUSTEES) WITHOUT CHA RGING ANY INTEREST. THE APPELLANT HAS EXPLAINED THAT LOOKING TO THE PROPERTY LEASED OUT BY THE TRUSTEES TO THE APPELLAN T SOCIETY, THE AMOUNT OF RS. 9 LAC GIVEN BY THE APPELLANT SOCIETY TO THE TRUSTEES AS SECURITY DEPOSITS IS VERY MINIMAL. THE CONTENTION OF THE APPELLANT IS FOUND TO BE CORRECT BECAUSE THE AP PELLANT HAS PAID RENT OF RS. 80,000/- PER MONTH FOR THE TOTAL C ONSTRUCTED AREA OF 20,000 SQ. FEET AND OPEN AREA WITH GARDEN OF 1,20,000 SQ. FEET. IF THE AMOUNT OF RENT AND SECURITY DEPOSI TS PAID BY THE APPELLANT IS SEEN WITH THE LAND AND BUILDING GIVEN BY THE TRUSTEES TO THE APPELLANT SOCIETY, THE AMOUNT OF SE CURITY DEPOSIT AND RENT PAID BY THE APPELLANT SOCIETY TO THE TRUST EES IS FOUND TO BE ABSOLUTELY FAIR AND REASONABLE. REGARDING THE OBSERVATION OF THE AO THAT THE APPELL ANT SOCIETY HAS GIVEN INTEREST FREE ADVANCE OF RS. 3,04 ,228/- TO SMT. SHANTI DEVI TAK, THE APPELLANT HAS EXPLAINED THAT T HE AMOUNT OF RS. 3,04,228/- WAS PAID BY THE APPELLANT SOCIETY TO SMT. SHANTI DEVI TAK AGAINST THE RENT PAYABLE OF RS. 5,09,628/- AND THERE WAS NET PAYABLE OF RS. 2,05,400/- AT THE END OF THE FINANCIAL YEAR BY THE APPELLANT SOCIETY TO SMT. SHANTI DEVI T AK. THE APPELLANT HAS FILED COPY OF LEDGER OF SMT. SHANTI D EVI TAK IN THE BOOKS OF THE APPELLANT IN SUPPORT OF THE EXPLANATIO N. THUS, THE OBSERVATION OF THE AO THAT THE APPELLANT SOCIETY HA D GIVEN 4 ITA NO. 207/JP/2018 M/S. A.S. SHANTI EDUCATIONAL SOCIETY, BHILWARA. ADVANCE OF RS. 3,04,228/- TO SMT. SHANTI DEVI TAK, IS FOUND TO BE INCORRECT. IN VIEW OF THE DISCUSSION MADE ABOVE, I AM OF THE V IEW THAT THE AO WAS NOT JUSTIFIED IN DISALLOWING THE CL AIM OF THE APPELLANT FOR EXEMPTION U/S 11& 12. HENCE, THE APPE LLANT IS ALLOWED EXEMPTION U/S 11 AS CLAIMED BY IT. ACCORDIN GLY, THIS GROUND OF APPEAL IS ALLOWED. THE ABOVE FINDING OF FACT IS NOT CONTROVERTED BY TH E REVENUE, THEREFORE, WE DO NOT SEE ANY REASON TO INTERFERE IN TO THE FINDING OF LD. CIT (A), SAME IS HEREBY AFFIRMED. GROUNDS NO. 1 TO 5 OF THE APPEAL ARE DISMISSED. 3. AS REGARDS GROUND NOS. 4 & 5 REGARDING DISALLOWA NCE OF INTEREST PAID BY THE ASSESSEE SOCIETY, THE TRIBUNAL HAS CONSIDERED AN ID ENTICAL ISSUE IN PARA 4.3 AS UNDER :- 4.3. WE HAVE HEARD RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELO W. THE LD. CIT (A) WHILE DELETING THE DISALLOWANCE HAS OBSERVED AS UND ER :- I HAVE GONE THROUGH THE ASSESSMENT ORDER, STATEM ENT OF FACTS, GROUNDS OF APPEAL AND WRITTEN SUBMISSION CAR EFULLY. IT IS SEEN THAT THE AO HIMSELF HAS ACCEPTED THAT THE FUND S BORROWED FROM THE BANK WERE UTILIZED FOR THE CONSTRUCTION OF THE BUILDING WHICH IS BEING USED BY THE TRUST TO ACHIEVE ITS OBJ ECTS. THEREFORE, I AM OF THE CONSIDERED VIEW THAT EVEN IF THE BUILDING IS NOT OWNED BY THE APPELLANT, THE INTEREST PAID ON THE FUNDS BORROWED FOR CONSTRUCTION OF THE BUILDING IS ADMISS IBLE AS DEDUCTION. HENCE THE DISALLOWANCE OF RS. 24,89,043/ - MADE BY THE AO IS HEREBY DELETED. THE GROUND OF APPEAL IS A LLOWED. 5 ITA NO. 207/JP/2018 M/S. A.S. SHANTI EDUCATIONAL SOCIETY, BHILWARA. IN VIEW OF THE ABOVE FINDING, WHICH IS NOT CONTROVE RTED BY LD. D/R, WE FIND NO REASON TO INTERFERE INTO THE ORDER OF LD. CIT (A), SAME IS HEREBY AFFIRMED. THE GROUND OF THE REVENUE IS D ISMISSED. IN VIEW OF THE FINDINGS OF THIS TRIBUNAL IN ASSESSE ES OWN CASE FOR THE ASSESSMENT YEAR 2012-13, WE DO NOT FIND ANY ERROR OR ILLEGALIT Y IN THE ORDER OF LD. CIT (A). 4. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 06/04/201 8. SD/- SD/- HKKXPUN FOT; IKY JKWO (BHAGCHAND) ( VIJAY PAL RAO ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 06/04/2018. DAS/ VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT-THE ITO (EXEMPTION), AJMER. 2. IZR;FKHZ@ THE RESPONDENT-M/S. A.S. SHANTI EDUCATIONAL SOCIETY , BHILWARA. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE {ITA NO.207/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR 6 ITA NO. 207/JP/2018 M/S. A.S. SHANTI EDUCATIONAL SOCIETY, BHILWARA.