Sinhgad Technical Education Society, Pune V. Deputy Commissioner of Income-tax,

ITA 2076/PUN/2014

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 3868 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 20-04-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 19-11-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S N DOSHI
• Keywords: Charitable institution; Principle of natural justice; Maximum Marginal Rate; Diversion of income; Additional evidence; Question of law; Fair market value; Valuation report; Capital receipt; Benefit of exemption; Reason to believe; Capital expenditure
• Section: 143(3); 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUN E , , , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NOS. 2075 TO 2077 & 2110/PUN/2014 / ASSESSMENT YEARS: 2007-08 TO 2009-10 SINHGAD TECHNICAL EDUCATION SOCIETY, S. NO. 44/1, VADGAON ( BUDRUK), OFF. SINHAGAD ROAD, PUNE-411 041. PAN : AABTS9900Q. .... / APPELLANT / V/S. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(2), PUNE. / RESPONDENT . / ITA NOS. 15 TO 17/PUN/2015 / ASSESSMENT YEARS: 2007-08 TO 2009-10 THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(2), PUNE. .... / APPELLANT / V/S. SINHGAD TECHNICAL EDUCATION SOCIETY, S. NO. 44/1, VADGAON ( BUDRUK), OFF. SINHAGAD ROAD, PUNE-411 041. PAN : AABTS9900Q. . / RESPONDENT ASSESSEE BY : SHRI S. N. DOSHI REVENUE BY : SHRI RAJEEV KUMAR. / DATE OF HEARING : 23.07.2018 / DATE OF PRONOUNCEMENT : 17.10.2018 2 ITA NOS. 2075 TO 2077 & 2110/PUN/2014 ITA NOS. 15 TO 17/PUN/2015 A.YS.2007-08 TO 2009-10 / ORDER PER ANIL CHATURVEDI, AM 1. ITA NO.2075/PUN/2014 FILED BY THE ASSESSEE AND ITA N O. 15/PUN/2015 FILED BY THE REVENUE ARE CROSS APPEALS AND ARE EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), CENTRAL, PUNE DATED 31.10.2014 FOR A.Y. 2007-08. SIMILARLY, ITA NO. 2110/ PUN/2014 FILED BY THE ASSESSEE AND ITA NO.16/PUN/2015 FILED BY THE REVENUE ARE CROSS APPEALS AND ARE EMANATING OUT OF THE ORDER OF COM MISSIONER OF INCOME TAX (APPEALS) III, PUNE, DATED 29.10.2014 FOR A.Y. 2009-10. ITA NO.2076 & 2077/PUN/2014 FILED BY THE ASSESSEE AND ITA N O. 17/PUN/2015 FILED BY THE REVENUE ARE CROSS APPEALS AND ARE EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), CENTRAL, PUNE DATED 14.10.2014 FOR A.Y. 2008-09 & 2009-10 RESPECTIVELY. SINCE ALL THE APPEALS ARE INTERCONNECTED, ALL THESE APPEALS ARE HEARD T OGETHER. WE FIRST TAKE UP THE APPEAL FOR A.Y.2007-08. 2. THE FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD FOR AY 2007-08 ARE AS UNDER. ASSESSEE IS A TRUST WHOSE AIMS AND OBJECTS ARE STATED TO INCLUDE IMPARTING EDUCATION, RUNNING EDUCATIONAL INSTITUTIONS. ASSESSE E FILED ITS RETURN OF INCOME FOR A.Y. 2007-08 ON 31.10.2007 SHOWING NIL T AXABLE INCOME. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DA TED 31.12.2009 AND THE TOTAL INCOME WAS DETERMINED AT RS 31,06,59,700/-. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER (AO), ASSESSEE CARRIED THE M ATTER BEFORE 3 ITA NOS. 2075 TO 2077 & 2110/PUN/2014 ITA NOS. 15 TO 17/PUN/2015 A.YS.2007-08 TO 2009-10 CIT(A), WHO VIDE ORDER DATED 31.10.2014 (IN APPEAL NO. PN/CI T(A)- CENTRAL/DCIT CEN. CIR. 2(2)/1188/2009-10) GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD CIT(A), ASSESSEE A ND REVENUE ARE NOW IN APPEAL BEFORE US. THE GROUNDS RAISED BY THE ASSES SEE IN APPEAL NO 2075/PUN/2015 READS AS UNDER. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE CIT(A) HAS ERRED IN NOT APPRECIATING THAT THE ORDER PASSED U/S 143(3) IS VOID-AB- INTIO AND BAD IN LAW AS THE APPELLANT BEING A CONNE CTED PERSON THE ASSESSMENT SHOULD HAD MADE U/S.153C OF THE INCOME T AX ACT 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND WITHOUT PREJUDICE TO THE ABOVE GROUND THE CIT (A) HAS ERRED IN A) HOLDING THAT THE APPELLANT HAS PAID EXCESSIVE AND UNREASONABLE RENT FOR THE PROPERTY OWNED BY SHRI M. N NAVALE RELYING ON THE DECISION OF ALLAHABAD HIGH CO URT IN CASE OF RADHABAI DALMIYA 125 ITR 134 THEREBY APPELL ANT HAS CONTRAVENED THE PROVISIONS OF SECTION I3(1)(C). B) REJECTING THE VALID CONTENTION MADE ALTERNATIVELY T HAT TO THE EXTENT OF ALLEGED EXCESS AMOUNT OF RENT THAT ONLY S HALL DISQUALIFY THE EXEMPTION AND THAT THERE CANNOT BE WHOLESALE DENIAL OF EXEMPTION. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE CIT (A) HAS ERRED IN HOLDING THAT SHARES ACQUIRED IN PUBLIC LTD COMPANY ARE IN THE NATURE OF INVESTMENT CONTRAVENING THE PROVISION S OF SECTION 13(1)(D) OVERLOOKING THE FACT THAT THE SAID EXPENDI TURE OF RS.1,50,000/- INCURRED ON ACQUIRING THOSE SHARES CO NSTITUTE THE CAPITAL EXPENDITURE INCURRED FOR FURTHERANCE OF OBJ ECTS OF TRUST AND THEREFORE IT AMOUNTS TO APPLICATION OF INCOME. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE CIT (A) HAS ERRED IN SUSTAINING THE DISALLOWANCE OF RS 70,50,000/- ON THE GROUND THAT IT IS A PRIOR PERIOD EXPENDITURE. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE CIT(A) HAS ERRED IN SUSTAINING THE ADDITION OF RS.20,40,000/-, THE AMOUNT WHICH REPRESENTS THE DONATION RECEIVED TOWARDS CORPUS OVE RLOOKING THE FACT THAT IT IS THE CAPITAL RECEIPT AND CANNOT BE TAXED REGARDLESS OF DENIAL EXEMPTION U/S. 11. 3. ON THE OTHER HAND, THE GROUNDS RAISED BY THE REVENUE IN APPEAL NO.15/PUN/2015 (WHICH HAVE BEEN SUBSEQUENTLY REVISED) AND THE REVISED GROUNDS READS AS UNDER: 4 ITA NOS. 2075 TO 2077 & 2110/PUN/2014 ITA NOS. 15 TO 17/PUN/2015 A.YS.2007-08 TO 2009-10 1. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE MADE U/S 40A (2) (B) ON ACCOUNT OF PAYMENT OF RENT IN EXCESS MADE TO M. N. NAVALE ( BI GGER HUF), A RELATED PARTY. 2. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE, T HE LD.CIT(A) HAS ERRED IN HOLDING THAT THE PROVISION OF SECTION 13(1 )(C) R.W.S.13(3) OF THE INCOME TAX ACT, 1961 ARE NOT ATTRACTED. 3. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE, T HE LD.CIT(A) HAS ERRED IN DECIDING THE ISSUE OF EXCESS PAYMENT OF RE NT CONSIDERING ONLY ONE LIMB OF THE HON'BLE ITAT'S ORDER NO.149/PN/2010 DTD.31/03/2012 REGARDING THE EXISTENCE OF M. N. NAV ALE (BIGGER HUF), HOWEVER HAS ENTIRELY OVERLOOKED THE OTHER LIM B OF THE SAID ORDER WHEREIN THE HON'BLE ITAT HAD DIRECTED THE AO TO EXAMINE THE VERACITY OF SOURCE OF INVESTMENT IN THE PROPERTIES BY THE BIGGER HUF WHICH WERE LET OUT ON RENT TO THE ASSESSEE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT (A) WAS NOT JUSTIFIED IN DELETING THE ADDITION MADE BY THE AO ON ACCOUNT OF INVESTMENT IN SHARES OF CO-OPERATIVE BANK AND PU BLIC LIMITED COMPANIES BY NOT. APPRECIATING THE FACTS THAT THE A SSESSEE HAD CONTRAVENED THE PROVISIONS OF SECTION 13(1)(D) FOR THE REASON OF INVESTMENT IN SHARES OF CO-OPERATIVE BANK AND PUBLI C LIMITED COMPANIES AS THESE ARE NOT SPECIFIED IN SECTION 11 (5) OF THE ACT. THE LD. CIT (A) HAS ALSO NOT APPRECIATED THE FACT THAT SIMILAR ADDITION MADE IN A.Y. 2006-07 WITH RESPECT TO INVESTMENT IN SHARES OF CO- OPERATIVE BANKS WHICH HAS BEEN CONFIRMED BY LD. CIT (A). FURTHER, THE LD. CIT (A) HAS NOT CONSIDERED THE AMENDED PROV ISIONS OF SECTION 13(1)(D)(III) OF THE ACT WITH RESPECT TO INVESTMENT IN SHARES OF PUBLIC LIMITED COMPANIES. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) ERRED IN HOLDING THAT SHRI M. N. NAVALE (BIGGER HUF ) DOES NOT STAND IN A RELATIONSHIP SPECIFIED UNDER SECTION 13(3) OF THE ACT, WITHOUT APPRECIATING THAT BIGGER HUF WAS A CONCERN IN WHICH TRUSTEES OF THE TRUST HAD A SUBSTANTIAL INTEREST THEREFORE, M. N. N AVALE (BIGGER HUF) IS A PERSON SPECIFIED IN SECTION 13(3) OF THE ACT. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) ERRED IN ALLOWING THE AMOUNTS PAID TO THE VARIOUS T RUSTS AMOUNTING TO RS. 2,04,00,000/-, WHEREIN THE TRUSTEE OF THE ASSES SEE TRUST ARE ALSO THE TRUSTEES AND HENCE THE ASSESSEE HAS CONTRAVENED THE PROVISIONS OF SECTION 13(1)(C). THE LD. CIT(A) HAS WRONGLY REL IED UPON THE DECISION OF LD. CIT(A) IN ASSESSEES OWN CASE FOR A .Y.2003-04 BY NOT APPRECIATING THE FACT THAT THE ADDITION MADE BY THE ASSESSING OFFICER IS ON A DIFFERENT FOOTING. 7. THE ORDER OF LD. CIT(A) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 4. SINCE THE GROUNDS RAISED BY ASSESSEE AND REVENUE AR E INTER- CONNECTED, ALL THE GROUNDS ARE CONSIDERED TOGETHER. 5 ITA NOS. 2075 TO 2077 & 2110/PUN/2014 ITA NOS. 15 TO 17/PUN/2015 A.YS.2007-08 TO 2009-10 5. BEFORE US, AT THE OUTSET, THE LD AR SUBMITTED THAT AS SESSEE DOES NOT WISH TO PRESS GROUND NOS.1 & 5. IN VIEW OF THE LD ARS SUBMISSION, THE GROUND NOS.1 & 5 ARE DISMISSED AS NOT PRESSED. 6. GROUND NO. 2 OF ASSESSEES APPEAL AND REVENUES GR OUND NO.1 TO 3 & 5 ARE WITH REGARD TO DISALLOWANCE OF RENT PAID. 6.1. ASSESSING OFFICER NOTICED THAT ASSESSEE HAD TAKEN ON RENT VARIOUS PROPERTIES (THE LIST OF PROPERTIES BEING LISTED ON PAGE 4 O F THE ASSESSMENT ORDER) BELONGING TO SHRI M.N.NAVALE ON RENT. HE NOTICED THAT IN EARLIER YEARS IN ASSESSEES OWN CASE, THE RENT PAID FOR VARIOUS PROPERTIES WERE HELD TO BE EXCESSIVE. HE ALSO NOTICED THAT ASSESSEE HAD ALSO TAKEN A FARM HOUSE OWNED BY SHRI M.N.NAVALE ON RENT & THAT THE AMOUN T OF RENT PAID WAS UNHEARD OF AND ACCORDING TO HIM THE FARM HOUSE DOES NOT SERVE ANY PURPOSE RELATING TO THE OBJECTS OF THE TRUST AND HAD G OT NOTHING TO DO WITH THE RUNNING OF THE EDUCATIONAL INSTITUTIONS. HE THEREFORE HE LD THAT THE RENT PAID BY THE ASSESSEE TO MR. NAVALE FOR THE PROPERTIES TA KEN ON RENT WAS UNREASONABLE. HE ALSO HELD THAT THE PAYMENT OF RENT TO M R. NAVALE ATTRACTED THE PROVISIONS OF SECTION 13(1)(C) OF THE ACT AS THE BENEFITS WAS DERIVED BY PERSONS REFERRED TO IN SECTION 13(3) OF THE AC T. HE, THEREFORE, HELD THAT THE ASSESSEE IS TO BE ASSESSED LIKE ANY OTHER ASSESSEE AND NO BENEFIT U/S. 11 & 12 WERE AVAILABLE TO ASSESSEE AND ACCOR DINGLY TREATED THE ASSESSEE TO BE AS ASSOCIATION OF PERSONS (AOP). A GGRIEVED BY THE ORDER OF ASSESSING OFFICER, ASSESSEE CARRIED THE MATTER BE FORE CIT(A) WHO GRANTED PARTIAL RELIEF TO THE ASSESSEE BY FOLLOWING HIS OWN ORDER IN ASSESSEES OWN CASE FOR AY 2008-09. THE RELEVANT OBSER VATIONS OF THE LD. CIT(A) ARE AS UNDER: 6 ITA NOS. 2075 TO 2077 & 2110/PUN/2014 ITA NOS. 15 TO 17/PUN/2015 A.YS.2007-08 TO 2009-10 6. GROUNDS NO.1 (A) AND 2(C): UNDER THESE GROUNDS OF APPEAL IT IS CONTENDED THAT THE AO ERRED IN HOLDING THAT THE APP ELLANT HAD CONTRAVENED THE PROVISIONS OF SECTION 13(1)(C) BY R EASON OF PAYMENT OF EXCESS RENT TO SHRI M. N. NAVALE AND THA T NO DISALLOWANCE UNDER SECTION 40A(2)(B) WAS CALLED FOR ON ACCOUNT OF THE RENTS PAID TO SHRI M.N.NAVALE. THIS GROUND IS I DENTICAL TO GROUND NO.1 (A) AND 2(B) OF APPEAL FOR AY. 2008-09. HENCE, THE RATIO OF DECISION FOR AY 2008-09 APPLIES EQUALLY TO THIS AY TOO. 6.1 IN VIEW OF THE DETAILED DISCUSSIONS IN MY ORDE R IN THE APPELLANTS OWN CASE FOR A.Y 2008-09, THE ADDITION AL MADE BY THE LD. AO VIS-A-VIS THE PROPERTIES AT FLATS NO.7, 8 & 9, GEETA BUILDING, SION, MUMBAI AND FARM HOUSE AT NDA ROAD, WARJE, PUNE ARE HEREBY DELETED AND THE ADDITIONS IN RESPEC T OF THE REMAINING PROPERTIES ARE CONFIRMED. FOR THE SAME RE ASONS, THE APPLICABILITY OF S.13(1)(C) IN THE APPELLANT'S CASE IS HEREBY UPHELD SINCE A PART OF THE INCOME OF THE INSTITUTION WAS U SED DURING THE PY FOR THE BENEFIT OF A PERSON REFERRED TO UNDER SE CTION 13(1)(C). ACCORDINGLY, THESE GROUNDS MAY BE TREATED AS PARTLY ALLOWED. 7. THE LD. CIT(A) HAD FOLLOWED HIS OWN ORDER FOR A.Y 2008-09 WHILE DECIDING THE APPEAL OF THE ASSESSEE IN A.Y 2007-08. THE O RDER OF CIT(A) FOR AY 2008-09 THAT WAS FOLLOWED BY CIT(A) WHILE DECIDING THE AP PEAL IN AY 2007-08 READS AS UNDER: 6.7 I HAVE GIVEN CAREFUL CONSIDERATION TO THE FACTS BEFORE ME AND TO THE VOLUMINOUS SUBMISSIONS MADE ON BEHALF OF THE AP PELLANT FROM TIME TO TIME. THE ISSUES RAISED BY THE APPELLANT AR E DISCUSSED SERIATIM IN THE SUCCEEDING PARAGRAPHS . 6.8 THE FIRST CONTENTION OF THE APPELLANT IS THAT T HE FARM HOUSE AT WARJE AND THE FLATS AT SION, MUMBAI, WHICH ARE AMON G THE PROPERTIES IN RESPECT OF WHICH EXCESS RENT IS STATED TO HAVE B EEN PAID TO THE MANAGING TRUSTEE, SHRI M. N. NAVALE IN FACT BELONGED NOT TO M.N.NAVALE (INDIVIDUAL) BUT TO THE M.N.NAVALE (BIGG ER HUF) WHICH WAS NOT ONE OF THE PERSONS SPECIFIED IN S 13(3). TH E APPELLANT'S CONTENTION IN THIS REGARD IS THAT THE AO HAD REJECT ED THE APPELLANT'S CONTENTION REGARDING THE EXISTENCE OF THE M.N. NAVA LE (BIGGER HUF). IN THIS REGARD IT IS POINTED OUT THAT ITAT PUNE IN ITS ORDER DATED 30/03/2012 HAS SINCE UPHELD THE EXISTENCE OF THE BIGGER HUF AN D THEREFORE, THE VERY BASIS OF THE AO'S REASONING IN INVOKING THE PROVISIONS OF S. 13(1 )(C) DOES NOT SURVIVE VIS-A-VIS THESE .PROPERTIES, NAMELY, FLATS NO. 7,8 & 9,. GEETA BUILDING, SION, MUMBAI AND THE PROPERTY AT WARJE (NDA ROAD). I HAVE GIVEN CAREFUL CONSIDERATION TO THIS CONTENTION OF THE APPELLANT THE UNDERLYING FAC TS HAVE BEEN DISCUSSED AT GREAT LENGTH IN MY ORDER IN THE CASE O F M.N. NAVALE (INDIVIDUAL) FOR AY 2008-09. AS MENTIONED THEREIN, THE ISSUE OF EXISTENCE OF THE M.N. NAVALE (BIGGER HUF) AS WELL A S OWNERSHIP OF ASSETS BY THE HUF HAD TRAVELLED TO THE ITAT (PUNE B ENCH) IN ITA NO. 149/PN/2010. IN THEIR ORDER DATED 30/03/2012. IN THAT CASE, THE JURISDICTIONAL BENCH OF HON ITAT UPHELD THE EXISTEN CE OF THE M.N. NAVALE (BIGGER HUF) IN THE EYES OF LAW, BUT LEFT TH E ISSUE OF 7 ITA NOS. 2075 TO 2077 & 2110/PUN/2014 ITA NOS. 15 TO 17/PUN/2015 A.YS.2007-08 TO 2009-10 QUANTIFICATION OF THE INCOME GENERATED BY THE HUF O UT OF ITS AGRICULTURAL HOLDINGS TO THE LD. AO THAT EXERCISE FOR QUANTIFICATION BY THE AO OF INCOME POTENTIALLY EARNED BY THE HUF AND THE ASSETS ACQUIRED BY THE HUF OUT OF THE SAME, IS STILL UNDER WAY. FROM THE POINT OF VIEW OF THE ISSUE AT HAND, HOWEVER, THE SI GNIFICANT FACT TO BE NOTED IS THAT ITAT CATEGORICALLY HELD THAT THE COMP ROMISE DECREE PASSED BY THE CIVIL COURT, PANDHAPUR IS SACROSANCT AND BINDING UPON THE DEPARTMENT SO FAR AS THE QUANTITY ALLOCATED B Y THE HON'BLE COURT, PANDHARPUR ARE CONCERNED.. HAVING PERUSED A COPY OF THE SAID COMPROMISE DECREE, I FIND THAT THE PROPERTIES UNDER CONTENTION NAMELY FLAT NO. 7,8 & 9, GEETA BUILDING, SION, MUMB AI AND THE PROPERTY AT WARJE ( NDA ROAD) ARE LISTED AS PROPERT IES OF THE M.N NAVALE ( BIGGER HUF) WHICH HAVE BEEN PARTITIONED AM ONG THE SMALLER HUFS. SUCH BEING THE FACTS, RESPECTFULLY FOLLOWING THE DECISION OF JURISDICTIONAL BENCH OF ITAT WHICH STILL HOLDS THE FIELD NOTWITHSTANDING THE DEPARTMENTS APPEAL BEFORE THE HON'BLE HIGH COU RT. I HEREBY UPHOLD THE APPELLANTS CONTENTION AND DELETE THE AD DITION WORKED OUT BY THE LD. AO ON ACCOUNT OF EXCESS RENT PAID TO THE BIGGER HUF. IT IS ALSO CORRECT THAT THE SAID BIGGER HUF DOES NOT STAN D IN A RELATIONSHIP SPECIFIED UNDER SECTION 13(3) OF THE ACT. THEREFORE , THE PROVISIONS OF SECTION 13(1)(C) WILL NOT ATTRACTED VIS--VIS THESE PROPERTIES. 6.9. THE NEXT CONTENTION OF THE APPELLANT IS THAT EVEN IF EXCESS RENT WAS PAID TO THE TRUSTEE, THE ONLY EFFECT OF THIS WO ULD BE THAT THE TRUST WOULD BE DENIED THE BENEFIT OF SECTION 11. BUT NO A DDITION CAN BE MADE TO THE TOTAL INCOME OF THE TRUST ON THIS GROUN D. THE DECISION OF ITAT CHENNAI IN 54 ITD 201 IS CITED BY THE APPELLAN T IN SUPPORT OF THE CONTENTION. I HAVE GIVEN CAREFUL CONSIDERATION TO T HE FACTS BEFORE ME AND PERUSED THE DECISION OF ITAT CHENNAI CITED IN P ARA-6.9 ABOVE. THE ISSUE RAISED BY THE APPELLANT HOLDS LITTLE MERI T. ONCE THE BENEFIT OF S.11 IS DENIED TO THE APPELLANT, THE CONSEQUENCE WOULD BE THAT THE APPELLANT WOULD HAVE TO BE ASSESSED AS AN AOP OTHER THAN A CHARITABLE TRUST UNDER THE APPROPRIATE HEAD OF INCO ME. THE PROVISIONS OF S.29 TO 44 WILL THEN COME INTO PLAY IN THE CASE OF THE APPELLANT AND THEREFORE, S. 40A(2) (B) WILL BE APPLICABLE. IN THI S CASE LAW CITED BY THE APPELLANT, THE APPELLANT WAS NOT ENGAGED IN ANY ACT IVITY ASSESSABLE UNDER THE HEAD PROFIT OF GAINS OF BUSINESS OR PROF ESSION AND THEREFORE, THE CHENNAI BENCH OF THE TRIBUNAL UNDERS TANDABLY OBSERVED THAT NO ADDITION COULD BE MADE SINCE S. 13 DOES NOT CALL FOR ANY ADDITION TO INCOME BUT MERELY DENIAL OF EXEMPTI ON FOR VIOLATION OF ITS PROVISIONS. 6.10 THE NEXT CONTENTION OF THE APPELLANT IS THAT THE AO'S RELIAN CE ON THE JUDGMENT OF THE HON'BLE ALLAHABAD HIGH COURT IN 125 ITR 134 WHILE ESTIMATING THE FAIR RENT OF THE PROPERTIES WA S TOTALLY MISPLACED AS THE SAID JUDGEMENT WAS IN THE CONTEXT OF ESTIMAT ION OF ANNUAL VALUE OF THE HOUSE PROPERTY FOR THE PURPOSES OF S.2 2 AND THAT TOO IN THE CASE OF A PROPERTY THAT WAS NOT ACTUALLY LET OU T. IT IS ALSO POINTED OUT THAT THE SAID JUDGEMENT WAS BASED ON THE PROVIS IONS OF THE ERSTWHILE S.23 WHICH HAS SINCE BEEN SUBSTITUTED. FA IR RENT ON THE OTHER HAND DEPENDS ON CONSIDERATIONS OF LOCALITY AV AILABILITY, CONVENIENCE, AREA AND UTILITY TO THE TENANT ETC. AN D THESE CONSIDERATIONS HAVE TO BE VIEWED FROM THE POINT OF VIEW OF THE APPELLANT AND IT IS NOT APPROPRIATE FOR THE AO TO S TEP INTO THE APPELLANT'S SHOES, IN THIS REGARD. ALSO THE AO DID NOT BRING ON RECORD ANY EVIDENCE OF SIMILAR PROPERTIES OR COMPARABLE IN STANCES OF RENT PAID FOR SIMILAR PROPERTIES . I HAVE GIVEN CAREFUL CONSIDERATION TO THE APPELLANT'S SUBMISSIONS ON THIS ISSUE. THERE IS LIT TLE DOUBT THAT THE RENTAL VALUE OF ANY PROPERTY WOULD DEPEND ON A NUMB ER OF FACTORS 8 ITA NOS. 2075 TO 2077 & 2110/PUN/2014 ITA NOS. 15 TO 17/PUN/2015 A.YS.2007-08 TO 2009-10 INCLUDING SOME OF THE FACTORS LISTED BY THE APPELLA NT AT THE SAME TIME, HOWEVER, WHERE THE OWNER AND THE TENANT WERE CLOSEL Y RELATED AND THERE IS A STRONG REASON TO BELIEVE THAT THE TRANSA CTION WAS NOT AT ARM'S LENGTH, THERE IS LITTLE OPTION WITH THE AO BU T TO ESTIMATE THE FAIR RENT IN THIS CONTEXT I DO NOT FIND ANY FUNDAMENTAL INFIRMITY IN THE AO'S RELIANCE UPON THE JUDGMENT OF THE ALLAHABAD HIGH CO URT. I ALSO FIND THAT MY PREDECESSOR WHILE DECIDING THE APPEAL IN TH E APPELLANT'S CASE FOR A Y 2006-07 HAD HELD AS FOLLOWS: 10.11 WITH REGARD TO THE ASSESSING OFFICER QUESTIN G THE HIRING OF THE FARM HOUSE AT VILLAGE WARJE, NDA ROAD, PUNE WHICH WAS APPROXIMATELY AT 10 KMS DISTANCE FROM THE CAMPU S OF THE INSTITUTIONS RUN BY THE APPELLANT HAS JUSTIFIED ITS EARLIER STAND AND CONTENTED THAT IT WAS NOT FOR THE ASSESSING OFF ICER TO SUGGEST THAT THE APPELLANT SHOULD HAVE HIRED HALLS FOR MEETING AND SPORTS COMPLEXES FOR SPORTS MEETS ETC, SINCE CO MMERCIAL EXPEDIENCY IS WITHIN THE PURVIEW OF A BUSINESSMAN, AND SIMILAR WAS THE CASE OF THE APPELLANT INSTITUTION. SO FAR AS THE CLAIM OF ELIGIBILITY FOR RS. 1 CRORE SALARY FOR THE SERVICES OF SHRI M.N. NAVALE IS CONCERNED, AGAINST THE APPELLANT HAS REITERATED THE SUBMISSIONS MADE EARLIER AND THERE IS NOTHING N EW IN THE COUNTER COMMENT DATED 16.7.2009. THE ASSESSING OFFI CER ALSO POINTED OUT THAT SHRI M.N. NAVALE WAS ALREADY GETTI NG FULL SALARY FROM ONE OF THE MANAGEMENT INSTITUTIONS BELO NGING TO THE APPELLANT SOCIETY AS A FULL TIME DIRECTOR THERE . 10.12 SO FAR AS THE ALLAHABAD HIGH COURT (SUPRA) J UDGMENT REGARDING 7% RATE OF RETURN BEING REASONABLE IS CON CERNED, IT IS NOTICED THAT IN TWO DECISIONS , THE GUJRAT HIGH COU RT HAS ALSO RENDERED SOMEWHAT SIMILAR DECISIONS. IN THE DECISIO N OF SAKARLAL BALABHAI VS. ITO, 1975, 100 ITR 97 (GUJ.), IT WAS MENTIONED THAT THE CAPITAL VALUE OF THE PROPERTY HA S A RELEVANCE AND BEARING ON THE QUESTION OF LETTING VA LUE OF A PROPERTY. IN THE ABSENCE OF ANY BETTER WAY OF ESTIM ATING RENT RATE OF INTEREST ON THE COST OF THE BUILDING AND LA ND MAY PROVIDE A REASONABLE BASIS FOR DETERMINING THE ANNU AL LETTING VALUE OF THE PROPERTY. IN THE DECISION OF THE GUJRA T HIGH COURT REPORTED IN THE CASE OF SHRI BIPINBHAI VADILAL FAMI LY TRUST VS. CIT (1994) 208 ITR 105 ( GUJ.), IT WAS OBSERVED THA T THERE ARE VARIOUS FACTORS WHICH AFFECTED THE RENTAL VALUE OF THE PREMISES, AND THE CRITERION OF THE REASONABLE RETURN TO THE L ANDLORD FROM THE PROPERTY WOULD BE A FAIR CRITERION, AND THE PER CENTAGE OF THE RETURN ON THE VALUE OF THE PROPERTY ADOPTED BY THE TRIBUNAL AT 8.4% P.A. WAS HELD TO BE VALID. THEREFORE, THE D ECISIONS OF THE ALLAHABAD AND GUJARAT HIGH COURT HAVE UPHELD TH E PRINCIPAL OF REASONABLE RATE OF RETURN IN THE INVES TMENT IN THE PROPERTY AKIN TO RATE OF INTEREST. THE ASSESSING OF FICER HAS STATED IN THE REMAND REPORT THAT A RATE OF 7% RETUR N WITHOUT ANY RISK IS CONSIDERED REASONABLE EVEN TODAY. IN FA CT IT IS NOTICED THAT THE RATE OF RETURN PROVIDED BY THE PRO VIDENT FUND FOR THE LAST SO MANY YEARS INCLUDING THE ASSESSMENT YEAR INVOLVED HERE HAS BEEN AROUND 8%, WHEREAS THE MAXIM UM RATE ON THE BANK FIXED DEPOSIT, OF ONE YEAR AND BEYOND, CONSIDERED TO BE SAFE HAS BEEN VARYING FROM AROUND 7% TO 10% D URING THE LAST 4-5 YEARS; BUT MOSTLY IT HAS BEEN IN THE VICIN ITY OF 7 TO 8% ONLY FOR FIXED DEPOSIT OF AT LEAST ONE YEAR. IT IS A COMMON EXPERIENCE THAT INVESTMENT IN PROPERTIES FOR ITS RE NTAL RETURN HAVE NOT BEEN FOUND TO BE A WORTHWHILE PROPOSITION AND 9 ITA NOS. 2075 TO 2077 & 2110/PUN/2014 ITA NOS. 15 TO 17/PUN/2015 A.YS.2007-08 TO 2009-10 EXPERIENCE AND IT HAS BEEN EXPERIENCED THAT BANK FI XED DEPOSIT HAVE BEEN PROVIDING BETTER RATES OF RETURNS WITH LE SSER HASSELS. 10.13 IT IS THEREFORE A FACT THAT THERE ARE DECISIO NS OF TWO DIFFERENT HIGH COURTS, IN WHICH 7 TO 8.4% OF THE RA TE OF RETURN WITH REFERENCE TO THE COST OF INVESTMENT IN PROPERT Y HAVE BEEN HELD TO BE REASONABLE. IT IS ALSO NOTICED THAT THE APPELLANT HAS NOT BEEN ABLE TO GIVE ANY CONTRARY DECISIONS OF ANY COURT OF TRIBUNAL. 6.11 IN VIEW OF THE MY OBSERVATIONS AS ABOVE AS WEL L AS CONSIDERING THE REASONS PROVIDED BY THE CIT(A)-II, PUNE IN HIS ORDER EXTRACTED ABOVE WITH WHICH I AM IN FULL AGREEMENT, THIS ARGUM ENT OF THE APPELLANT IS ALSO HEREBY REJECTED. 6.12 THE NEXT CONTENTION OF THE APPELLANT IS THAT SHRI M.N.NAVALE WAS MAKING IMMENSE CONTRIBUTION TO THE MANAGEMENT O F THE AFFAIRS OF THE APPELLANT TRUST INCLUDING DAY TO DAY ADMINISTRAT ION, COORDINATION AND LIAISON, OBTAINING NECESSARY CLEARANCES FROM GOVERNMENT AUTHORITIES, ENTERING INTO AGREEMENTS, PURSUING LEG AL MATTERS, MANAGING THE FINANCIAL AFFAIRS, ACQUIRING PROPERTIE S, ARRANGING FINANCE, STANDING GUARANTEE FOR LOANS ETC. AS SUCH HE WAS SHOULDERING TREMENDOUS RESPONSIBILITIES THE VALUE O F WHICH WOULD NOT BE LESS THAN RS. 4,00,000/- PER MONTH AND THESE HA D TO BE CONSIDERED EVEN BY VERY CONSERVATIVE STANDARDS. CON SIDERING THESE FACTS, THE BENEFIT ACCRUING TO HIM BY WAY OF RENT W AS VERY MEAGER. THE DECISION OF THE HON'BLE MADRAS HIGH COURT IN CI T VS. SOCIETY OF IMMACULATE CONCEPTION 241 ITR 193, IS RELIED UPON. THIS ISSUE TOO WAS CONSIDERED BY CIT(A)-II, PUNE WHILE DECIDING TH E APPELLANT'S CASE FOR AY 2006-07. HAVING CONSIDERED THE ARGUMENT, THE LD. CIT(A) OBSERVED AS FOLLOWS: THE ASSESSING OFFICER HAS ALSO QUESTIONED THE JUST IFICATION GIVEN BY THE APPELLANT THAT SHRI M.N. NAVALE DUE TO HIS YEOMEN SERVICE RENDERED TO THE SOCIETY, WAS ENTITLED TO A SALARY OF MORE THAN RS.1 CRORE AND , THEREFORE, EVEN IF THIS RENT WAS EXCESSIVE, IT WAS COMPENSATED BY THE FACT THAT HE H AS FOREGONE SALARY FROM THE SOCIETY. THE ASSESSING OFFICER HAS RIGHTLY POINTED OUT THAT IF SUCH WAS THE CASE, THE APPELLAN T HAS TO FIRST ADMIT THAT THE RENT PAID WAS EXCESSIVE AND THEN ARG UE THAT THE EXCESS RENT PAID WAS IN LIEU OF SALARY. IT IS THUS INDIRECTLY ADMITTED IN THIS SUBMISSION THAT THE PROPERTIES ALS O BELONGED TO SHRI M.N. NAVALE HIMSELF, AS A COMPENSATION FOR THE SERVICES RENDERED BY HIM, IN LIEU OF THE SALARY WOULD OBVIO USLY NOT BE PAID TO THE BIGGER HUF; IN RESPECT OF WHICH THE CLA IM OF OWNERSHIP HAS BEEN MADE FROM TIME TO TIME. THE ASSE SSING OFFICER HAS ALSO POINTED OUT THAT THE JUSTIFICATION OF REMUNERATION OF MORE THAN RS.1 CORE IS ALSO NOT ACC EPTABLE AND SHRI M. N. NAVALE WAS ALREADY PAID SALARY BY TH E MANAGEMENT INSTITUTE WHICH WAS RUN BY THE APPELLANT SOCIETY WHICH WAS A FULL TIME JOB DONE BY HIM. IT IS FURTHE R STATED THAT IN RESPECT OF SOCIETY IT IS NOT EXPLAINED AS TO WHA T FULL TIME SERVICES WERE BEING RENDERED BY HIM APART FROM MAKI NG SOME GENERAL STATEMENTS. THE INSTITUTE AND THE SOCIETIES WERE HAVING OTHER FULL TIME EMPLOYEES, AND THE BOARDS OF TRUSTEES WERE HAVING 7 MEMBERS INCLUDING SHRI M.N. NAVALE. O N THIS COUNT, ALSO THE ASSESSING OFFICER COUNTERED ARGUMEN TS OF THE APPELLANT AND ALSO STATED THAT THE DECISION OF THE MADRAS HIGH 10 ITA NOS. 2075 TO 2077 & 2110/PUN/2014 ITA NOS. 15 TO 17/PUN/2015 A.YS.2007-08 TO 2009-10 COURT REPORTED IN 241 ITR 193 CITED BY THE APPELLAN T WAS NOT APPLICABLE. 6.13 HAVING CONSIDERED THE ABOVE OBSERVATIONS OF THE LD. CIT(A)-II, PUNE WHILE DISPOSING OF THE APPELLANTS CASE FOR A. Y 2006-07, I FIND MYSELF IN FULL AGREEMENT WITH HIM. IT IS A SELF DEF EATING ARGUMENT TO SAY THAT SINCE THE MANAGING TRUSTEE WAS MAKING A VA LUABLE CONTRIBUTION, THE TRUST FOUND A WAY TO COMPENSATE H IM BY PAYING EXCESS RENT FOR THE PROPERTIES OWNED BY HIM AND HIR ED BY THE TRUST. IT IS ALSO TRUE THAT THE CASE LAW RELIED UPON BY THE A PPELLANT IN HIS SUPPORT DOES NOT COME TO HIS RESCUE BY ANY STRETCH OF IMAGINATION. IN THAT CASE THE ISSUE AROSE VIS--VIS THE AMOUNT SPEN T BY A MISSIONARY ON MAINTENANCE OF NUNS WHO HAD TAKEN VOWS OF POVERT Y, WERE NOT SUPPOSED TO OWN ANY WORLDLY WEALTH, AND WERE NOT GE TTING ANY SALARY. HAVING CONSIDERED THESE FACTS, THE HON'BLE HIGH COURT OF MADRAS HELD THAT THE PROVISIONS OF S. 13(1)(C) COUL D NOT BE INVOKED IN RELATION TO THE AMOUNT SPENT ON THEIR MAINTENANCE. THERE ARE ABSOLUTELY NO PARALLELS BETWEEN THE FACTS OF THE CA SE AND THE PRESENT ONE. MOST SIGNIFICANTLY, AMOUNTS SPENT ON SUBSISTEN CE OF AN INDIVIDUAL CANNOT BE EQUATED WITH RENT PAID FOR HIR ING OF PROPERTIES. AS SUCH THIS ARGUMENT OFF THE APPELLANT IS HEREBY REJECTED. 6.14 THE NEXT CONTENTION OF THE APPELLANT IS THAT T HE APPELLANT'S CONTENTION THAT THE RENTS WERE REASONABLE IS BACKED BY VALUATION REPORTS OBTAINED FROM REGISTERED VALUER. I HAVE GIV EN CAREFUL CONSIDERATION TO THIS CONTENTION OF THE APPELLANT T HE APPELLANT HAS NOT SUBMITTED COPIES OF THE VALUATION REPORT UNDER REFE RENCE. THE POSSIBILITY OF THE APPELLANT HAVING OBTAINED A TAILOR-MADE REPORT TO JUSTIFY THE RENT PAID CANNOT BE RULED OUT. MOREOVER , I FIND THAT THERE IS NO LEGAL SANCTITY UNDER THE ACT FOR REFERRING THE F AIR RENT IN RESPECT OF PROPERTIES TO AN APPROVED VALUER. IN VIEW OF THESE FACTS, THIS CONTENTION OF THE APPELLANT IS ALSO HEREBY REJECTED . 6.15 THE NEXT CONTENTION OF THE APPELLANT IS THAT E VEN IF EXCESS RENT WAS PAID, AT THE MOST THE SAID AMOUNT COULD BE C ONSIDERED AS NOT HAVING BEEN APPLIED FOR CHARITABLE PURPOSE BUT CANN OT LEAD TO WHOLESALE DENIAL OF EXEMPTION. IN THIS REGARD, DECI SION OF THE HON'BLE DELHI HIGH COURT IN NASSCOM IS RELIED UPON, AS ALSO DECISION OF THE HON'BLE MADRAS HIGH COURT 110 ITR 364 AND THAT OF ITAT MUMBAI IN 136 ITR 355. I DO NOT FIND ANY MERIT IN THESE CO NTENTIONS OF THE APPELLANT FIND THAT THE 'DECISION OF THE HON DELHI HIGH COURT IN THE CASE OF NASSCOM HAS 'NO BEARING ON THE ISSUE AT HAND. THE DECISIONS IN THE OTHER CASES CITED BY THE APPELLANT ALSO TURNED ENTIRELY ON THEIR OWN FACTS ON THE OTHER HAND, IN A GAPPA CHILD CENTRE V. CIT [1997] 92 TAXMAN 327/2261TR 211 (KER.), WHER E THE ASSESSEE TRUST PURCHASED' A REFRIGERATOR EVEN BEFOR E THE TRUST BUILDINGS WERE COMPLETED AND KEPT IT AT THE DISPOSA L OF THE MANAGING TRUSTEE AND IT WAS FOUND THAT THE ASSESSEE NEVER CH ARGED ADEQUATE RENT OR OTHER COMPENSATION FROM THE TRUSTEE, THE HON. HIGH.COURT HELD THAT THE CASE WOULD BE HIT BY THE PROHIBITION CONTAINED IN SECTION 13(1)(C), AND THE ASSESSEE-TRUST WOULD NOT BE ENTITLED TO EXEMPTION UNDER SECTION 11. IT HAS BEEN HELD IN A L ARGE NUMBER OF OTHER CASES THAT EVEN IF A SMALL PORTION OF THE INC OME OF THE CHARITABLE TRUST ENSURES OR IS USED OR APPLIED FOR THE BENEFIT OF A PERSON SPECIFIED UNDER SECTION 13(3), THE ENTIRE INCOME OF THE TRUST IS DENIED EXEMPTION. CONSIDERING THE LEGAL POSITION EMERGING FROM THE CLEAR LANGUAGE OF THE STATUTE AS WELL AS THE CASE LAWS REFERRED TO, THIS CONTENTION OF THE APPELLANT IS ALSO HEREBY REJECTED. 11 ITA NOS. 2075 TO 2077 & 2110/PUN/2014 ITA NOS. 15 TO 17/PUN/2015 A.YS.2007-08 TO 2009-10 6.16 THE NEXT CONTENTION OF THE APPELLANT IS THAT THE PROVISIONS OF S.40A(II) HAVE BEEN WRONGLY INVOKED AND APPLIED BY THE AO WITHOUT BRINGING ON RECORD ANY COMPARABLE DATA REGARDING REASONABLENESS OF RENT. IN DOING SO HE HAS ALSO IGN ORED CBDT CIRCULAR NO.6-P OF 1968 DATED 06/07/1968 WHICH MANDATES THAT FAIR MARKET VALUE OF THE GOODS, LEGITIMATE NEEDS OF THE BUSINESS AND BENEFIT DERIVED ETC. I HAVE GIVEN CAREFUL CONSIDERATION TO THIS SUBMISSION OF THE APPELLANT. IN THE SAID CIRCULAR, THE BOARD HAD CONVEYED THAT WHILE INVOKING THE PROVISIONS OF THE SECTION THE ASSESSING OFFICER IS EXPECTED TO EXERCISE HIS JUDG MENT IN A REASONABLE AND FAIR MANNER AND THAT IT SHOULD BE BO RNE IN MIND THAT THE SECTION IS MEANT TO CHECK EVASION OF TAX T HROUGH EXCESSIVE OR UNREASONABLE PAYMENTS TO RELATIVES AND ASSOCIATE CONCERNS AND SHOULD NOT BE APPLIED IN THE MANNER WH ICH WILL CAUSE HARDSHIP IN BONAFIDE CASES. AS DISCUSSED IN T HE FOREGOING PARAGRAPHS, THE FACTS OF THE PRESENT CASE DO NOT SP EAK OF A SITUATION WHERE THE AO HAS ACTED IN THE MANNER IN W HICH CBDT HAS SPOKEN OF IN ITS CIRCULAR. FOR THE REASONS DISC USSED IN DETAIL IN THE SAID PARAGRAPHS, THE APPLICABILITY OF S. 13( 1)(C) IN THE APPELLANTS CASE IS HEREBY UPHELD. ACCORDINGLY, THE APPELLANT CANNOT DRAW ANY SUPPORT FROM THE SAID CIRCULAR. 6.17. IN VIEW OF THE DETAILED DISCUSSIONS ABOVE, TH E ADDITION MADE BY THE LD. AO VIS--VIS THE PROPERTIES AT FLAT S NO. 7, 8 & 9, GEETA BUILDING, SION, MUMBAI AND FIRM HOUSE AT NDA ROAD, WARJE, PUNE ARE HEREBY DELETED AND THE ADDITIONS IN RESPECT OF THE REMAINING PROPERTIES ARE CONFIRMED. FOR THE SAM E REASONS, THE APPLICABILITY OF S.13(1)(C) IN THE APPELLANTS CASE IS HEREBY UPHELD SINCE A PART OF THE INCOME OF THE INSTITUTION WAS U SED DURING P.Y FOR THE BENEFIT OF A PERSON REFERRED TO UNDER SECTI ON 13(1)(C). ACCORDINGLY, THESE GROUNDS MAY BE TREATED AS PARTLY ALLOWED. 8. AGGRIEVED BY THE ORDER OF CIT(A) ON THIS ISSUE, ASSES SEE AND REVENUE ARE NOW BEFORE US. ASSESSEES GROUND NO. 2 AND REVEN UES GROUND NO. 1 TO 3 & 5 ARE ON THE SAME ISSUE AND ARE THEREFORE CONSIDERED TOGETHER. 9. BEFORE US, LD AR REITERATED THE SUBMISSIONS MADE BEFOR E AO AND CIT(A). HE FURTHER SUBMITTED THAT IDENTICAL ISSUE WITH RESPE CT TO THE SAME PROPERTIES AROSE IN ASSESSEES CASE IN AY 2006-07 BEFOR E THE HONBLE TRIBUNAL AND THE HONBLE TRIBUNAL HAS DECIDED THE ISSUE IN ITS FAVOUR. HE POINTED TO PARA 87, 87.1 OF TRIBUNALS ORDER. HE FURTHER SU BMITTED THAT AS FAR AS THE ISSUE OF EXCESS RENT PAID TO MR. M.N. NAVALE O N ACCOUNT OF VIOLATION OF PROVISIONS OF SEC.13(1)(C) IS CONCERNED, IN AY 2006 -07, THE 12 ITA NOS. 2075 TO 2077 & 2110/PUN/2014 ITA NOS. 15 TO 17/PUN/2015 A.YS.2007-08 TO 2009-10 MATTER WAS SENT BACK TO CIT(A). HE THEREFORE SUBMITTED T HAT FOLLOWING THE ORDER OF TRIBUNAL FOR AY 2006-07, THE ISSUE BE DECIDED. LD DR ON THE OTHER HAND SUPPORTED THE ORDER OF AO. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT GROUNDS IS WITH RESPECT TO PAYMENT OF RENT TO SHRI M.N.NAVALE, THE TRUSTEE OF THE ASSESSEE AND INVOK ING OF PROVISIONS OF SECTION 13(1) OF THE ACT. WE FIND THAT IDENTICAL ISSUE ARO SE IN ASSESSEES CASE IN AY 2006-07 BEFORE THE CO-ORDINATE BENCH OF THE TRIBUNAL. THE CO- ORDINATE BENCH VIDE ORDER DATED 14.12.2016 DECIDED THE IS SUE BY OBSERVING AS UNDER: 82. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE PAP ER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIO US DECISIONS CITED BEFORE US. WE FIND THE ASSESSING OFFICER IN THE BODY OF T HE ASSESSMENT ORDER HAS HELD THAT THE ASSESSEE TRUST HAS GIVEN EXCESS RENT TO SHRI M.N. NAVALE ON ACCOUNT OF THE 3 PROPERTIES TAKEN ON RENT. ACCORDI NG TO THE ASSESSING OFFICER THE ASSESSEE TRUST HAS TAKEN ON RENT FLAT/OFFICE AT GOVIND CHAMBERS, KARVE ROAD, PUNE ON A MONTHLY RENT OF RS.75,000/-, THE FA RM HOUSE AT WARJE, NDA ROAD, PUNE ON A MONTHLY RENT OF RS.1,25,000/- AND F LAT NOS. 7,8, & 9 IN GEETA BUILDING, SION, MUMBAI ON A MONTHLY RENT OF R S.1,56,000/-. ACCORDING TO THE ASSESSING OFFICER THE FAIR RENT SH OULD BE EQUAL TO 7% PER ANNUM OF THE COST OF THE PROPERTY IN VIEW OF THE DE CISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF RADHA DEVI DALM IA REPORTED IN 125 ITR 134. WE FIND THE LD.CIT(A) ENHANCED SUCH FAIR RENT TO 9% OF THE COST OF PROPERTY. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE RENT PAID TO M.N. NAVALE (BIGGER HUF) IN RESPECT OF THE FIRST TWO PROPERTIES ARE OUTSIDE THE PURVIEW OF SECTION 13(1)(C). IT IS ALSO HIS SUBMISSION THAT THE CIT(A) IN ASSESSEES OWN CASE FOR A.Y. 2007-08 AND 2008-09 HAS HELD THAT THERE IS NO VIOLATION OF PROVISION OF SECTION 13(1) (C) ON ACCOUNT OF RENT PAID TO M.N. NAVALE (BIGGER HUF) IN RESPECT OF THE PROPERTI ES BEING FLAT NO.7, 8 AND 9 AT GEETA BUILDING, BOMBAY AND THE FARM HOUSE AT W ARJE. 83. WE FIND FORCE IN THE ABOVE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE. WE FIND THE CIT(A) IN ASSESSEES OWN CAS E FOR A.Y. 2008-09 VIDE ORDER DATED 14-10-2014 AT PARA 6.8 OF THE ORDER HAS OBSERVED AS UNDER : 6.8 THE FIRST CONTENTION OF THE APPELLANT IS THAT THE FARM HOUSE AT WARJE AND THE FLATS AT SION, MUMBAI, WHICH ARE AMON G THE PROPERTIES IN RESPECT OF WHICH EXCESS RENT IS STATED TO HAVE B EEN PAID TO THE MANAGING TRUSTEE, SHRI M. N. NAVALE, IN FACT BELONG ED NOT TO M. N. NAVALE (INDIVIDUAL) BUT TO THE M.N.NAVALA (BIGGER H UF) WHICH WAS NOT ONE OF THE PERSONS SPECIFIED IN S.13(3). THE APPEL LANTS CONTENTION IN 13 ITA NOS. 2075 TO 2077 & 2110/PUN/2014 ITA NOS. 15 TO 17/PUN/2015 A.YS.2007-08 TO 2009-10 THIS REGARD IS THAT THE AO HAD REJECTED THE APPELLA NTS CONTENTION REGARDING THE EXISTENCE OF THE M.N. NAVALE (BIGGER HUF). IN THIS REGARD IT IS POINTED OUT THAT ITAT PUNE IN ITS ORDE R DATED 30/03/2012 HAS SINCE UPHELD THE EXISTENCE OF THE BIGGER HUF AN D THEREFORE, THE VERY BASIS OF THE AOS REASONING IN INVOKING THE PR OVISIONS OF S. 13(1)(C) DOES NOT SURVIVE VIS-AVIS THESE PROPERTIES , NAMELY, FLATS NO. 7,8 &9, GEETA BUILDING, SION, MUMBAI AND THE PROPER TY AT WARJE (NDA ROAD). I HAVE GIVEN CAREFUL CONSIDERATION TO THIS CONTENTION OF THE APPELLANT. THE UNDERLYING FACTS HAVE BEEN DISCUSSE D AT GREAT LENGTH IN MY ORDER IN THE CASE OF M.N.NAVALE (INDIVIDUAL) FOR AY 2008 09. AS MENTIONED THEREIN, THE ISSUE OF EXISTENCE OF THE M.N.NAVALE (BIGGER HUF) AS WELL AS OWNERSHIP OF ASSETS BY THE HUF HAD TRAVELLED TO THE ITAT (PUNE BENCH) IN ITA NO. 149/PN/2010. IN THEIR ORDER DATED 30/03/2012, IN THAT CASE, THE JURISDICTIONAL BENCH OF HON'BLE. ITAT UPHELD THE EXISTENCE OF THE M.N.NAVALE (BIGGER HUF) IN THE EYES OF LAW, BUT LEFT THE ISSUE OF QUANTIFICATION OF THE IN COME GENERATED BY THE HUF OUT OF ITS AGRICULTURAL HOLDINGS TO THE LD. AO. THAT EXERCISE FOR QUANTIFICATION BY THE AO OF INCOME POTENTIALLY EARN ED BY THE HUF AND THE ASSETS ACQUIRED BY THE HUF OUT OF THE SAME, IS STILL UNDERWAY. FROM THE POINT OF VIEW OF THE ISSUE AT HAND, HOWEVE R, THE SIGNIFICANT FACT TO BE NOTED IS THAT THE ITAT CATEGORICALLY HEL D THAT THE COMPROMISE DECREE PASSED BY THE CIVIL COURT, PANDHA RPUR IS SACROSANCT AND BINDING UPON THE DEPARTMENT SO FAR AS THE QUANTITY ALLOCATED BY THE HON'BLE COURT, PANDARPUR ARE CONCE RNED:. HAVING PERUSED A COPY OF THE SAID COMPROMISE DECREE, I FIN D THAT THE PROPERTIES UNDER CONTENTION NAMELY, FLAT NO.7,8 & 9 , GEETA BUILDING, SION, MUMBAI AND THE PROPERTY AT WARJE (NDA ROAD) A RE LISTED AS PROPERTIES OF THE M.N. NAVALE (BIGGER HUF) WHICH HA VE BEEN PARTITIONED AMONG THE SMALLER HUFS. SUCH BEING THE FACTS, RESPECTFULLY FOLLOWING THE DECISION OF JURISDICTION AL BENCH OF ITAT WHICH STILL HOLDS THE FIELD NOTWITHSTANDING THE DEP ARTMENTS APPEAL BEFORE THE HON. HIGH COURT, I HEREBY UPHOLD THE APP ELLANTS CONTENTION AND DELETE THE ADDITION WORKED OUT BY TH E LD. AO ON ACCOUNT OF EXCESS RENT PAID TO THE BIGGER HUF. IT IS ALSO CORRECT THAT THE SAID BIGGER HUF DOES NOT STAND IN A RELATIONSHI P SPECIFIED UNDER SECTION 13(3) OF THE ACT. THEREFORE, THE PROVISION S OF SECTION 13(1)(C) WILL NOT BE ATTRACTED VIS--VIS THESE PROPERTIES. 6.9. . . . . . . . . . . . . . . . 6.17. IN VIEW OF THE DETAILED DISCUSSIONS ABOVE, TH E ADDITION MADE BY THE LD. ASSESSING OFFICER VIS--VIS THE PROPERTI ES AT FLATS NO.7,8 & 9, GEETA BUILDING, SION, MUMBAI AND FARM HOUSE AT N DA ROAD, WARJE, PUNE ARE HEREBY DELETED AND THE ADDITIONS IN RESPECT OF THE REMAINING PROPERTIES ARE CONFIRMED. FOR THE SAME R EASONS, THE APPLICABILITY OF S.13(1)(C) IN THE APPELLANTS CASE IS HEREBY UPHELD SINCE A PART OF THE INCOME OF THE INSTITUTION WAS U SED DURING THE PY FOR THE BENEFIT OF A PERSON REFERRED TO UNDER SECTI ON 13(1)(C). ACCORDINGLY, THESE GROUNDS MAY BE TREATED AS PARTLY ALLOWED. 84. WE FIND FOLLOWING THE ABOVE ORDER THE CIT(A) IN ASSESSEES OWN CASE FOR A.Y. 2007-08 AT PARA 6 AND 6.1 OF THE ORDER HAS OBSERVED AS UNDER : 14 ITA NOS. 2075 TO 2077 & 2110/PUN/2014 ITA NOS. 15 TO 17/PUN/2015 A.YS.2007-08 TO 2009-10 6. GROUNDS NO.1 (A) AND 2(C): UNDER THESE GROUNDS OF APPEAL IT IS CONTENDED THAT THE AO ERRED IN HOLDING THAT THE APPELLANT HAD CONTRAVENED THE PROVISIONS OF SECTION 13(1)(C) BY R EASON OF PAYMENT OF EXCESS RENT TO SHRI M. N. NAVALE AND THAT NO DISALL OWANCE UNDER SECTION 40A(2)(B) WAS CALLED FOR ON ACCOUNT OF THE RENTS PAID TO SHRI M.N.NAVALE. THIS GROUND IS IDENTICAL TO GROUND NO.1 (A) AND 2(B) OF APPEAL FOR AY. 2008-09. HENCE, THE RATIO OF DECISIO N FOR AY 2008-09 APPLIES EQUALLY TO THIS AY TOO. 6.1 IN VIEW OF THE DETAILED DISCUSSIONS IN MY ORDE R IN THE APPELLANT'S OWN CASE FOR AY 2008-09, THE ADDITION M ADE BY THE LD. AO VIS-A-VIS THE PROPERTIES AT FLATS NO.7, 8 & 9, G EETA BUILDING, SION, MUMBAI AND FARM HOUSE AT NDA ROAD, WARJE, PUNE ARE HEREBY DELETED AND THE ADDITIONS IN RESPECT OF THE REMAINI NG PROPERTIES ARE CONFIRMED. FOR THE SAME REASONS, THE APPLICABILITY OF S.13(1)(C) IN THE APPELLANT'S CASE IS HEREBY UPHELD SINCE A PART OF T HE INCOME OF THE INSTITUTION WAS USED DURING THE PY FOR THE BENEFIT OF A PERSON REFERRED TO UNDER SECTION 13(1)(C). ACCORDINGLY, THESE GROUN DS MAY BE TREATED AS PARTLY ALLOWED . 85. SINCE THE IMPUGNED ORDER OF CIT(A) WAS PRIOR TO THE ORDER OF CIT(A) FOR A.Y. 2007-08 AND 2008-09 AND SINCE THE REVENUE HAS NOT CHALLENGED THE ORDER OF CIT(A) ON THIS ISSUE FOR A.Y. 2007-08 AND 2008-09, THEREFORE, WE HOLD THAT THE ASSESSEE TRUST HAS NOT VIOLATED THE P ROVISIONS OF SECTION 13(1)(C) BY GIVING RENT TO M.N. NAVALE (BIGGER HUF) IN RESPECT OF THE PROPERTIES STATED AT FLAT NO.7, 8 AND 9, GEETA BUIL DING, BOMBAY AND PROPERTY AT WARJE. 86. SO FAR AS THE FIRST PROPERTY IS CONCERNED IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE FAIR RENT NEE DS TO BE DECIDED FROM THE VIEW POINT OF THE TENANT WHO PAYS THE RENT. ANY TE NANT FOR THAT PURPOSE WILL TAKE INTO CONSIDERATION UTILITY, LOCALITY, AVAILABI LITY, TOTAL AREA OF THE SAID PROPERTY ETC. ALTHOUGH THE ASSESSEE HAS SUBMITTED CERTAIN DETAILS SUCH AS VALUERS REPORT DURING THE APPELLATE STAGE, HOWEVER, WE FIND THE CIT(A) HAS NOT ACCEPTED THOSE ADDITIONAL EVIDENCES. IT IS ALS O HIS SUBMISSION THAT SINCE THE RENT GIVEN TO SHRI M.N. NAVALE ALTHOUGH MAY BE HIGHER ACCORDING TO THE ASSESSING OFFICER, HOWEVER, CONSIDERING THE SERVICE S RENDERED BY SHRI M.N. NAVALE TO THE TRUST FREE OF ANY REMUNERATION SHOULD HAVE ALSO BEEN CONSIDERED. 87. WE FIND THE CIT(A) HAS DIRECTED THE ASSESSING O FFICER TO ADOPT 9% OF THE COST OF THE PROPERTY AT KARVE ROAD AS REASONABL E RENT. WHILE DOING SO, HE HAS ALSO RELIED ON THE DECISION OF THE HONBLE A LLAHABAD HIGH COURT IN THE CASE OF SMT. RADHA DEVI DALMIA REPORTED IN 125 ITR 134. IN OUR OPINION, THE ABOVE DECISION IS NOT APPLICABLE TO TH E FACTS OF THE PRESENT CASE. IN THAT CASE, THE PROPERTY WAS VACANT AND FOR THE P URPOSE OF SECTION 22 OF THE I.T. ACT THE NOTIONAL ANNUAL VALUE WAS REQUIRED TO BE DECIDED U/S.23. UNDER THESE CIRCUMSTANCES THE ANNUAL VALUE OF THE P ROPERTY WAS DIRECTED TO BE DETERMINED AT 7% OF THE COST OF THE PROPERTY. H OWEVER, IN THE INSTANT CASE THE ASSESSEE HAD FILED CERTAIN DETAILS BEFORE THE CIT(A) FOR CALCULATION OF FAIR RENT OF THE PROPERTY WHICH HAS BEEN IGNORED BY HIM. UNDER THESE CIRCUMSTANCES AND IN THE INTEREST OF JUSTICE, WE DE EM IT PROPER TO RESTORE THIS ISSUE TO THE FILE OF THE CIT(A) WITH A DIRECTION TO ADJUDICATE THIS ISSUE IN THE LIGHT OF FACTS AND SUBMISSIONS MADE AND THE ADDITIO NAL EVIDENCES FILED BEFORE HIM. THE CIT(A) SHALL GIVE DUE OPPORTUNITY O F BEING HEARD TO THE ASSESSEE AND DECIDE THE ISSUE AS PER FACT AND LAW. WE HOLD AND DIRECT 15 ITA NOS. 2075 TO 2077 & 2110/PUN/2014 ITA NOS. 15 TO 17/PUN/2015 A.YS.2007-08 TO 2009-10 ACCORDINGLY. 87.1 WE MAY ALSO CLARIFY HERE THAT ONLY THE EXCESS FAIR RENT, IF ANY, WHICH IS DETERMINED WILL BE SUBJECT TO TAX AT THE MAXIMUM MARGINAL RATE AND THERE CANNOT BE WHOLESALE DENIAL OF EXEMPTION FOR VIOLATI ON OF PROVISIONS OF SECTION 13(1)(C) ON ACCOUNT OF EXCESS RENT, IF ANY, PAID TO SHRI M.N. NAVALE. THE ADDITIONAL GROUND BY THE ASSESSEE IS ACCORDINGLY AL LOWED AND GROUND OF APPEAL NO.6 IS ALLOWED FOR STATISTICAL PURPOSES. SINCE THE ISSUE WHICH IS RAISED IS IDENTICAL TO THE ISSUE IN A .Y.2006- 07, WE, THEREFORE, REMIT THE ISSUE BACK TO THE FILE OF CIT(A) TO DECIDE THE SAME IN THE LIGHT OF OUR DIRECTION IN A.Y.2006-07. NEEDLESS TO STATE THAT CIT(A) SHALL GRANT REASONABLE OPPORTUNITY OF HEARING TO BO TH THE PARTIES AND DECIDE THE ISSUE AS PER FACTS AND IN ACCORDANCE WITH LAW. THUS, GROUND OF APPEAL NO. 2 RAISED BY ASSESSEE IS DISMISSED BUT LINKED GROUND OF APPEAL NOS. 1 AND 2 RAISED BY THE REVENUE IS ALLOWED AN D THE ISSUE IS SENT TO THE FILE OF CIT(A). GROUND OF APPEAL NOS. 3 AND 5 RA ISED BY THE REVENUE ARE RELATED ISSUE AND SINCE THE MATTER IS REMIT TED BACK FOR VERIFICATION, THE SAME BECOME ACADEMIC. 11. GROUND NO 3 OF ASSESSEES APPEAL AND GROUND NO 4 O F REVENUES APPEAL ARE INTERCONNECTED AND ARE WITH REGARD TO ACQUIS ITION OF SHARES WHICH WERE HELD TO BE IN CONTRAVENTION OF PROVISIONS OF SEC TION 13(1)(D) OF THE ACT. 11.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER ASKED THE ASSESSEE TO SUBMIT THE DETAILS OF INVESTMENTS MADE BY IT TO WHICH ASSESSEE SUBMITTED THE DETAILS OF SHARES ACQUIRED A ND INTER-ALIA SUBMITTED THAT IT HAD PAID RS. 1.50 LACS FOR ACQUISITION OF SH ARES. IT WAS FURTHER SUBMITTED THAT THE SHARES OF THE COOPERATIVE BA NKS WERE ACQUIRED FOR AVAILING LOAN FACILITIES FROM THOSE BANKS AND THUS IT WAS FOR THE INTEREST 16 ITA NOS. 2075 TO 2077 & 2110/PUN/2014 ITA NOS. 15 TO 17/PUN/2015 A.YS.2007-08 TO 2009-10 OF THE ASSESSEE AND THEREFORE THE PROVISIONS OF SECTION. 13(1)(D) WAS NOT ATTRACTED. THE SUBMISSIONS OF THE ASSESSEE WERE NOT FOUN D ACCEPTABLE TO ASSESSING OFFICER. ASSESSING OFFICER WAS OF THE VIEW THAT ASSE SSEE HAD VIOLATED THE PROVISIONS OF SECTIONS 11(2) R.W.S 11(5) OF THE AC T AND THAT THE BENEFITS AVAILABLE TO A TRUST ARE NOT ALLOWABLE TO ASSESSEE BY VIRTUE OF THE PROVISIONS OF SECTION 13(1)(D) OF THE ACT AND ACCORDINGLY, THE ASSESS EE TRUST IS TO BE ASSESSED AS AOP. AGGRIEVED BY THE ORDER OF AO , ASSESSEE CARRIED THE MATTER BEFORE CIT(A) WHO, FOLLOWING HIS ORDER FOR AY 2008 -09 GRANTED PARTIAL RELIEF TO THE ASSESSEE BY OBSERVING AS UNDER: 7. GROUND NO. 1(B): UNDER THIS GROUND OF APPEAL, TH E APPELLANT HAS CHALLENGED THE AOS ACTION OF HOLDING THAT THE APPE LLANT HAD CONTRAVENED THE PROVISIONS OF S. 13(1)(D) FOR THE R EASON OF INVESTMENT IN SHARES OF COOPERATIVE BANKS AND PUBLIC LIMITED CO MPANIES. UPON CLOSER PERUSAL IT IS SEEN THAT THIS GROUND IS IDENT ICAL TO GROUND NO. 1(B) FOR A.Y. 2008-09. HENCE, THE RATIO OF DECISION FOR A.Y 2008-09 APPLIES EQUALLY TO THIS AY TOO. 12. WHILE DECIDING THE ISSUE FOR A.Y 2008-09, THE LD. CIT(A) H AS OBSERVED AS UNDER: 7.8 THE NEXT ISSUE THEREFORE IS APPLICABILITY OF TH E SAID PROVISION, NAMELY, S. 13(1) (D) VIS--VIS SHARES HELD IN PUBLI C LIMITED COMPANIES. IN THIS REGARD, THE APPELLANT VIDE SUBMI SSION DATED 14.03.2012 HAS ENCLOSED A LIST OF THE SHARES ACQUIR ED. IT IS CONTENTED THAT THERE ARE THE SHARES OF DIFFERENT COMPANIES HA VING DIFFERENT ACTIVITIES. THE QUANTITY OF THE SHARES ACQUIRED WAS HARDLY IN THE RANGE OF 1 TO 5 SHARES. THE TOTAL COST INVESTED RS. 1,50,000/- AS AGAINST THE TOTAL OUTLAY OF THE APPELLANT INSTITUTI ON OF RS.413.56 CRORE. FROM THIS , THE APPELLANT STATES, IT IS CRYS TAL CLEAR THAT THE COST OF SHARES IN PUBLIC LIMITED CO. IS TOO MINISCULE IN COMPARISON TO THE TOTAL OUTLAY AND THEREFORE THE COST OF THESE SHARES BY ANY STANDARD CANNOT BE CONSIDERED AS INVESTMENT. IT IS FURTHER C ONTENDED AS FOLLOWS: MOREOVER WE HAVE ALREADY EXPLAINED THE PROPRIETY O F ACQUIRING THESE SHARES THAT BEING UNDISPUTEDLY DIRE CTLY CONNECTED WITH THE OBJECTS OF THE INSTITUTION. THIS IS THE CAPITAL EXPENDITURE INCURRED FOR FURTHERANCE OF THE OBJECT OF THE TRUST SIMILAR TO MAKING DEPOSITS FOR AVAILING ELECTRICITY CONNECTION, WATER CONNECTION, TELEPHONE CONNECTION OR ACQUIRING PROPERTY ON HIRE BY MAKING SECURITY DEPOSIT ETC. THEREFORE S HARES IN PUBLIC LIMITED COMPANIES CANNOT BE CONSIDERED AS ACQ UIRED AS INVESTMENT IN CONTRAVENTION OF SEC.13(1)(D). 17 ITA NOS. 2075 TO 2077 & 2110/PUN/2014 ITA NOS. 15 TO 17/PUN/2015 A.YS.2007-08 TO 2009-10 7.9 I HAVE CONSIDERED THE ABOVE SUBMISSIONS OF THE APPELLANT. IN VIEW OF THE FACTS MENTIONED IN PARA 7.8 ABOVE, I DO NOT FIND THE CONTENTION OF THE APPELLANT ACCEPTABLE ON THIS ISSUE. HOWEVER, THE ALTERNATE CONTENTION OF THE APPELLANT THAT DENIAL OF EXEMPTIO N HAS TO BE RESTRICTED TO THE RELATABLE INCOME ONLY HAS TO BE A CCEPTED IN VIEW OF THE CATEGORICAL OBSERVATION OF THE JURISDICTIONAL BENCH OF THE TRIBUNAL IN PARA 28 OF ITA NO. 113/PN/10 IN THE APPELLANTS OWN CASE FOR 1999-200. 7.10 THE AO IS DIRECTED ACCORDINGLY. IN VIEW OF THE ABOVE DECISION WITH REGARD TO INVESTMENT IN SHARES OF CO-OPERATIVE SOCIETY AND SHARES OF PUBLIC LIMITED COMPANIES, THIS GROUND OF APPEAL MAY BE TREATED AS PARTLY ALLOWED. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE AND REVENUE A RE NOW IN APPEAL BEFORE US. 13. BEFORE US, LD AR REITERATED THE SUBMISSIONS MADE BEFO RE ASSESSING OFFICER AND CIT(A) AND FURTHER SUBMITTED THAT THE QUANTITY OF SHARES OF EACH OF THE COMPANIES RANGE FROM 1 TO 5 SHARES AND THU S THERE IS NO PROFIT MOTIVE FOR ACQUISITION OF SHARES. ON THE CONTRARY, THE EXPE NSE INCURRED IS FOR FURTHERANCE OF THE OBJECTS OF THE TRUST AND THEREFOR E, IT IS AN APPLICATION OF INCOME. HE FURTHER SUBMITTED THAT IDENTICAL ISSUE AROSE IN ASSESSEES OWN CASE IN A.Y. 2006-07 AND WHILE DECIDING THE ISSUE, THE CO-ORDINATE BENCH OF THE TRIBUNAL HAS HELD THAT THERE CANNOT BE WH OLESALE DENIAL OF EXEMPTION OF THE ENTIRE INCOME AND AT THE MOST DIVIDEND O N SHARES WOULD LOSE THE BENEFIT OF EXEMPTION. HE POINTED TO THE RELEVANT FINDINGS OF THE ORDER. HE THEREFORE SUBMITTED THAT SINCE THE FACTS OF THE CASE IN THE YEAR UNDER APPEAL ARE IDENTICAL TO THAT OF AY 2006-07, FOLLOWING T HE ORDER OF THE AY 2006-07, THE GROUND BE ALLOWED. LD DR ON THE OTHER H AND SUPPORTED THE ORDER OF ASSESSING OFFICER AND FURTHER SUBMITTED THAT ONCE THERE WAS VIOLATION OF THE PROVISIONS OF SECTION.13(1)C) RWS 13(2)(A) TO 13 (2)(H) OF THE ACT, FOR DIVERSION OF INCOME OR PART OF THE INCOME FOR THE BENEFIT OF THE INTERESTED PERSONS AS PRESCRIBED UNDER SECTION 13(3) OF THE ACT, THE 18 ITA NOS. 2075 TO 2077 & 2110/PUN/2014 ITA NOS. 15 TO 17/PUN/2015 A.YS.2007-08 TO 2009-10 ASSESSEE WOULD FORFEIT THE BENEFIT OF EXEMPTION UNDER SECTIO N 11 AND 12 OF THE ACT ON THE ENTIRE INCOME AND NO BENEFIT OF APPLICATION OF INCOME CAN B E GIVEN. 14. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL ON RECORD. WE FIND THAT IDENTICAL ISSUE AROSE IN ASSESSEES OW N CASE IN A.Y 2006-07 AND THE ISSUE WAS DECIDED BY THE CO-ORDINATE B ENCH OF THE TRIBUNAL BY OBSERVING AS UNDER: 128. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE PAP ER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND THE ASSESSEE IN THE INSTA NT CASE IS HOLDING 220 SHARES RANGING FROM 1 TO 15 IN DIFFERENT LIMITED BLU E-CHIP COMPANIES. ALTHOUGH THE ASSESSING OFFICER HAS NOT DISCUSSED TH E ISSUE IN THE BODY OF THE ASSESSMENT ORDER, HOWEVER, ON THE BASIS OF THE INFORMATION PROVIDED BY THE ASSESSING OFFICER IN THE REMAND REPORT FOR THE PRECEDING ASSESSMENT YEARS THE CIT(A) OBSERVED THAT THE ASSESSEE HAS VIO LATED THE PROVISIONS OF SECTION 13(1)(D) OF THE I.T. ACT BY INVESTING IN SH ARES IN THE LISTED BLUE CHIP COMPANIES. THEREFORE, THE ASSESSEE IS NOT ENTITLED TO THE BENEFIT OF PROVISIONS OF SECTION 11. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE TRUST IS CONDUCTING COUR SES ON BUSINESS MANAGEMENT NAMELY, MBA, MCA, DBM ETC. FOR WHICH THE AUDITED ACCOUNTS OF DIFFERENT COMPANIES ARE REQUIRED FOR THE BENEFIT OF THE STUDENTS AND THEREFORE CONSIDERING THE MINISCULE AMOUNT INVESTED IN THE SHARES OF THESE COMPANIES FOR RS.1,50,000/- IT CAN BE CONSIDERED AS APPLICATION OF INCOME AND NOT AN INVESTMENT. IT IS ALSO HIS ALTERNATE SU BMISSION THAT THERE CANNOT BE WHOLESALE DENIAL OF EXEMPTION U/S.11 AND AT THE MOST THE DIVIDEND EARNED ON THESE SHARES SHOULD LOSE THE BENEFIT OF E XEMPTION. 129. WE FIND SOME FORCE IN THE ALTERNATE ARGUMENT O F THE LD. COUNSEL FOR THE ASSESSEE. THE PUNE BENCH OF THE TRIBUNAL IN AS SESSEES OWN CASE IN ITA NO.113/PN/2010 ORDER DATED 18-03-2011 FOR A.Y. 2009-10 AT PARA 28 OF THE ORDER HAS HELD THAT DENIAL OF EXEMPTION HAS TO BE RESTRICTED TO THE RELATABLE INCOME IN VIEW OF THE SPECIFIC PROVISIONS OF THE PROVISO TO SECTION 164(2) OF THE ACT AS EXPLAINED BY THE BINDING JURIS DICTIONAL HIGH COURT JUDGMENT IN THE CASE OF SHETH MAFATLAL GAGALBHAI FO UNDATION TRUST (SUPRA) AND IN PRINCIPLE THE DENIAL CANNOT BE EXTENDED TO O THER INCOME OF THE TRUST. IT WAS ALSO BROUGHT TO OUR NOTICE THAT RELYING ON T HE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2009-10 THE CIT(A) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE FOR A.Y. 2008-09 BY OBSERVIN G AS UNDER : 7.9 I HAVE CONSIDERED THE ABOVE SUBMISSIONS OF THE APPELLANT. IN VIEW OF THE FACTS MENTIONED IN PARA 7.8 ABOVE, I DO NOT FIND THE CONTENTION OF THE APPELLANT ACCEPTABLE ON THIS ISSU E. HOWEVER, THE ALTERNATE CONTENTION OF THE APPELLANT THAT DENIAL O F EXEMPTION HAS TO BE RESTRICTED TO THE RELATABLE INCOME ONLY HAS TO B E ACCEPTED IN VIEW OF THE CATEGORICAL OBSERVATION OF THE JURISDICTIONA L BENCH OF THE TRIBUNAL IN PARA 28 OF ITA NO.113/PN/2010 IN THE AP PELLANTS OWN 19 ITA NOS. 2075 TO 2077 & 2110/PUN/2014 ITA NOS. 15 TO 17/PUN/2015 A.YS.2007-08 TO 2009-10 CASE FOR 1999-2000. 7.10 THE AO IS DIRECTED ACCORDINGLY. IN VIEW OF T HE ABOVE DECISION WITH REGARD TO INVESTMENT IN SHARES OF CO-OPERATIVE SOCIETY AND SHARES OF PUBLIC LIMITED COMPANIES, THIS GROUND OF APPEAL MAY BE TREATED AS PARTLY ALLOWED. 130. WE FIND THE CIT(A) HAS ALSO FOLLOWED THE SAME V IEW IN A.Y. 2007-08. IT WAS BROUGHT TO OUR NOTICE BY THE LD. AUTHORISED REPRESENTATIVE THAT THE REVENUE HAS NOT GONE ON APPEAL ON THIS ISSUE. 131. WHILE DECIDING THE ADDITIONAL GROUND NO.3 WE H AVE ALREADY HELD THAT THERE CANNOT BE WHOLESALE DENIAL OF EXEMPTION OF TH E ENTIRE INCOME OF THE ASSESSEE AND AT THE MOST DIVIDEND ON SHARES WOULD L OSE THE BENEFIT OF EXEMPTION. IN VIEW OF THE ABOVE, WE RESTORE THE IS SUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO FIND OUT THE DIVIDEND INCOME, IF ANY, OUT OF THESE SHARES INCLUDING THAT OF VALUE OF BONU S SHARES THAT WERE RECEIVED/OBTAINED DURING THE YEAR AND BRING THE SAM E TO TAX. WE HOLD AND DIRECT ACCORDINGLY. GROUND OF APPEAL NO.8 BY THE A SSESSEE IS ACCORDINGLY PARTLY ALLOWED FOR STATISTICAL PURPOSES. 15. BEFORE US, THE SUBMISSION OF THE LD AR THAT THE FACTS IN THE YEAR ARE IDENTICAL TO THAT OF AY 2006-07 HAS NOT BEEN CONTROVER TED BY REVENUE. FURTHER, REVENUE HAS NOT POINTED ANY DISTINGUISHING FEATU RE IN THE FACTS OF THE PRESENT CASE AND THAT OF AY 2006-07. WE FIND THAT T HE CO-ORDINATE BENCH WHILE DECIDING THE APPEAL IN A.Y.2006-07 HAS RESTOR ED THE ISSUE BACK TO THE FILE OF AO TO FIND OUT THE DIVIDEND INCOME, IF ANY THAT WERE RECEIVABLE /OBTAINED BY THE ASSESSEE AND BRING THE SAME TO TAX. FOLLOWING THE SAME PARITY OF REASONING AS IN A.Y.2006-07 WITH SPECIA L REFERENCE TO PARA 131, THE GROUND OF APPEAL NO.3 RAISED BY ASSESSEE I S, THUS, PARTLY ALLOWED FOR STATISTICAL PURPOSE. 15.1 NOW, COMING TO THE LINKED GROUND OF APPEAL NO. 4 RAISED BY REVENUE WHICH IS AGAINST THE ORDER OF CIT(A) IN HOLDING THAT THE INVESTMENT IN SH ARE IN CO-OPERATIVE SOCIETY ARE COVERED UNDER SECTION 13(1)(D) OF THE ACT. THE TRIBUNAL VIDE PARA 122 AND 123 HAD HELD AS UNDER: 20 ITA NOS. 2075 TO 2077 & 2110/PUN/2014 ITA NOS. 15 TO 17/PUN/2015 A.YS.2007-08 TO 2009-10 122. SIMILAR VIEW HAS BEEN TAKEN BY THE TRIBUNAL IN TH E CASE OF PATANGRAO KADAM PRATISTHAN VS. DCIT AND VICE VERSA VIDE ITA NO. 289/PN/2011 AND 312/PN/2011 DATED 31.12.2012 AND VARI OUS OTHER DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE. WE FURTHER FIND THE CIT(A) FOLLOWING THE DECISION OF HON'B LE BOMBAY HIGH COURT IN THE CASE OF VIKHE PATIL FOUNDATION (SUPRA.) HAS HELD IN HIS ORDER FOR A.Y.2008-09 IN ASSESSEES OWN CASE THAT SECTI ON 13(1)(D) CANNOT BE INVOKED, VIS--VIS THE INVESTMENT IN SHARE OF CO-OPERATIVE SOCIETY.THE RELEVANT OBSERVATION OF LD. CIT(A) AT PARA 7.7 OF HIS ORDER READS AS UNDER: 7.7 IT IS EVIDENT FROM THE ABOVE EXTRACT THAT WHILE DISMISSING THE DEPARTMENTS APPEAL, THE HON' HIGH COURT KEPT IN V IEW (I) THAT TRIBUNAL HAD RECORDED A FINDING OF THAT FACT TH AT THE SHARES WERE SUBSCRIBED TO ONLY FOR PURPOSES OF OBTAINING TH E LOAN AND THE AMOUNTS SO OBTAINED WERE USED FOR FURTHERANCE OF THE OBJECT OF THE TRUST, (II) ON IDENTICAL FACTS, THE REVENUE HAS GRANTED THE BENEFIT OF EXEMPTION UNDER SECTION 11/12 OF THE ACT FOR THE ASSESSMENT YEARS 2006-07, 2009-10, 2010-11 AND 2011-12 ON SCRUTINY ASSESSMENT UNDER SECTION 143(3) OF THE ACT, AND MOST SIGNIFICANTLY, (III) THAT THE FINDINGS OF THE TRIBUNAL IS A FINDINGS OF FACT AND THEREFORE THE PROPOSED QUESTION OF LAW COULD NOT BE ENTERTAINED. COMPARABLE FACTS DO NOT EXIST IN THE PRE SENT CASE. NEVERTHELESS, IT IS TRUE THAT THE HON'BLE HIGH COURT, W HICH IS THE JURISDICTIONAL HIGH COURT, HAS CATEGORICALLY OBSE RVED THAT INVESTMENT IN SHARES OF CO-OPERATIVE BANKS WHICH IS A PRE- CONDITION FOR RAISING OF LOANS IS NOT AN INVESTMENT AS NORMALLY UNDERSTOOD. IT IS ALSO TRUE THAT THERE IS NO ADVERSE FINDING OF FACT IN THE IMPUGNED ASSESSMENT ORDER EITHER AS REGA RDS THE FACT THAT THE INVESTMENT WERE UTILIZED FOR THE OBJE CTS OF THE TRUST. IN VIEW OF THESE FACTS, I FIND THE CONTENTION OF THE APPELLANT ACCEPTABLE AND ACCORDINGLY, HOLD THAT SECTION 13(1)(D) C ANNOT BE ALLOWED INVOKED VIS A VIS THE INVESTMENTS IN SHARES O F CO- OPERATIVE SOCIETY. 123. IN THE INSTANT CASE ALSO THE LD. COUNSEL FOR THE A SSESSEE SUBSTANTIATED THAT THE SHARES WERE OBTAINED ON ACCOU NT OF LOANS AVAILED. HE HAS ALSO FILED A CHART SHOWING THAT AFTER T HE LOANS WERE REPAID, THE SHARES WERE SUBSEQUENTLY REDEEMED IN MAY 2010 AND JULY 2010. THEREFORE, CONSIDERING THE TOTALITY OF THE F ACTS OF THE CASE AND RELYING ON THE DECISION OF HON'BLE BOMBAY HIGH COURT CITED (SUPRA), WE HOLD THAT THE ASSESSEE HAS NOT VIOLATED TH E PROVISIONS OF SECTION 13(1)(D) BY INVESTING IN SHARES OF COOPERATIV E BANKS FROM WHICH IT HAS TAKEN LOANS. THEREFORE, THE ASSESSEE CANN OT BE DENIED THE BENEFIT OF SECTION 11. GROUND RAISED BY THE ASSE SSEE IS ACCORDINGLY ALLOWED. PROVISIONS OF SECTION 13(1)(D) CANNOT BE INVOKED VIS--VIS INV ESTMENT IN SHARE IN CO-OPERATIVE SOCIETY. SINCE THE ASSESSEE HAS NOT VIOLATED THE PROVISIONS OF SECTION 13(1)(D) OF THE ACT, THE ASSESSEE CANNO T BE DENIED THE 21 ITA NOS. 2075 TO 2077 & 2110/PUN/2014 ITA NOS. 15 TO 17/PUN/2015 A.YS.2007-08 TO 2009-10 BENEFIT OF SECTION 11 OF THE ACT. FOLLOWING THE SAME PARITY OF REASONING AS HELD WHILE DECIDING THE ASSESSEES APPEAL IN A.Y.2006-07, WE UPHOLD THE ORDER OF CIT(A) AND THUS, THE GROUND OF APPEAL NO.4 RAISE D BY REVENUE IS DISMISSED. 16. GROUND NO.4 OF ASSESSEES APPEAL IS WITH REGARD TO DISALLOWANCE OF EXPENDITURE FOR IT BEING OF PRIOR PERIOD. 16.1 THE LD.CIT(A) IN HIS ORDER ON PAGE 11 HAS NOTED THA T IT WAS ASSESSEES CONTENTION THAT THE ADDITION OF RS.70,50,000/- ON ACCOUNT OF PRIOR PERIOD EXPENSES WAS MADE BY THE ASSESSING OFFICER O N THE BASIS OF THE REPORT OF SPECIAL AUDITOR APPOINTED UNDER SEC.142(2A) O F THE ACT. IT WAS CONTENTED BEFORE ASSESSING OFFICER THAT THOUGH THE EXPENDITURE RELATED TO EARLIER PERIOD BUT SINCE THE LIABILITY FOR THE EXPE NSES CRYSTALLIZED DURING THE YEAR, THE EXPENSES WERE ALLOWABLE. THE SUBMISS IONS OF THE ASSESSEE WERE NOT FOUND ACCEPTABLE TO ASSESSING OFFICER AND THEREFORE HE DISALLOWED THE EXPENSES. AGGRIEVED BY THE ORDER OF ASSESS ING OFFICER, ASSESSEE CARRIED THE MATTER BEFORE CIT(A) WHO UPHELD THE ORDER OF ASSESSING OFFICER BY OBSERVING AS UNDER: 9.2 I HAVE GIVEN CAREFUL CONSIDERATION TO THE APPE LLANTS SUBMISSIONS. UPON PERUSAL OF THE ORDER OF JURISDICT IONAL BENCH IN THE APPELLANTS CASE FOR 1999-2000, HOWEVER, I DO NOT F IND THAT THE ISSUE HAS ARISEN FOR THAT AY AND THAT THE HON'BLE TRIBUN AL HAD SET IT ASIDE TO THE AO FOR VERIFICATION AS CLAIMED BY THE APPELL ANT. IN ANY CASE, THE LD. AR HAS HIMSELF SUBMITTED THAT THE ISSUE HAS NO TAX IMPACT. ACCORDINGLY, FOR WANT OF ANY SUBMISSIONS ON MERITS, THIS GROUND IS HEREBY DISMISSED. AGGRIEVED BY THE ORDER OF LD CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US. 22 ITA NOS. 2075 TO 2077 & 2110/PUN/2014 ITA NOS. 15 TO 17/PUN/2015 A.YS.2007-08 TO 2009-10 17. BEFORE US, LD AR REITERATED THE SUBMISSIONS MADE B EFORE CIT(A) AND SUBMITTED THAT SINCE THE LIABILITY CRYSTALLIZED DURING THE YEA R, THE EXPENSES BE ALLOWED. HE FURTHER SUBMITTED THAT IDENTICAL ISSUE AROSE IN ASSESSEES CASE IN AY 2006-07 AND THE HONBLE TRIBUNAL DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BUT HOWEVER FOR VERIFICATION OF THE CLAIM RE MITTED THE ISSUE TO AO. HE POINTED TO THE RELEVANT PARAS 159 TO 162 OF T HE TRIBUNAL AND SUBMITTED THAT SINCE THE ISSUE UNDER THE YEAR IN CONSIDERATION IS SIM ILAR TO THAT OF AY 2006-07, THEREFORE, WITH SIMILAR DIRECTIONS, THE MATTER MAY BE REMITTED TO AO. LD DR DID NOT CONTROVERT THE SUBMISSIONS OF LD AR BUT HOWEVER SUPPORTED THE ORDER OF CIT(A). 18. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT GROUND IS WITH RESPECT TO ALLOWABILITY OF PRIOR PERIOD EXPENSES WHICH WERE DISALLOWED BY AO AND CI T(A). WE FIND THAT IDENTICAL ISSUE AROSE IN ASSESSEES CASE IN AY 2006- 07. THE CO- ORDINATE BENCH OF TRIBUNAL, BY FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. NAGRI MILLS (33 ITR 681) A ND AHMEDABAD BENCH OF TRIBUNAL IN THE CASE OF ACIT VS. HOME & LIFE SOLU TIONS (INDIA) LTD (41 TAXMANN.COM) REMITTED THE MATTER BACK TO THE AO . THE RELEVANT OBSERVATIONS OF THE TRIBUNAL IN AY 2006-07 AS UNDER: 159. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE B Y BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE PAP ER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIO US DECISIONS CITED BEFORE US. WE FIND ON THE BASIS OF THE RECASTED FINAL ACC OUNTS BY THE SPECIAL AUDITORS THE ASSESSING OFFICER DISALLOWED AN AMOUNT OF RS.94,84,854/- ON ACCOUNT OF PRIOR PERIOD EXPENSES DEBITED DURING THE YEAR. SINCE THE ASSESSEE HAD NOT TAKEN ANY GROUND BEFORE THE CIT(A) THE SAME WAS NOT ADJUDICATED BY HIM. SINCE THE ASSESSEE HAS TAKEN T HIS GROUND FOR THE FIRST TIME BEFORE THE TRIBUNAL, THEREFORE, FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF BROKERS AND SHAREH OLDERS PVT. LTD. (SUPRA) THE SAME IS ADMITTED. 160. IT IS THE CASE OF THE LD. COUNSEL FOR THE ASSE SSEE THAT THE ASSESSEE 23 ITA NOS. 2075 TO 2077 & 2110/PUN/2014 ITA NOS. 15 TO 17/PUN/2015 A.YS.2007-08 TO 2009-10 HAS GIVEN FULL DETAILS OF THE PRIOR PERIOD EXPENSES AS PER PAGES 14 AND 73 TO 110 OF THE PAPER BOOK NO.3. ACCORDING TO THE LD. C OUNSEL FOR THE ASSESSEE AS LONG AS THESE EXPENSES ARE OTHERWISE ALLOWABLE I T DOES NOT MAKE ANY DIFFERENCE EVEN IF THESE ARE CLAIMED AND ALLOWED IN A.Y. 2006-07. WE FIND THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS . NAGRI MILLS COMPANY LTD. REPORTED IN 33 ITR 681 THE HONBLE HIGH COURT HAS OBSERVED AS UNDER (SHORT NOTES) : WHERE A COMPANY WHICH MAINTAINED ITS ACCOUNTS ON T HE MERCANTILE BASIS DID NOT MAKE ANY ENTRY TOWARDS BONUS FOR THE CALENDAR YEAR I95I, BUT, ON A DISPUTE REGARDING BONUS PAYABLE TO THE WO RKERS FOR THAT YEAR BEING REFERRED TO THE CONCILIATION BOARD, THE BOARD , BY ITS AWARD IN JUNE, I952, DIRECTED THE COMPANY TO PAY BONUS OUT OF THE PROFITS FOR THAT YEAR, AND THE COMPANY IN MAKING THE RETURN CLAIMED TO DED UCT FOR THE YEAR I95I, THE BONUS WHICH IT DISTRIBUTED IN DECEMBER, I 952, AGAINST THE LAST ITEM OF PART IV OF THE INCOME-TAX RETURN: HELD, THAT AS UNDER SECTION 10(5) OF THE INCOME-TAX ACT ACTUAL PAYMENT WAS NOT NECESSARY FOR THE PURPOSE OF DEDUCTION AND IT WAS SUFFICIENT IF THE LIABILITY TO BONUS WAS INCURRED ACCORDING TO TH E METHOD OF ACCOUNTING UPON THE BASIS OF WHICH THE PROFITS OR GAINS WERE C OMPUTED, THE COMPANY WAS ENTITLED TO THE DEDUCTION UNDER SECTION 10(2)(X) OF THE BONUS PAID FROM THE PROFITS FOR THE YEAR I95I, EVEN THOUGH THE AMOUNT HAD NOT BEEN ENTERED IN ITS ACCOUNTS FOR THAT YEAR. 161. WE FIND THE AHMEDABAD BENCH OF THE TRIBUNAL IN THE CASE OF HITACHI ACIT VS. HOME AND LIFE SOLUTIONS (INDIA) LTD. REPO RTED IN 41 TAXMANN.COM WHILE DECIDING AN IDENTICAL GROUND HAS OBSERVED AS UNDER : 14. FOR THE GROUND NO.4 OF THE REVENUE IN THE PRES ENT YEAR, THE LEARNED DR SUPPORTED THE ASSESSMENT ORDER, WHEREAS THE LEARNED AR SUPPORTED THE ORDER OF THE LEARNED CIT(A). 15. WE HAVE CONSIDERED RIVAL SUBMISSIONS. WE FIND T HAT IT IS OBSERVED BY THE LEARNED CIT(A) AT PAGE NO.11 OF HIS ORDER THAT THIS REQUEST WAS ALSO MADE BY THE ASSESSEE BEFORE THE AO THAT THIS EXPENSE, RELATED TO PRIOR PERIOD, SHOULD BE EITHER ALLOWED IN THE PRESENT YEAR OR IF IT IS NOT ALLOWED IN THE PRESENT YEAR, THEN THE SAME SHOULD BE ALLOWED IN THE EARLIER YEAR, TO WHICH SUC H EXPENSES ARE RELATED TO. HE ALSO NOTED THAT THE AO HAS TOTALLY I GNORED THIS ASPECT, ALTHOUGH, HE HAS PASSED THE ASSESSMENT ORDER FOR TH E PRECEDING YEAR I.E. A.Y.2000-2001 ON THE SAME DATE. WE ARE OF THE CONSIDERED OPINION THAT WHEN THERE IS NO OTHER OBJECTION OF TH E AO, REGARDING ALLOWABILILTY OF EXPENSES RELATING TO PRIOR PERIOD, THE SAME SHOULD BE ALLOWED EITHER IN THE PRESENT YEAR OR IN THE PRECED ING YEAR, TO WHICH SUCH EXPENSES ARE RELATED TO. THE ASSESSEE HAS DISC LOSED A LOSS OF RS.6,92,700/- IN THE PRESENT YEAR, AND IN A.Y.2000- 2001, THE ASSESSEE HAS FILED RETURN OF INCOME DISCLOSING NIL INCOME AFTER SETTING OFF OF BROUGHT FORWARD LOSS OF EARLIER YEAR S TO THE EXTENT OF RS.303.11 LAKHS. HENCE, EVEN IF THIS EXPENSES ARE A LLOWED IN THE EARLIER YEARS I.E. A.Y. 2000-2001, IT WILL ULTIMATEL Y BE ADJUSTED IN THE PRESENT YEAR, BY WAY OF SET OFF OF BROUGHT FORWARD LOSS, AND THEREFORE, IT WILL MAKE NO DIFFERENCE EVEN IF DEDUC TION IS ALLOWED IN THE PRESENT YEAR. HENCE, WE FEEL THAT NO INTERFEREN CE IS CALLED FOR IN THE ORDER OF THE LEARNED CIT(A) ON THIS ASPECT. THE GROUND NO.4 OF THE REVENUE IS REJECTED. 24 ITA NOS. 2075 TO 2077 & 2110/PUN/2014 ITA NOS. 15 TO 17/PUN/2015 A.YS.2007-08 TO 2009-10 162. IN VIEW OF THE ABOVE DISCUSSION, WE DEEM IT PR OPER TO RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A D IRECTION TO DECIDE THE ISSUE AFRESH IN THE LIGHT OF THE DECISIONS CITED ABOVE. NEEDLESS TO SAY THE ASSESSING OFFICER SHALL GIVE DUE OPPORTUNITY OF BEI NG HEARD TO THE ASSESSEE AND DECIDE THE ISSUE AS PER LAW. WE HOLD AND DIREC T ACCORDINGLY. GROUND OF APPEAL NO.13 BY THE ASSESSEE IS ACCORDINGLY ALLO WED FOR STATISTICAL PURPOSES. 19. BEFORE US, SINCE BOTH THE PARTIES HAVE ADMITTED THAT THE FACTS OF THE CASE IN THE YEAR UNDER CONSIDERATION ARE IDENTICAL TO THA T OF AY 2006-07, WE THEREFORE FOR THE SIMILAR REASONING AS GIVEN BY THE CO- ORDINATE BENCH OF THE TRIBUNAL WHILE DECIDING THE ASSESSEES APPEAL IN AY 200 6-07 AND WITH SIMILAR DIRECTIONS SET ASIDE THE ISSUE TO THE FILE OF AO. THUS THE GROUND OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 20. NOW WE TAKE UP REVENUES GROUND NO.6 WHICH IS WITH RESPECT TO AMOUNTS PAID TO VARIOUS TRUSTS IN ALLEGED CONTRAVENTION O F PROVISIONS OF SECTION 13(1)(C) OF THE ACT. 21. AO NOTED THAT ASSESSEE HAD GIVEN ADVANCES OF RS. 2 ,12,85,506/- TO OTHER TRUSTS (SAVITRBAI PHULE SHIKSHAN PRASARAK MANDAL, SH RI YESHWANTRAO CHAVAN SHIKSHAN PRASARAK MANDAL AND SHRINA TH SHIKSHAN PRASARAK MANDAL). HE NOTICED THAT THE TRUSTEES OF ASSES SEE WERE ALSO TRUSTEES IN SAVITRIBAI PHULE SHIKSHAN PRASARAK MANDAL AND SHRINATH SHIKSHAN PRASARAK MANDAL AND HENCE GRANTING OF ADVANCE WAS IN VIOLATION TO THE PROVISIONS OF SECTION. 13(1)(C) OF THE ACT AND INVOKE D THE PROVISION. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATT ER BEFORE CIT(A), WHO DECIDED THE ISSUE AGAINST THE ASSESSEE BY OBSERVING AS UNDER : 13. GROUND NO 4 : UNDER THIS GROUND OF APPEAL, THE APPELLANT HAS CONTENDED THAT THE AO ERRED IN ADDING AN AMOUNT OF RS.2,04,00,000/- WHICH REPRESENTED DONATIONS RECEIVED TOWARDS THE TR UST CORPUS WHICH WAS IN THE NATURE OF CAPITAL RECEIPTS AND COULD NOT BE TAXED REGARDLESS OF ALLOWABILITY OF CLAIM OF EXEMPTION UNDER SECTION 11. 25 ITA NOS. 2075 TO 2077 & 2110/PUN/2014 ITA NOS. 15 TO 17/PUN/2015 A.YS.2007-08 TO 2009-10 13.1 THE AO HAS NOT SPECIFICALLY DISCUSSED THIS ISS UE IN THE ORDER OTHER THAN HOLDING THAT THE ASSESSEE WAS NOT ENTITLED TO THE BENEFIT-OF SECTION 11 AND 12 AND WAS TO BE ASSESSED AS AN AOP. HE ADDE D THE SAID AMOUNT TO THE INCOME OF THE APPELLANT IN THE COMPUT ATION OCCURRING AT THE END OF THE ORDER WITH THE REMARK 'ADD: DONATION '. 13.2 THE APPELLANT IN ITS BRIEF SUBMISSION ON THIS ISSUE VIDE LETTER DATED 14/03/2012, HAS CONTENDED THAT THE AO HAS MADE THE ADDITION MER ELY RELYING ON THE REPORT OF THE SPECIAL AUDITOR IGNORI NG THE FACT THAT THESE DONATIONS WERE RECEIVED FROM DONERS TOWARDS TRUST C ORPUS WITH SPECIFIC DIRECTIONS TO THIS EFFECT. BEING EARMARKED DONATION S TOWARDS THE TRUST CORPUS, THE RECEIPTS CAPITAL IN NATURE AND COULD NO T BE TAXED REGARDLESS OF WHETHER OR NOT THE APPELLANT WAS HELD TO BE ELIG IBLE FOR DEDUCTION UNDER SECTION 11. 13.3 I HAVE GIVEN CAREFUL CONSIDERATION TO THE ABOV E FACTS. THE SCHEME OF TAXATION OF CHARITABLE TRUSTS AND INSTITUTIONS UNDE R THE IT ACT IS THAT FIRSTLY ALL VOLUNTARILY CONTRIBUTIONS RECEIVED BY THEM ARE DEEMED TO BE THE INCOME OF SUCH ENTITIES UNDER SECTION 2(24)(IIA) AND THEREAFT ER, SUBJECT TO THE FULFILLMENT OF CONDITIONS LAID DOWN IN SECTION 11/SECTION 12/SE CTION 10(21)/SECTION 10(23)/SECTION 10(23C) ETC, AS THE CASE MAY BE, THE SAME ARE ELIGIBLE FOR EXEMPTION. IN RESPECT OF ENTITIES CLAIMING UNDER SEC TION 11 AND 12, THE EXEMPTION OF CORPUS DONATIONS IS PROVIDED FOR UNDER SECTION 11(I) (D). THEREFORE, ONCE THE PROVISIONS OF SECTION 11 AND 12 ARE FOUND TO BE INAPPLICABLE IN VIEW OF THE PROVISIONS OF SECTION 1 3, THE EFFECT WOULD BE THAT THE CORPUS DONATIONS WOULD BE DEEMED TO BE THE INCO ME OF THE APPELLANT BUT WOULD NOT QUALIFY FOR EXEMPTION UNDER SECTION 11(I) (D). THE APPELLANTS CASE BEING OF THIS NATURE, THE AO HAS RIGHTLY ADDED THE SAID AMOUNT TO THE INCOME OF THE APPELLANT. ACCORDINGLY, THIS GROUND OF APPEA L IS WITHOUT MERIT AND IS HEREBY DISMISSED. 22. THE REVENUE HAS FILED APPEAL AGAINST THE DECISION OF C IT(A) ON THE ISSUE WHICH IS DECIDED AGAINST THE ASSESSEE. CONSEQUENTLY , ASSESSEE HAS NOT AGITATED THE SAID DECISION OF CIT(A). HENCE, THERE IS NO MERIT IN THE GROUND OF APPEAL NO. 6 RAISED BY REVENUE AND THE SAME IS DISMISSED. 23. IN THE RESULT, THE APPEAL OF ASSESSEE IN ITA NO.207 5/PUN/2014 IS PARTLY ALLOWED AND THE APPEAL OF REVENUE IN ITA NO.15/PUN/2015 IS PARTLY ALLOWED. 24. WE NOW TAKE UP ASSESSEES APPEAL IN ITA NO. 2076/PU N/2014 AND REVENUES APPEAL IN ITA NO.16/PUN/2015 FOR AY 2008-09. 26 ITA NOS. 2075 TO 2077 & 2110/PUN/2014 ITA NOS. 15 TO 17/PUN/2015 A.YS.2007-08 TO 2009-10 25. THE GROUNDS RAISED BY THE ASSESSEE IN ITA NO.2076/ PUN/2014 FOR A.Y. 2008-09 READS AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE CIT(A) HAS ERRED IN NOT APPRECIATING THAT THE ORDER PASSED U/S. 143(3) IS VOID-AB-INITIO AND BAD IN LAW AS THE APPELLANT BEING A CONNECTED PERSON THE ASSESSMENT SHOULD HAD MADE U/S.153C OF THE INCOME TAX ACT 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND WITHOUT PREJUDICE TO THE ABOVE GROUND THE CIT (A) HAS ERRED IN A) HOLDING THAT THE APPELLANT HAS PAID EXCESSIVE AND U NREASONABLE RENT FOR THE PROPERTY OWNED BY SHRI M.N NAVALE RELY ING ON THE DECISION OF ALLAHABAD HIGH COURT IN CASE OF RADHABA I DALMIYA 125 ITR 134 THEREBY APPELLANT HAS CONTRAVENED THE P ROVISIONS OF SECTION 13(1)(C). B) REJECTING THE VALID CONTENTION MADE ALTERNATIVELY T HAT TO THE EXTENT OF ALLEGED EXCESS AMOUNT OF RENT THAT ONLY SHALL DI SQUALIFY THE EXEMPTION AND THAT THERE CANNOT BE WHOLESALE DENIAL OF EXEMPTION. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE CIT (A) HAS ERRED IN HOLDING THAT SHARES ACQUIRED IN PUBLIC LTD COMPANY ARE IN THE NATURE OF INVESTMENT CONTRAVENING THE PROVISIONS OF SECTION 1 3(1)(D) OVERLOOKING THE FACT THAT THE SAID EXPENDITURE OF RS.1,50,000/- INC URRED ON ACQUIRING THOSE SHARES CONSTITUTE THE CAPITAL EXPENDITURE INCURRED FOR FURTHERANCE OF OBJECTS OF TRUST AND THEREFORE IT AMOUNTS TO APPLICATION OF INCOME. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE CIT (A) HAS ERRED IN SUSTAINING THE DISALLOWANCE OF RS 69,00,538/- ON TH E GROUND THAT IT IS A PRIOR PERIOD EXPENDITURE. THE ABOVE GROUNDS OF APPEAL MAY KINDLY BE ALLOWED T O BE AMENDED, ALTERED, MODIFIED ETC., IN THE INTEREST OF' NATURAL JUSTICE. 25.1. ON THE OTHER HAND, THE GROUNDS RAISED BY THE REVE NUE (WHICH HAVE BEEN SUBSEQUENTLY REVISED) IN ITA NO.16/PUN/2015 FOR A.Y . 2008-09 READS AS UNDER: 1. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE, T HE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE MADE U/S.40A(2)(B) ON ACC OUNT OF PAYMENT ON RENT IN EXCESS MADE TO M.N. NAVALE ( BIGGER HUF), A RELA TED PARTY. 2 . O N FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE L D. CIT(A) HAS ERRED IN HOLDING THAT THE PROVISION OF SECTION 13(1)(C) R.W. S.13(3) OF THE INCOME TAX ACT, 1961 ARE NOT ATTRACTED. 27 ITA NOS. 2075 TO 2077 & 2110/PUN/2014 ITA NOS. 15 TO 17/PUN/2015 A.YS.2007-08 TO 2009-10 3.ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE, TH E LD. CIT(A) HAS ERRED IN DECIDING THE ISSUE OF EXCESS PAYMENT OF RENT CONSID ERING ONLY ONE LIMB OF THE HON'BLE ITAT'S ORDER NO.149/PN/2010 DTD. 31/03/2012 REGARDING THE EXISTENCE OF M. N. NAVALE (BIGGER HUF), HOWEVER HAS ENTIRELY OVERLOOKED THE OTHER LIMB OF THE SAID ORDER WHEREIN THE HON'BLE IT AT HAD DIRECTED THE AO TO EXAMINE THE VERACITY OF SOURCE OF INVESTMENT IN THE PROPERTIES BY THE BIGGER HUF WHICH WERE LET OUT ON RENT TO THE ASSESSEE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT (A) WAS NOT JUSTIFIED IN DELETING THE ADDITION MADE BY THE AO O N ACCOUNT OF INVESTMENT IN SHARES OF CO-OPERATIVE BANK AND PUBLIC LIMITED COMP ANIES BY NOT APPRECIATING THE FACTS THAT THE ASSESSEE HAD CONTRA VENED THE PROVISIONS OF SECTION 13(1)(D) FOR THE REASON OF INVESTMENT IN SH ARES OF CO-OPERATIVE BANK AND PUBLIC LIMITED COMPANIES AS THESE ARE NOT SPECIF IED IN SECTION 11 (5) OF THE ACT. THE LD. CIT (A) HAS ALSO NOT APPRECIATED T HE FACT THAT SIMILAR ADDITION MADE IN A.Y. 2006-07 WITH RESPECT TO INVES TMENT IN SHARES OF CO- OPERATIVE BANKS WHICH HAS BEEN CONFIRMED BY LD. CIT (A). FURTHER, THE LD. CIT (A) HAS NOT CONSIDERED THE AMENDED PROVISIONS O F SECTION 13(1)(D)(III) OF THE ACT WITH RESPECT TO INVESTMENT IN SHARES OF PUB LIC LIMITED COMPANIES. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) ERRED IN HOLDING THAT SHRI M. N. NAVALE (BIGGER HUF) DOES NO T STAND IN A RELATIONSHIP SPECIFIED UNDER SECTION 13(3) OF THE ACT, WITHOUT A PPRECIATING THAT BIGGER HUF WAS A CONCERN IN WHICH TRUSTEES OF THE TRUST HA D A SUBSTANTIAL INTEREST THEREFORE, M. N. NAVALE (BIGGER HUF) IS A PERSON SP ECIFIED IN SECTION 13(3) OF THE ACT. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT (A) WAS NOT JUSTIFIED IN DELETING THE ADDITION MADE BY THE A.O. ON ACCOUNT OF DISALLOWANCE IN RESPECT OF AMOUNT WRITTEN OFF OF RS .1,49,532/- WHICH WAS DETECTED ON ACCOUNT OF SPECIAL AUDIT. 7. THE ORDER OF CIT(A) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 26. BEFORE US, AT THE OUTSET THE LD.AR SUBMITTED THAT THE ASSESSEE DOES NOT WISH TO PRESS GROUND NO.1 OF THE PRESENT APPEAL. FU RTHER, GROUNDS NOS.2 TO 4 RAISED IN THE APPEAL ARE IDENTICAL TO THE GROU NDS RAISED BY THE ASSESSEE IN ITS APPEAL FOR A.Y. 2007-08 AND THEREFORE THE SUBMISSIONS MADE BY HIM WHILE ARGUING THE APPEAL FOR A.Y. 2007-08 WOULD BE EQUALLY APPLICABLE TO THE PRESENT APPEAL ALSO. LD DR DID NOT CONTR OVERT THE SUBMISSIONS MADE BY LD AR. 27. WE HAVE HEARD THE RIVAL CONTENTIONS. GROUND OF APPE AL NO.1 IS DISMISSED. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT THE GROUND N O.2, 3 28 ITA NOS. 2075 TO 2077 & 2110/PUN/2014 ITA NOS. 15 TO 17/PUN/2015 A.YS.2007-08 TO 2009-10 AND 4 RAISED IN A.Y.2008-09 AND GROUND OF APPEAL NO.2 AND 3 RAISED IN A.Y.2009-10 ARE IDENTICAL TO ISSUE RAISED IN A.Y.2007-08 BY T HE ASSESSEE. ACCORDING, WE HOLD THAT OUR DECISION GIVEN IN A.Y.2007-08 ON THE SAID ISSUES WOULD APPLY MUTATIS-MUTANDIS. ACCORDINGLY, SAID GROU NDS OF APPEAL ARE DECIDED AS IN A.Y.2007-08. THE LD. AR FOR THE ASSESS EE POINTED OUT THAT THE ISSUES RAISED BY REVENUE IN GROUND OF APPEAL NO . 1 TO 5 ARE SIMILAR TO GROUND RAISED BY REVENUE IN A.Y.2007-08. HENCE, O UR DECISION IN A.Y.2007-08 WOULD APPLY MUTATIS-MUTANDIS. GROUNDS OF A PPEAL RAISED BY REVENUE ARE, THUS, DECIDED AS INDICATED ABOVE. 28. GROUND NO 6 RAISED BY REVENUE IS WITH RESPECT TO D ELETION OF DISALLOWANCE OF RS.1,49,532/- IN RESPECT TO AMOUNTS WRITTEN OFF. 29. CIT(A) WHILE DECIDING THE ISSUE IN PARA 9 OF THE ORDER HA S NOTED THAT THE DISALLOWANCE WAS MADE ON THE BASIS OF THE REPORT OF S PECIAL AUDITOR UNDER SECTION 142(2A) OF THE ACT. IT WAS ASSESSEES SUBM ISSION THAT THE AMOUNTS REPRESENTED PETTY DEBIT BALANCES CARRIED FORWAR D WHICH HAD REMAINED TO BE ADJUSTED AGAINST THE RELEVANT EXPENSES AND ON REALIZING THAT THESE BALANCES REPRESENTED FICTITIOUS RECEIVABLES, THE AGGREGATE AMOUNT OF RS.1,49,532/- WAS WRITTEN OFF AND FURTHER THE WRIT E OFF WAS IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING POLICIES. CI T(A) HAS NOTED THAT THE AO HAS NOT DISCUSSED THE ISSUE AT ALL ON MERITS AND IN THE ABSENCE OF ANY DISCUSSION ON THE NATURE OF AMOUNTS, HE D ELETED THE ADDITION. AGGRIEVED BY THE ORDER OF CIT(A), REVENUE IS NOW IN APPEAL BEFORE US. 29 ITA NOS. 2075 TO 2077 & 2110/PUN/2014 ITA NOS. 15 TO 17/PUN/2015 A.YS.2007-08 TO 2009-10 30. BEFORE US, LD.DR SUBMITTED THAT LD CIT(A) HAS WRONGLY DELETED THE ADDITION. LD AR ON THE OTHER HAND REITERATED THE SUBMISS IONS MADE BEFORE CIT(A) AND SUPPORTED HIS ORDER. 31. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE BEING OF DELETION OF ADDITION OF RS. 1,49,532 /-. BEFORE US, LD DR HAS NOT POINTED OUT ANY FALLACY IN THE FINDINGS OF CIT (A). IN SUCH CIRCUMSTANCES, WE FIND NO REASON TO INTERFERE WITH THE ORD ER OF CIT(A) IN ALLOWING WRITE OFF OF PREOPERATIVE EXPENSES AND THUS, THE GROUND NO.6 OF REVENUE IS DISMISSED. 32. IN THE RESULT, THE APPEAL OF ASSESSEE AND APPEAL O F THE REVENUE ARE DECIDED AS INDICATED ABOVE. 33. WE NOW TAKE UP ASSESSEES APPEAL NO. ITA NO 2110/P UN/2014 AND REVENUES APPEAL IN ITA NO17/PUN/2015 FOR AY 2009-10. 34. THE GROUNDS RAISED BY THE ASSESSEE IN ITA NO. 2110/ PN/2014 READS AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE CIT(A) HAVING ACCEPTED THAT THERE IS NO CONTRAVENTION OF SECTION 13(1)(C) IN RESPECT OF RENT PAID FOR THE PROPERTIES OWNED BY M.N.NAVALE (BIGGER HUF), NOT BEING A SPECIFIED PERSON AND DIRECTING THE ASSESSING OFFICE R TO DELETE THE DISALLOWANCE MADE U/S. 40 (A)(2)(B) IN RESPECT OF RENT PAID, HAS ERRED IN FURTHER HOLDING THAT INVOCATION OF SEE 13(1)(C) IS UPHELD AS THE PART OF INCOME WAS USED FOR BENEFIT OF A PROHIBITED PERSON. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE CIT (A) HAS ERRED IN HOLDING THAT SHARES ACQUIRED IN PUBLIC LTD COMPANY ARE IN THE NATURE OF INVESTMENT CONTRAVENING THE PROVISIONS OF SECTION 1 3(1)(D) OVERLOOKING THE FACT THAT THE SAID EXPENDITURE OF RS.1,50,000/- INC URRED ON ACQUIRING THOSE SHARES CONSTITUTE THE CAPITAL EXPENDITURE INCURRED FOR FURTHERANCE OF OBJECTS OF TRUST AND THEREFORE IT AMOUNTS TO APPLICATION OF INCOME. 30 ITA NOS. 2075 TO 2077 & 2110/PUN/2014 ITA NOS. 15 TO 17/PUN/2015 A.YS.2007-08 TO 2009-10 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE CIT (A) HAS ERRED IN SUSTAINING THE DISALLOWANCE OF RS.59,33,827/- IN TH E GROUND THAT IT IS A PRIOR PERIOD EXPENDITURE. 35. ON THE OTHER HAND, THE GROUNDS RAISED BY THE REVEN UE (WHICH WERE SUBSEQUENTLY REVISED) IN APPEAL NO.17/PUN/2015 READS AS UNDER: 1. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE, T HE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE MADE U/S.40A(2)(B) ON ACC OUNT OF PAYMENT ON RENT IN EXCESS MADE TO M.N. NAVALE (BIGGER HUF), A RELA TED PARTY. 2 . O N FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE L D. CIT(A) HAS ERRED IN HOLDING THAT THE PROVISION OF SECTION 13(1)(C) R.W. S.13(3) OF THE INCOME TAX ACT, 1961 ARE NOT ATTRACTED. 3. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE, T HE LD. CIT(A) HAS ERRED IN DECIDING THE ISSUE OF EXCESS PAYMENT OF RENT CONSID ERING ONLY ONE LIMB OF THE HON'BLE ITAT'S ORDER NO.149/PN/2010 DTD.31/03/2012 REGARDING THE EXISTENCE OF M. N. NAVALE (BIGGER HUF), HOWEVER HAS ENTIRELY OVERLOOKED THE OTHER LIMB OF THE SAID ORDER WHEREIN THE HON'BLE IT AT HAD DIRECTED THE AO TO EXAMINE THE VERACITY OF SOURCE OF INVESTMENT IN THE PROPERTIES BY THE BIGGER HUF WHICH WERE LET OUT ON RENT TO THE ASSESSEE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT (A) WAS NOT JUSTIFIED IN DELETING THE ADDITION MADE BY THE AO O N ACCOUNT OF INVESTMENT IN SHARES OF CO-OPERATIVE BANK AND PUBLIC LIMITED COMP ANIES BY NOT APPRECIATING THE FACTS THAT THE ASSESSEE HAD CONTRA VENED THE PROVISIONS OF SECTION 13(1)(D) FOR THE REASON OF INVESTMENT IN SH ARES OF CO-OPERATIVE BANK AND PUBLIC LIMITED COMPANIES AS THESE ARE NOT SPECIF IED IN SECTION 11 (5) OF THE ACT. THE LD. CIT (A) HAS ALSO NOT APPRECIATED T HE FACT THAT SIMILAR ADDITION MADE IN A.Y. 2006-07 WITH RESPECT TO INVES TMENT IN SHARES OF CO- OPERATIVE BANKS WHICH HAS BEEN CONFIRMED BY LD. CIT (A). FURTHER, THE LD. CIT (A) HAS NOT CONSIDERED THE AMENDED PROVISIONS O F SECTION 13(1)(D)(III) OF THE ACT WITH RESPECT TO INVESTMENT IN SHARES OF PUB LIC LIMITED COMPANIES. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) ERRED IN HOLDING THAT SHRI M. N. NAVALE (BIGGER HUF) DOES NO T STAND IN A RELATIONSHIP SPECIFIED UNDER SECTION 13(3) OF THE ACT, WITHOUT A PPRECIATING THAT BIGGER HUF WAS A CONCERN IN WHICH TRUSTEES OF THE TRUST HA D A SUBSTANTIAL INTEREST THEREFORE, M. N. NAVALE (BIGGER HUF) IS A PERSON SP ECIFIED IN SECTION 13(3) OF THE ACT. 6. THE ORDER OF CIT(A) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 36. BEFORE US, AT THE OUTSET, THE LD. AR SUBMITTED THAT T HE ASSESSEE DOES NOT WISH TO PRESS GROUND NO 1 OF THE PRESENT AP PEAL AND THAT THE GROUNDS NO 2 & 3 RAISED IN THE APPEAL ARE IDENTICAL TO TH E GROUNDS RAISED 31 ITA NOS. 2075 TO 2077 & 2110/PUN/2014 ITA NOS. 15 TO 17/PUN/2015 A.YS.2007-08 TO 2009-10 BY THE ASSESSEE IN ITS APPEAL FOR AY 2007-08 AND THEREFO RE THE SUBMISSIONS MADE BY HIM WHILE ARGUING THE APPEAL FOR AY 200 7-08 WOULD BE EQUALLY APPLICABLE TO THE PRESENT APPEAL ALSO. AS FAR A S THE GROUNDS RAISED BY THE REVENUE ARE CONCERNED HE SUBMITTED THAT THE GROUNDS RAISED BY REVENUE ARE ALSO SIMILAR TO THE GROUNDS RAISED BY REV ENUE IN AY 2007- 08 AND THEREFORE THE SUBMISSIONS MADE BY HIM WHILE ARGUIN G THE APPEAL FOR AY 2007-08 WOULD BE EQUALLY APPLICABLE TO THE PRESENT APPEAL ALSO. LD DR DID NOT CONTROVERT THE SUBMISSIONS MADE BY LD AR. 37. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN VIEW OF THE LD ARS SUBMISSION , GROUND NO.1 IS DISMISSED AS NOT PRESSED. AS FAR AS THE ISSUES RAISED IN GROUND NOS.2 & 3 ARE CONCERNED, IN VIEW OF THE SUBMISSIONS OF BOTH THE PARTIES THAT THE FACTS IN THOSE GROUNDS ARE IDENTICAL AND SIMILAR TO THE GROUNDS R AISED BY ASSESSEE IN AY 2007-08. FOLLOWING THE SAME PARITY OF REASONING, OUR D ECISION GIVEN IN A.Y.2007-08 WOULD APPLY MUTATIS-MUTANDIS TO THE ISSUE R AISED BY ASSESSEE. HENCE, GROUNDS OF APPEAL RAISED BY ASSESSEE AR E DECIDED ACCORDINGLY. SIMILARLY, ISSUES RAISED BY REVENUE ARE ALSO IDE NTICAL TO THE ISSUES RAISED IN A.Y.2007-08 AND OUR DECISION SHALL APPLY MU TATIS- MUTANDIS. 38. IN THE RESULT, APPEAL OF THE ASSESSEE AND APPEAL OF TH E REVENUE ARE DECIDED AS INDICATED ABOVE. 39. WE NOW TAKE UP ASSESSEES APPEAL NO.2077/PUN/2014 FOR AY 2008- 09. 32 ITA NOS. 2075 TO 2077 & 2110/PUN/2014 ITA NOS. 15 TO 17/PUN/2015 A.YS.2007-08 TO 2009-10 40. THE GROUNDS RAISED BY THE ASSESSEE IN ITA NO.2077/ PUN/2014 READS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) HAS ERRED IN NOT DIRECTING THE ASSESSING OFFICER TO RECTIFY THE ASSESSMENT ORDER BY SETTING OFF THE UNABSORBED DEFICIT OF EARLIER A.Y. 2000-01 AND 2003-04. 41. BEFORE US, AT THE OUTSET, THE LD AR SUBMITTED THAT T HE GROUNDS RAISED HAVE BECOME ACADEMIC. THE AFORESAID CONTENTION OF T HE LD AR HAS NOT BEEN CONTROVERTED BY LD DR. 42. WE HAVE HEARD THE RIVAL SUBMISSIONS. IN VIEW OF THE LD ARS CONTENTION THAT THE GROUND RAISED IN THE APPEAL HAS BEE N RENDERED ACADEMIC, THE GROUND IS DISMISSED AND THUS, THE APPEAL OF ASS ESSEE IS DISMISSED. 43. IN THE RESULT, THE APPEAL OF ASSESSEE IN ITA NO.20 77/PUN/2014 IS DISMISSED. 44. BEFORE CLOSE OF HEARING, THE LEARNED AUTHORIZED REPRESE NTATIVE FOR THE ASSESSEE STATED THAT FOR ASSESSMENT YEAR 2007-08 (IN ITA NO.2075/PUN/2014) BECAUSE OF CONFUSION OF REVENUE RAISING A GROUND OF APPEAL AGAINST ADDITION OF RS. 2.04 CRORES, BEING DELETED BY THE CIT(A), THE ASSESSEE BY AN ERROR HAD NOT PRESSED THE GROUND OF A PPEAL NO.5. HOWEVER, HE WANTED TO NOW PRESS THE GROUND OF APPEAL NO.5. 45. THE ASSESSING OFFICER AT PAGE 7 OF ASSESSMENT ORDER HAS DEALT WITH THE ISSUE. THE ASSESSEE HAD ADVANCED SUM OF RS. 2.04 CR ORES TO EDUCATIONAL INSTITUTION AS APPLICATION OF INCOME AND HAD CLAIME D THE SAME 33 ITA NOS. 2075 TO 2077 & 2110/PUN/2014 ITA NOS. 15 TO 17/PUN/2015 A.YS.2007-08 TO 2009-10 TO BE TREATED AS CASE OF DONATION. HOWEVER, THE ASSESS ING OFFICER AT PAGE 7 HOLDS AS UNDER:- ADVANCES TO OTHERS. IT WAS OBSERVED THAT THE TRUST HAS GIVEN ADVANCES O F RS.2,12,85,506/- TO OTHER TRUSTS AS UNDER: SAVITRIBAI PHULE SHIKSHAN PRASARAK MANDAL RS.1, 87,60,506/- SHRI YESHWANTRAO CHAVAN SHIKSHAN PRASARAK MANDAL R S.17,25,000/- SHRINATH SHIKSHAN PRASARAK MANDAL RS. 8,00,000/- IT IS SEEN THAT THE TRUSTEES OF STES ARE TRUSTEES I N TWO OF THESE TRUSTS VIZ. SAVITRIBAI PHULE SHIKSHAN PRASARAK MANDAL AND SHRIN ATH SHIKSHAN PRASARAK MANDAL. HENCE IT IS OBVIOUSLY A CASE WHERE THERE IS VIOLATION OF SECTION 13(1)(C). 46. THE ASSESSING OFFICER HAD DISALLOWED THE SAID CLAIM OF ASSE SSEE IN VIEW OF VIOLATION OF PROVISIONS OF SECTION 13(1)(C) OF THE ACT, WHIC H HAS BEEN UPHELD BY CIT(A) VIDE PARA 13.3, WHICH IS BEING REPRODUCED B Y US IN THE PARAS HEREINABOVE WHILE DEALING WITH GROUND OF APPEAL NO.6 R AISED BY REVENUE. THE ASSESSEE HAD MADE ADVANCES TO OTHER ED UCATIONAL INSTITUTIONS BUT THE PLEA OF ASSESSEE BEFORE US IS THAT T HE CIRCULAR ON THIS ISSUE THOUGH REFERS TO DONATIONS BUT TAKING ANALOGY, IT ALS O REFERS TO ADVANCES, WHEREIN CBDT TALKS OF PAYMENT OF SUMS AND NOT ADVANCES. HE, THEREFORE, SUBMITTED THAT THE SAME CANNOT BE ADDED AS INCOME. 47. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVE NUE STRONGLY REBUTTED THE SUBMISSIONS OF ASSESSEE AND POINTED OUT T HAT PROVISIONS OF SECTION 13(1)(C) OF THE ACT WERE DIRECTLY OR INDIRECTLY APPLICABLE. 48. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE TRIBUNAL IN ASSESSEE OWN CASE IN ITA 34 ITA NOS. 2075 TO 2077 & 2110/PUN/2014 ITA NOS. 15 TO 17/PUN/2015 A.YS.2007-08 TO 2009-10 NO.320/PUN/2010, RELATING TO ASSESSMENT YEAR 2006-07, OR DER DATED 14.12.2016 VIDE PARA 72 HAD HELD AS UNDER:- 72. IN VIEW OF THE ABOVE, WE ARE OF THE CONSIDERED OPINION THAT WHENEVER THERE IS VIOLATION OF SECTION 11(5) AND 13(1)(C) OF THE I.T. ACT, EXEMPTION CANNOT BE WITHDRAWN FOR THE ENTIRE INCOME AND INCOM E WHICH IS THE SUBJECT MATTER OF VIOLATION ONLY CAN BE BROUGHT TO TAX. AC CORDINGLY, ADDITIONAL GROUND NO.3 BY THE ASSESSEE IS ALLOWED . FOLLOWING THE SAME PARITY OF REASONING, SINCE THE ADVANCES MADE BY ASSESSEE TO OTHER EDUCATIONAL INSTITUTIONS VIOLATE THE PRO VISIONS OF SECTION 13(1)(C) OF THE ACT, THEN THE SAID ADVANCES CANNOT BE ALLOW ED AS DEDUCTION UNDER SECTION 11 OF THE ACT, SAME IS BROUGHT TO TAX IN T HE HANDS OF ASSESSEE. WE DIRECT ACCORDINGLY. CONSEQUENTLY, THE ASS ESSEE IS NOT ENTITLED TO ANY EXEMPTION UNDER SECTION 11 OF THE ACT, WH ERE THERE IS VIOLATION OF SECTION 13(1)(C) OF THE ACT. HENCE, GROUND OF APPEAL NO.5 RAISED BY ASSESSEE IS DISMISSED. 49 . TO SUM UP, APPEALS OF THE ASSESSEE IN ITA NOS.20 75 AND 2076/PUN/2014 FOR A.YS.2007-08 AND 2008-09 AND ITA NO. 2110/PUN/2014 FOR A.Y. 2009-10 ARE PARTLY ALLOWED. THE APPEAL OF ASSESSEE IN ITA NO.2077/PUN/2014 FOR A.Y. 2008-09 I S DISMISSED. ALL THE APPEALS OF REVENUE IN ITA NOS. 15 TO 17/PUN/201 5 FOR A.YS. 2007-08 TO 2009-10, RESPECTIVELY, ARE PARTLY ALLOWE D. ORDER PRONOUNCED ON THIS 17TH THE DAY OF OCTOBER, 2018. SD/- SD/- (SUSHMA CHOWLA) (AN IL CHATURVEDI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; ! / DATED : 17/10/ 2018. SB / YAMINI 35 ITA NOS. 2075 TO 2077 & 2110/PUN/2014 ITA NOS. 15 TO 17/PUN/2015 A.YS.2007-08 TO 2009-10 !'#$ %$' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS), CENTRAL, PUNE. 4. THE CIT(APPEALS)-III, PUNE. 5. '#$ %& , ' %& , ()* , / DR, ITAT, A BENCH, PUNE. 6. $+, -. / GUARD FILE. / BY ORDER , // TRUE COPY // // /01 2 %* / SR. PRIVATE SECRETARY ' %& , / ITAT, PUNE.