DEPUTY COMMISSIONER OF INCOME TAX (E), CIRCLE, JAIPUR V. M/S JYOTI VIDYAPEETH TRUST, JAIPUR

ITA 300/JPR/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6321 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 01-03-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VRINDERA MEHTA
• Assessee Lawyers: K L MOOLCHANDAN I
• Keywords: Charitable institution; Rule of consistency
• Section: 12AA; 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 JKO] U;KF;D LNL; ,OA JH HKKXPAN] YS[KK L NL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, A M VK;DJ VIHY LA- @ ITA NO. 300/JP/2018 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2014-15 THE DCIT(E), CIRCLE, JAIPUR. CUKE VS. M/S JYOTI VIDYAPEETH TRUST, 143, GOMEZ DEFENSE COLONY, VAISHALI NAGAR, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAATJ 4910 C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RES PONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI K.L. MOOLCHANDANI (ADV.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI VRINDERA MEHTA (CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 21/06/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 18/07/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 29.12.2017 OF CIT (A), JAIPUR FOR THE A.Y. 2014-15. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS AS UNDER:- 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF SURPL US AMOUNTING TO RS.3,20,75,265/- MADE ON ACCOUNT OF REJECTION OF EX EMPTION U/S 11 ITA NO. 300/JP/2018 DCIT(E) V M/S JYOTI VIDYAPEETH TRUST 2 OF THE ACT INVOKING PROVISIONS OF SECTION 13(1)(C)( II) OF THE I.T. ACT, 1961. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE CIT(A) HAS ERRED IN IGNORING THE FACTS THAT AO HAD DENIED EXEMPTION U/S 11 FOR THE YEAR UNDER CONSIDERATION A S THE FOUNDER OF THE TRUST, TREASURE OF THE TRUST, MEMBER OF TRUST A RE GETTING PERSONAL BENEFIT IN THE FORM OF SALARY WHICH IS NOT REASONAB LE. 3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LD. CIT (APPEALS) HAS ERRED IN DELETING THE ADDITION OF SUR PLUS BY IGNORING THE FACTS MENTIONED AND CERTIFIED BY AUDITOR IN PAR T-II [APPLICATION OR USE OF INCOME OR PROPERTY FOR THE BENEFIT OF PER SONS REFERRED TO SECTION 13(3)] OF HIS AUDIT REPORT [FORM 10B] DATED 24.07.2013 THAT SALARY WAS PAID TO SPECIFIED PERSONS 4) ANY OTHER OF LAW AS DEEMED FIT IN THE FACTS AND CIR CUMSTANCES OF THE CASE MAY ALSO BE FRAMED BEFORE THE HON'BLE TRIBUNAL IN THE INTEREST OF JUSTICE. 2. THE ASSESSEE IS A TRUST DULY REGISTERED U/S 12AA OF THE ACT VIDE ORDER DATED 13.02.2004. THE ASSESSEE FILED ITS RETU RN OF INCOME ON 17.07.2014 DECLARING TOTAL INCOME OF RS. NIL AFTER CLAIMING EXEMPTION/DEDUCTION U/S 11 OF THE IT ACT. DURING TH E SCRUTINY ASSESSMENT THE AO NOTED THAT THE ASSESSEE HAS MADE PAYMENTS OF RS. 58,49,909/- TOWARDS SALARIES TO FOUNDER OF TRUST, T REASURE OF TRUST AND THE PERSON SPECIFIED U/S 13(3) OF THE IT ACT. THE D ETAILS OF THE PAYMENTS OF SALARY TO THESE PERSONS ARE AS UNDER:- ITA NO. 300/JP/2018 DCIT(E) V M/S JYOTI VIDYAPEETH TRUST 3 S. NO. NAME OF PERSON AMOUNT. 1. DR. PANKAJ GARG 15,00,000/- 2. SMT. VIDUSHI GARG 22,80,000/- 3. HEMA CHOUDHARY 3,45,742/ - 4. DEEPAK CHOUDHARY 6,91,516/- 5. DEEPTI RASTOGI 5,09,619/- 6. MEGHNA SINGHAL 5,23,032/- TOTAL 58,49,909/- ACCORDINGLY, THE AO PROPOSED TO DENY THE BENEFIT OF SECTION 11 OF THE ACT TO THE ASSESSEE VIDE LETTER DATED 23.11.2016. I N RESPONSE THE ASSESSEE FILED ITS REPLY AND CLAIMED THAT THE SALAR Y WAS PAID TO ALL THESE PERSONS FOR THE SERVICES THEY HAVE RENDERED TO THE ASSESSEE TRUST. ACCORDINGLY THE ASSESSEE JUSTIFIED THE PAYMENT OF S ALARY TO THESE PERSONS. THE AO DID NOT ACCEPT THE CONTENTION OF TH E ASSESSEE HELD THAT THE ASSESSEE HAS MADE PAYMENT OF RS. 58,49,909/- TO WARDS SALARIES TO THESE PERSONS SPECIFIED U/S 13(3) OF THE ACT WHICH AMOUNTS THE PERSONAL BENEFIT TO THESE PERSONS. ACCORDINGLY, THE AO INVOKED THE PROVISIONS OF SECTION 13(1)(C)(II) OF THE ACT AND D ENIED THE EXEMPTION U/S 11 OF THE ACT. HENCE, THE AO BROUGHT THE ENTIRE SURPLUS TO TAX AS PER SECTION 164(2) OF THE ACT. THE ASSESSEE CHALLEN GED THE ACTION OF THE ITA NO. 300/JP/2018 DCIT(E) V M/S JYOTI VIDYAPEETH TRUST 4 AO BEFORE THE LD. CIT(A) AND CONTENDED THAT THE PAY MENT OF SALARY WAS NOT EXCESSIVE AND IT WAS REASONABLE BY CONSIDERING THE SERVICES RENDERED BY THESE PERSONS. THE LD. CIT(A) HAS OVERT URNED THE ORDER OF THE ASSESSING OFFICER AND ALLOWED THE CLAIM OF THE ASSESSEE U/S 11 OF THE ACT. 3. BEFORE US, THE LD. DR HAS SUBMITTED THAT THE ASS ESSEE HAS NOT DISPUTED THE FACT THAT THE PAYMENTS OF SALARIES WER E MADE TO THE PERSONS SPECIFIED U/S 13(3) OF THE ACT, THEREFORE, THE PROVISIONS OF SECTION 13(1)(C)(II) OF THE ACT ARE APPLICABLE IN T HE CASE OF THE ASSESSEE. HE HAS FURTHER CONTENDED THAT THE LD. CIT(A) HAS AL LOWED THE CLAIM OF THE ASSESSEE WITHOUT GIVING A FINDING OF THE FACT W HETHER THESE PERSONS HAVE RENDERED ANY SERVICES TO THE ASSESSEE AND THER EFORE, THE PAYMENT IS NOT EXCESSIVE. THE ASSESSING OFFICER HAS CLEARLY HELD THAT THE ASSESSEE HAS NOT PRODUCED ANY DOCUMENTARY EVIDENCE TO SHOW THAT THESE PERSONS HAVE ACTUALLY RENDERED ANY SERVICE TO THE ASSESSEE TRUST. HE HAS RELIED UPON THE ORDER OF THE ASSESSING OFFIC ER. 4. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE HA S SUBMITTED THAT THE ASSESSEE DULY EXPLAINED THE SERVICES RENDERED B Y THESE PERSONS AS REPRODUCED BY THE LD. CIT(A) IN PARA 4.2 OF THE IMP UGNED ORDER. THUS, ITA NO. 300/JP/2018 DCIT(E) V M/S JYOTI VIDYAPEETH TRUST 5 HE HAS REITERATED THE CONTENTION HAS RAISED BEFORE THE LD. CIT(A) AS UNDER AS UNDER:- 4.2 DURING THE APPELLATE PROCEEDING THE APPELLANT HAS FILED WRITTEN SUBMISSION AS UNDER AND ALSO ARGUED THE CAS E ON THE SAME BASIS. (I) FROM THE READING OF THE ASSESSMENT ORDER, IT I S SEEN THAT THE ID. AO DID NOT APPRECIATE THE SPIRIT OF THE PROVISI ONS OF SECTION 13(1)(C) (II) OF THE ACT IN RIGHT PERSPECTIVE. IN F ACT, THESE PROVISIONS DO NOT COME INTO PLAY IN THE PRESENT CAS E. FOR THE PURPOSE, THE ID. AO WAS REQUIRED TO BRING THE MATER IAL ON RECORD TO ARRIVE AT THE FINDINGS THAT THAT SUCH SALARY AND INTEREST PAYMENTS MADE TO THE SPECIFIED PERSONS WERE IN 'EXC ESS' AND HAVE TO GIVE CATEGORICAL AND SPECIFIC FINDING THAT THE P ROPERTY OR INCOME OF THE TRUST WAS USED DIRECTLY OR INDIRECTLY FOR TH E BENEFIT OF THE SPECIFIED PERSON BY WAY OF MAKING SUCH EXCESS PAYME NT OF THE SALARY AND INTEREST TO THE SPECIFIED PERSONS. OBVIO USLY SUCH SPECIFIC AND DIRECT FINDINGS ARE MISSING IN THE PRE SENT CASE. THE LEARNED AO HAD MADE SUCH OBSERVATIONS ON PRESUMPTIO NS, SURMISES, AND CONJECTURES AND WITHOUT ANY BASIS. TH US THESE FINDINGS BEING UNFOUNDED ARE NOT LEGALLY MAINTAINAB LE. ON READING OF THE ASSESSMENT ORDER, IT IS SEEN THAT THE ID. AO HAD FAILED TO BRING ANY MATERIAL ON RECORD TO DEMONSTRATE THAT TH ESE PAYMENTS WERE IN 'EXCESS'. IN ABSENCE OF THIS EXERCISE, THE PROVISIONS OF SECTION 13(1)(C)( OF THE ACT COULD NOT BE INVOKED A ND THE REGISTRATION U/S 12AA COULD NOT BE CANCELLED, AND T HE SURPLUS OF RS. 3,20,75,265/- _COULD NOT BE TAXED IN THE STATUS OF AOP. (II)FURTHER, IT IS RELEVANT TO POINT OUT THAT THE A MOUNTS OF SALARY PAID TO THE SPECIFIED PERSONS WERE FOR THE SERVICES RENDERED BY THEM DIRECTLY TO THE UNIVERSITY OF JYOTI VIDHYAPEET H WOMEN UNIVERSITY FOR WHICH THEY WERE PAID DIRECTLY BY THE 'UNIVERSITY MANAGEMENT'. THE SPECIFIED PERSONS HAD NO ROLE WHAT -SO-EVER TO DECIDE SUCH REMUNERATION PAID TO THEM. THE MANAGEM ENT OF ITA NO. 300/JP/2018 DCIT(E) V M/S JYOTI VIDYAPEETH TRUST 6 UNIVERSITY IS WORKING INDEPENDENTLY AND TAKE KEY DE CISIONS INCLUDING PAYMENTS OF SALARY ETC. INDEPENDENTLY, TH E OFFICE BEARER OF THE APPELLANT TRUST HAVE NO ROLE TO DECIDE THE R EMUNERATION PAID TO THE SPECIFIED PERSON. WHILE MAKING OBSERVAT IONS ON THE POINT, THE ID. AO HAD OVER-LOOKED THIS VITAL FACT. IN THE CIRCUMSTANCES, THE FINDINGS OF THE ID. AO ON THE PO INT ARE ILL- FOUNDED. SIMILARLY THE INTEREST WAS ALSO PAID AS PE R PREVALENT RATES AND HAVING CONSIDERED THE OPERATIONAL EXISGEN CIES OF THE TRUST. BY NO STRETCH OF IMAGINATION, THESE PAYMENTS COULD BE REGARDED 'EXCESS'; PARTICULARLY WHEN ALL SUCH EXPEN SES HAD BEEN ACCEPTED BY THE DEPARTMENT AS GENUINE, REASONABLE A ND FAIR IN THE PAST. AS PER PRINCIPLES OF CONSISTENCY, THE PA ST HISTORY OF THE CASE COULD NOT BE IGNORED IN ABSENCE OF ANY MAT ERIAL BROUGHT ON RECORD TO DEVIATE FROM THE PAST HISTORY OF THE CASE. III)TO MAKE THIS POINT MORE CLEAR, IT WOULD BE IN T HE FITNESS OF THINGS TO BRIEFLY DISCUSS THE NATURE OF THE SERV ICES RENDERED BY THESE PERSONS, THEIR QUALIFICATION, EXP ERIENCE AND OTHER TECHNICAL QUALIFICATION TO DEMONSTRATE TH E JUSTIFICATION OF MAKING SUCH PAYMENTS TO THE SPECIF IED PERSONS AS DISCUSSED IN THE ENCLOSED 'ANNEXURE-A' (IV)IT IS NEEDLESS TO RE-ITERATE THAT SUCH PAYMENTS MADE TO THE SPECIFIED PERSONS IN THE A. YRS. 2012-13 & 2013-14 WERE HELD TO BE FAIR AND REASONABLE BY THE REVENUE. DURING THIS YEAR, THE APPELLANT TRUST CONTINUED TO OPERATE IN THE SAME MA NNER AND STYLE SO THERE IS NO VALID REASON TO DEVIATE FROM T HE PAST HISTORY OF THE CASE, FOLLOWING THE RULE OF CONSISTENCY. (V)LASTLY, IT IS A SETTLED LAW THAT WHERE THE SALAR Y & INTEREST PAID TO THE SPECIFIED PERSONS IS REASONABLE AND IS FOR T HE SERVICES RENDERED BY THEM, THESE PROVISIONS COULD NOT BE INV OKED. FOR THE PURPOSE, FOLLOWING JUDICIAL CITATIONS (INCLUDING TH E JUDICIAL CITATIONS OF THE HONORABLE TERRITORIAL ITAT BENCHES) ARE RELI ED UPON. THE HEAD-NOTES OF THESE JUDGMENTS ARE SUBMITTED IN THE CHART 'ANNEXURE-B' FOR YOUR KIND PERUSAL AND RECORD. ITA NO. 300/JP/2018 DCIT(E) V M/S JYOTI VIDYAPEETH TRUST 7 (A) ALIT VS MAHIMA SHIKSHA SAMITI 93 DTR 33 (JPOTRI B) (B)ITO VS. YAZUR SHIKHA SAMITI 1093 & 1094/JP/2016 (C) CIT VS IDICULA TRUST SOCIETY (2014) 104 DTR 000 9 (P&H) (D)CIT VS PARIWAR SEWA SANSTHAN (2002)254 ITR 268 ( DEL-HC) (E)ITO VS NOBLE MEDICAL FOUNDATION & RESEARCH CENTR E (2015) 44 CCH 418 (PUNE) (TRIB) (VI) BEFORE PARTING WITH, IT WOULD ALSO BE RELEVANT TO POINT OUT THAT THE ID. AO HAD INCORRECTLY INVOKED THE PROVISIONS O F SECTION 164(2) OF THE ACT TO TAX THE SURPLUS AT MAXIMUM MARGINAL R ATE. THESE PROVISIONS COME INTO PLAY ONLY WHERE THE SHARE RATI O OF THE BENEFICIARIES IS UNKNOWN' THAT TOO IN RESPECT OF TH E INCOME HELD IN VIOLATION OF SEC. 13. IN THE PRESENT CASE, ALL SUCH CONDITIONS ARE MISSING SO THE PROVISION OF SECTION 164(2) WOULD NO T COME INTO PLAY. A DETAILED NOTE HAVING RELEVANT JUDICIAL CITA TIONS ARE SUBMITTED IN ANNEXURE C FOR YOUR KIND PERUSAL AND R ECORD. THUS THE WORKING OF THE TAX ON THE SURPLUS FUND IS ALSO INCORRECT AND DESERVES TO BE QUASHED.' THE LD. AR HAS FURTHER SUBMITTED THAT ALL THESE PE RSONS WERE HOLDING IMPORTANT POSITIONS IN THE TRUST AND THEREFORE, PER FORMING IMPORTANT ROLES AND FUNCTIONS IN DAY TO DAY ACTIVITY OF THE A SSESSEE TRUST WHICH JUSTIFIES THE PAYMENT OF SALARY IN QUESTION. HE HAS FURTHER CONTENDED THAT THE ASSESSING OFFICER DID NOT DISALLOW THE PAY MENT OF SALARY EITHER IN THE EARLIER YEAR OR IN THE SUBSEQUENT YEAR. HE H AS SUPPORTED THE ORDER OF THE LD. CIT(A). IN REJOINDER THE LD. DR HA S SUBMITTED THAT RES JUDICATA IS NOT APPLICABLE IN THE MATTER OF TAXATIO N AND FURTHER THE ITA NO. 300/JP/2018 DCIT(E) V M/S JYOTI VIDYAPEETH TRUST 8 ASSESSING OFFICER HAS NOT DECIDED THIS ISSUE EITHER IN THE YEAR AND SUBSEQUENT YEAR. THEREFORE, ACCEPTING THE CLAIM WIT HOUT ANY DECISION CANNOT BE CONSIDERED AS BINDING OR RES-JUDICATA. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIALS ON RECORD. AS PER THE DETAILS OF THE PAYM ENT OF SALARIES TO THESE 6 PERSONS WE FIND THAT THESE PERSONS ARE FALL ING IN THE CATEGORY OF SPECIFIED PERSONS U/S 13(3) OF THE ACT. THIS FACT H AS NOT DISPUTED BY THE ASSESSEE BUT THE ASSESSEES CLAIM IS THAT PAYMENT O F SALARY MADE TO THESE PERSONS IS NOT EXCESSIVE BUT IT IS REASONABLE CONSIDERING THE SERVICES RENDERED BY THESE PERSONS. THE ASSESSING O FFICER HAS DISPUTED ANY SERVICE BEING ACTUALLY RENDERED BY THESE PERSON S THOUGH ON PAPERS THESE PERSONS ARE HOLDING VARIOUS POSITIONS. WE HAV E GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE SUBM ISSIONS MADE BY THE ASSESSEE. EXCEPT THE EXPLANATION AND SUBMISSIONS OF THE ASSESSEE NO REFERENCE IS MADE BY THE LD. CIT(A) TO ANY EVIDENCE FILED EITHER BEFORE THE ASSESSING OFFICER OR BEFORE THE LD. CIT(A) TO S HOW THAT THESE PERSONS HAVE ACTUALLY RENDERED THE SERVICES TO THE ASSESSEE TRUST. THE LD. CIT(A) HAS ALLOWED THE CLAIM OF THE ASSESSMENT ONLY ON THE GROUND THAT THE AO HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SHOW THAT THE PAYMENTS MADE TO THESE PERSONS IS NOT REASONABLE AN D EXCESSIVE. WE ITA NO. 300/JP/2018 DCIT(E) V M/S JYOTI VIDYAPEETH TRUST 9 FURTHER NOTE THAT AS PER THE DETAILS OF THE POSITIO NS HELD BY THESE PERSONS THEIR QUALIFICATION MAY NOT SATISFY THE REQ UIREMENT FOR APPOINTMENT OF SUCH POSITIONS IN A UNIVERSITY. THE QUALIFICATION OF THESE PERSONS ARE GIVEN AS UNDER:- S. NO. NAME DESIGNATION QUALIFICATION 1. DR. PANKAJ GARG FOUNDER ADVISOR BHMS 2. SMT. VIDHUSHI GARG CHAIRPERSON M.SC (MICROBIOLOGY) 3. MS HEMA CHAUDHAR CHIEF EXECUTIVE OFFICER MBA, B TECH (EC) 4. MR. DEEPAK CHOUDHARY PRO - PRESIDENT MBA, B.COM 5. DEE PTI RUSTAGI REGISTRAR MBA, B.COM 6. MEGHNA SINGHAL CONTROLLER OF EXAMINATION MBA, BA THE ASSESSEE IS A UNIVERSITY AND THEREFORE, THE APP OINTMENT OF THESE KEY POSTS CAN BE MADE AS PER RULES AND QUALIFICATIO N PRESCRIBED UNDER THE RELEVANT STATUTE OR UGC GUIDELINES AS CASE MAY BE. HOWEVER, PRIMA FACIE IT APPEARS THAT THE POSITIONS HELD BY THESE S IX PERSONS IN A ITA NO. 300/JP/2018 DCIT(E) V M/S JYOTI VIDYAPEETH TRUST 10 UNIVERSITY DO NOT POSSESS THE REQUISITE QUALIFICATI ON AND THEREFORE, THE PAYMENT MADE TO THESE PERSONS HAVE TO BE EXAMINED I N THE CONTEXT OF SECTION 13(1)(C)(II) OF THE ACT AND IN THE LIGHT OF THEIR QUALIFICATION AND ACTUAL SERVICE RENDERED BY THESE PERSONS. SECTION 1 3(1) STIPULATES THAT THE BENEFIT OF SECTION 11 WILL NOT BE AVAILABLE IN RESPECT OF THE INCOME OR PART THEREOF IF SUCH INCOME IS USED OR APPLIED D IRECTLY OR INDIRECTLY FOR THE BENEFIT OF PERSONS SPECIFIED U/S 13(3) OF THE A CT. FURTHER SUB- SECTION 13(2)(C) PROVIDES THAT IF THE INCOME IS APP LIED BY WAY OF SALARIES OR ALLOWANCE OR OTHERWISE TO IN ANY PERSON REFER TO SUB-SECTION (3) FOR THE SERVICE RENDERED BY THESE PERSONS TO TRUST OR I NSTITUTION AND THE AMOUNTS SO PAID IS IN EXCESS OF WHAT MAY BE REASONA BLE PAID FOR SUCH SERVICES THEN THE SAME IS DEEMED TO HAVE BEEN USED OR APPLIED FOR THE BENEFIT OF A PERSON REFERRED TO IN SUB-SECTION (3). FOR READY REFERENCE WE QUOTE THE PROVISIONS OF SECTION 13(1)(C)(II) AS WELL AS SECTION 13(2)(C) AS UNDER:- SECTION (1)(C)(II) IF ANY PART OF SUCH INCOME OR A NY PROPERTY OF THE TRUST OR INSTITUTION (WHENEVER CREATED OR ESTAB LISHED) IS DURING THE PREVIOUS YEAR USED OR APPLIED, DIRECTLY OR INDIRECTLY FOR THE BENEFIT OF ANY PERSO N REFERRED TO IN SUB-SECTION (3): PROVIDED THAT IN THE CASE OF A TRUST OR INSTITUTION CREATED OR ESTABLISHED BEFORE THE COMMENCEMENT OF THIS ACT, TH E PROVISIONS OF SUB-CLAUSE (II) SHALL NOT APPLY TO ANY USE OR AP PLICATION, ITA NO. 300/JP/2018 DCIT(E) V M/S JYOTI VIDYAPEETH TRUST 11 WHETHER DIRECTLY OR INDIRECTLY, OF ANY PART OF SUCH INCOME OR ANY PROPERTY OF THE TRUST OR INSTITUTION FOR THE BENEFI T OF ANY PERSON REFERRED TO IN SUB-SECTION (3), IF SUCH USE OR APPL ICATION IS BY WAY OF COMPLIANCE WITH A MANDATORY TERM OF THE TRUST OR A MANDATORY RULE GOVERNING THE INSTITUTION: PROVIDED FURTHER THAT IN THE CASE OF A TRUST FOR RE LIGIOUS PURPOSES OR A RELIGIOUS INSTITUTION (WHENEVER CREATED OR EST ABLISHED) OR A TRUST FOR CHARITABLE PURPOSES OR A CHARITABLE INSTI TUTION CREATED OR ESTABLISHED BEFORE THE COMMENCEMENT OF THIS ACT, TH E PROVISIONS OF SUB-CLAUSE (II) SHALL NOT APPLY TO ANY USE OR AP PLICATION, WHETHER DIRECTLY OR INDIRECTLY, OF ANY PART OF SUCH INCOME OR ANY PROPERTY OF THE TRUST OR INSTITUTION FOR THE BENEFI T OF ANY PERSON REFERRED TO IN SUB-SECTION (3) IN SO FAR AS SUCH US E OR APPLICATION RELATES TO ANY PERIOD BEFORE THE 1ST DAY OF JUNE, 1 970. SECTION 13(2)(C) IF ANY AMOUNT IS PAID BY WAY OF SA LARY, ALLOWANCE OR OTHERWISE DURING THE PREVIOUS YEAR TO ANY PERSON REFERRED TO IN SUB- SECTION (3) OUT OF THE RESOURCES OF THE TRUST OR INSTITUTION FOR SERVICES RENDERED BY THAT PERSON TO SUCH TRUST OR I NSTITUTION AND THE AMOUNT SO PAID IS IN EXCESS OF WHAT MAY BE REAS ONABLY PAID FOR SUCH SERVICES. CO-JOINT READY OF PROVISIONS OF SECTION 13(1), READ 13(2) AND SECTION 13(3) REVEALS THE BENEFIT OF SECTIONS 11 OR 12 SHAL L NOT BE AVAILABLE INTER ALIA IN THE CASE WHERE THE INCOME WHICH IS AP PLIED OR USED DIRECTLY OR INDIRECTLY FOR THE BENEFIT OF ANY PERSON REFERRE D TO SECTION 13(3) OF THE ACT. SO FAR AS THE SALARIES OR ALLOWANCES PAID TO ANY PERSON REFERRED IN SECTION 13(3) THE SAME HAS TO BE CONSIDERED IN T HE CONTEXT OF SERVICE RENDERED BY SUCH PERSONS AND IF THE AMOUNT SO PAID IS FOUND IN EXCESS WHAT MAY BE REASONABLY PAID FOR SUCH SERVICES THEN, ONLY TO THE EXTENT ITA NO. 300/JP/2018 DCIT(E) V M/S JYOTI VIDYAPEETH TRUST 12 OF EXCESS AMOUNT IT WILL BE DEEMED AS APPLIED OR US ED FOR THE BENEFIT OF SUCH PERSONS. HENCE, THE DISALLOWANCE U/S 13(1) R.W .S. 13(2) AND 13(3) OF THE ACT IS ONLY IN RESPECT OF THE INCOME WHICH I S APPLIED FOR THE BENEFIT OF THE PERSONS SPECIFIED U/S 13(3) OF THE A CT AND NOT ENTIRE INCOME OF THE ASSESSEE TRUST. SUB-SECTION (2) OF SE CTION 13 PRESCRIBS THE MANNER IN CASE OF PAYMENT OF SALARY OR ALLOWANC E OR OTHERWISE TO THE SPECIFIED PERSONS FOR THE SERVICES RENDERED AND TESTING THE SAME AS PER THE PARA METER OF REASONABLY PAID FOR SUCH SERV ICES. IT IS APPARENT THAT THE PAYMENT MADE TO THESE PERSONS CLEARLY ATTR ACTS THE PROVISIONS OF SECTIONS 13(1) AND 13(2) OF THE ACT HOWEVER, ONL Y TO THE EXTENT OF THE PAYMENT WHICH IS FOUND TO BE EXCESS OF WHAT MAY BE REASONABLY PAID FOR SUCH SERVICE. IN CASE NO SERVICES WERE REN DERED THEN THE ENTIRE PAYMENTS TO SUCH PERSONS WOULD BE TREATED AS THE AP PLICATION OF INCOME OF THE TRUST IN VIOLATION OF THE PROVISION O F SECTION 13(1) R.W.S. 13(3) OF THE ACT AND THEREFORE, TO THE EXTENT OF TH E PAYMENT THE BENEFIT OF SECTION 11 WILL NOT BE AVAILABLE. SINCE NEITHER THE AO NOR THE LD. CIT(A) HAS EXAMINED THE RELEVANT FACTS ON THE POINT WHETHER ALL THESE PERSONS POSSESS THE REQUISITE QUALIFICATION FOR HOL DING THE POSITION AS SHOWN BY THE ASSESSEE AND FURTHER WHETHER THEY HAVE RENDERED ANY SERVICES TO THE TRUST. ITA NO. 300/JP/2018 DCIT(E) V M/S JYOTI VIDYAPEETH TRUST 13 6. ACCORDINGLY, IN THE FACTS AND CIRCUMSTANCES OF T HE CASE AND IN THE INTEREST OF JUSTICE, WE SET ASIDE THE IMPUGNED ORDE R OF THE LD. CIT(A) AND REMIT THE MATTER TO THE RECORD OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION AFTER PROPER VERIFICATION AND EXAMINAT ION TO ALL THE RELEVANT FACTS. THE ASSESSEE IS DIRECTED TO PRODUCE TO ALL T HE RELEVANT FACTS TO ESTABLISH THE ACTUAL RENDERING OF SERVICES BY THESE PERSONS AS WELL AS ALL THE RELEVANT RULES APPLICABLE IN RESPECT OF THE QUA LIFICATION AND APPOINTMENT OF PERSONS ON SUCH POST. AS REGARDS OTH ER ISSUE WHICH ARE DECIDED BY THE LD. CIT(A) THE SAME WERE NOT CHALLEN GED BEFORE US AND THEREFORE, ATTAINED FINALITY. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 18/07/2018. SD/- SD/- HKKXPAN FOT; IKY JKO (BHAGCHAND) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 18/07/2018. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE DCIT(E), CIRCLE, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- M/S JYOTI VIDYAPEETH TRUST, JAIPUR. ITA NO. 300/JP/2018 DCIT(E) V M/S JYOTI VIDYAPEETH TRUST 14 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. 300/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR