DCIT, Chandigarh V. Amritsar International Foundation (Trust), Amritsar

ITA 310/CHANDI/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6528 (ITAT-CHANDIGARH)
• Duration Of Justice: 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2013-2014
• Appeal Filed On: 14-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR GULSHAN RAI
• Keywords: Salary income; Charitable institution; Source of fund; Question of law; Benefit of exemption
• Section: 80G; 12A; 2; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH A, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.310/CHD/2017 (ASSESSMENT YEAR : 2013-14) THE D.C.I.T., VS. AMRITSAR INTERNATIONAL CIRCLE-1(EXEMPTIONS), FOUNDATION(TRUST), CHANDIGARH. AMRITSAR JALANDHAR G.T.ROAD, NEAR MANWALA P.O. MEHARBAN, AMRITSAR. PAN: AABTA0422D (APPELLANT) (RESPONDENT) APPELLANT BY : DR.GULSHAN RAI, CIT, DR RESPONDENT BY : SHRI SUDHIR SEHGAL DATE OF HEARING : 12.09.2017 DATE OF PRONOUNCEMENT : 08.12.2017 ORDER PER ANNAPURNA GUPTA, A.M.: THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME TAX(APPEALS )-2, AMRITSAR [HEREINAFTER REFERRED TO AS CIT(APPEALS) ] DATED 26.10.2016 RELATING TO ASSESSMENT YEAR 2013-14. 2. THE ONLY ISSUE IN THE PRESENT APPEAL RELATES TO EXEMPTION CLAIMED BY THE ASSESSEE AS AN INSTITUTION ESTABLISHED WHOLLY FOR THE PURPOSE OF EDUCATION U/S 10(23C)(VI) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT), WHICH WAS DENIED BY THE ASSESSING OFFICER SINCE HE FOUND THAT THE ASSESSEE HAD ADVANCED INTEREST FREE LOAN O F RS.30 LACS TO ONE M/S BABA AMARNATH EDUCATIONAL SOCIETY, WHICH AS PER THE ASSESSING OFFICER, WAS A SPECIFIED PERSO N U/S 2 13(3) OF THE ACT WITH WHOM SUCH TRANSACTIONS WERE PROHIBITED BY SECTION 13(1) OF THE ACT, FOR THE PU RPOSE OF CLAIMING EXEMPTION. THE AO ALSO DENIED THE EXEMPTIO N SINCE HE FOUND THAT THE SAID ADVANCE WAS IN VIOLATION OF THE PRESCRIBED MODES OF INVESTMENTS OF FUNDS OF TRUSTS CLAIMING EXEMPTION U/S 10(23C) OF THE ACT, AS PRESCRIBED U/S 13(1)(D) RWS 11(5) OF THE ACT. THE ASSESSING OFFICE R ALSO HELD THAT THE ASSESSEE WAS INELIGIBLE FOR EXEMPTION SINC E HE FOUND THAT THE MAIN OBJECT OF THE ASSESSEE WAS NOT EDUCATION BUT GIVING LOAN AND ADVANCE AND BUILDING CAPITAL. THE SURPLUS EARNED BY THE ASSESSEE AMOUNTI NG TO RS.3,64,60,383/- THEREFORE WAS SUBJECTED TO TAX. 3. BEFORE THE LD.CIT(APPEALS), DETAILED SUBMISSIONS WERE FILED IN WRITING BY THE ASSESSEE REPRODUCED IN THE ORDER FROM PAGES 4 TO 17. BRIEFLY STATED, THE ASSESSEE A SSAILED THE ORDER OF THE ASSESSING OFFICER STATING THAT; I) THE ADVANCE GIVEN TO M/S BABA AMARNATH EDUCATIONAL SOCIETY WAS NOT GIVEN IN THE IMPUGNED YEAR BUT IN ASSESSMENT YEAR 2011-12 AND THUS HAD NO RELEVANCE TO THE IMPUGNED YEAR. II) THE ADVANCE WAS AUTHORIZED BY ITS OBJECTS AND HENCE WAS TO BE TREATED AS APPLICATION OF INCOME OF THE ASSESSEE. III) THE PROVISIONS OF SECTION 13(1)(C)/13(1)(D) RE AD WITH SECTION 13(3) OF THE ACT WERE NOT APPLICABLE SINCE THE ASSESSEE HAD CLAIMED EXEMPTION U/S 10(23C)(VI) OF THE ACT AND THE SAID PROVISIONS APPLIED TO EXEMPTION CLAIMED U/S 11 OF THE ACT ONLY. 3 IV) EVEN OTHERWISE THE ASSESSEE HAD NOT VIOLATED TH E PROVISIONS OF SECTION 13(1)(C) READ WITH SECTION 13(3) SINCE M/S BABA AMARNATH EDUCATIONAL SOCIETY WAS NOT A SPECIFIED PERSON AS PER SECTION 13(3) OF THE ACT. V) THE ASSESSEE HAD NOT VIOLATED THE PROVISIONS OF SECTION 13(1)(D) R.W.S 11(5) ALSO SINCE THE ADVANCE WAS GIVEN FOR FULFILLMENT OF ITS OBJECT. VI) THERE WAS NO MERIT IN THE CONTENTION OF THE ASSESSING OFFICER THAT THE ASSESSEE WAS INDULGING ONLY IN GIVING LOANS AND ADVANCES AND BUILDING CAPITAL SINCE THE ADVANCE HAD BEEN GIVEN IN PURSUANCE OF ITS OBJECTS. 4. THE LD.CIT(APPEALS) AFTER CONSIDERING ASSESSEES SUBMISSIONS ALLOWED THE ASSESSEES APPEAL DELETING THE ENTIRE ADDITION MADE. 5. AGGRIEVED BY THE SAME, THE REVENUE HAS NOW FILED THE PRESENT APPEAL BEFORE US, RAISING THE FOLLOWING GRO UNDS: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT( A) HAS ERRED IN LAW WHILE ALLOWING EXEMP TION UNDER SECTION 10(23C)(VI) OF THE L.T.ACT. 1961 WITH OUT APPRECIATING THAT THERE WAS A CLEAR VIOLATION OF SUB CLAUSE(A) OF UN-NUMBERED PROVISO 3 TO SECTION 10(23C) WHICH ST RICTLY PROVIDES THAT APPLICATION OF INCOME SHALL BE WHOLLY AND EXCLUSIVELY TO THE OBJECTS FOR WHICH IT IS ESTABLISHED . THE ASSESSEE WAS PRECLUDED FROM APPLYING ITS INCOME OTHER T HAN ON ITS OBJECTS WHICH WAS SOLELY FOR EDUCATION PURPOS ES. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN LAW IN NOT TAKING INTO ACCOUNT TH AT THE ADVANCEMENT OF LOAN IS NOT AN APPLICATION OF IN COME FOR THE PURPOSE OF SECTION 10(23C)(VI). 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN LAW WHILE NOT CONSIDERING SUB CLAUSE (B) OF UN-NUMBEREDPROVISO3TOSECTION10(23C) W HICH PROHIBITS INVESTMENT OF FUNDS OTHER THAN IN ANY MOD E OR FORMS SPECIFIED IN SECTION 11(5).4. 4 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. C1T(A) HAS ERRED IN LAW WHILE ALLOWING BENEFIT U NDER SECTION 10(23C)(VI) OF THE L.T.ACT.1961 WITHOUT APPRECI ATING THAT THERE WAS A CLEAR VIOLATION OF SECTION 13 OF TH E INCOME TAX ACT. 5. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) IS RIGHT IN LAW AS THE FINDINGS RECOR DED ARE PERVERSE AND CONTRARY TO THE EVIDENCE/MATERIAL AVAI LABLE ON RECORD AND DULY CONSIDERED BY THE AO. 6. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE G ROUNDS OF APPEAL ON OR BEFORE THE DATE IT IS HEARD AND DISPOSED OFF. 6. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTIE S, GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AN D ALSO CAREFULLY PERUSED THE DOCUMENTS TO WHICH OUR ATTENT ION WAS DRAWN DURING THE COURSE OF HEARING BEFORE US. 7. THE FACTS RELATING TO THE CASE WHICH ARE NOT DI SPUTED, IS THAT THE ASSESSEE TRUST IS REGISTERED AS AN INST ITUTION ESTABLISHED WHOLLY FOR EDUCATIONAL PURPOSES U/S 10( 23C)(VI) OF THE INCOME TAX ACT, 1961 AND DURING THE IMPUGNED ASSESSMENT YEAR HAD CLAIMED EXEMPTION OF ITS INCOME UNDER THE SAID SECTION. IT IS ALSO NOT DISPUTED THAT INT EREST FREE LOAN OF RS.30 LACS WAS GIVEN TO ONE M/S BABA AMARNA TH EDUCATIONAL SOCIETY. 8. THE CONTENTION OF THE REVENUE IS THAT THE SAID L OAN IS IN VIOLATION OF THE PROVISIONS OF SECTION 13(1)(C) READ WITH SECTION 13(3) OF THE ACT AND HENCE THE ASSESSEE IS NOT ELIGIBLE TO CLAIM EXEMPTION U/S 10(23C)(VI) OF THE ACT.THE LD. DR, RELYING UPON THE ORDER OF THE ASSESSING OF FICER STATED THAT M/S BABA AMARNATH EDUCATIONAL SOCIETY I S COVERED U/S 13(3) BECAUSE BOTH THE ASSESSEE AND THE SAID TRUST HAVE COMMON MEMBERS AND HAVE INTEREST IN OTHE R 5 SISTER CONCERNS ALSO AND HAVE BEEN PROVIDING LOAN T O GROUP CONCERNS WHICH SHOWS THAT ALL TRUSTEES HAVE SUBSTAN TIAL INTEREST IN EACH SOCIETY. LD. DR ALSO POINTED OUT THAT THE ASSESSING OFFICER HAD ESTABLISHED NEXUS BETWEEN ALL THE GROUP SOCIETY COMPANIES AND THEIR TRUSTEES BY WAY O F DEMONSTRATING A TRANSACTION BETWEEN SHIVA EDUCATION AL TRUST, WHICH WAS A SOCIETY BELONGING TO A GROUP AND SACHDEVA BUILDING CONTRACTORS PVT. LTD. WHICH WAS A GROUP COMPANY, WHERE AGREEMENT BETWEEN BOTH WERE SHOWN TO HAVE BEEN MADE ON RANDOM FIGURE WITHOUT THINKING TH AT THERE WAS ANY REQUIREMENT OF MAINTAINING OF BUILDIN G OR NOT. 9. THE LD. DR ALSO DREW OUR ATTENTION TO THE FINDIN GS OF THE ASSESSING OFFICER WITH REGARD TO THE APPLICABIL ITY OF PROVISIONS OF SECTION 11(5) OF THE ACT TO THE SAID ADVANCE STATING THAT IT IS THE MODUS OPERANDI OF THE ASSESS EE TO TAKE UNSECURED LOANS FROM TRUSTS IN THE GROUP SOCIETY A ND THEN DIVERT THEM TO GROUP SOCIETIES AS UNSECURED LOAN AN D INVEST THE SAME IN FIXED ASSETS. LD.DR STATED THAT THE IM PUGNED ADVANCE BEING THE FUND OF THE ASSESSEE, THE ASSESSE E OUGHT TO HAVE DEPOSITED IT IN THE MODES SPECIFIED U/S 11( 5) OF THE ACT. THE LD. DR FURTHER RELIED UPON THE DECISION O F THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. V. G.P. FOUNDATION, 183 CTR (MAD) 330 IN SUPPORT OF ITS CON TENTION THAT THE BENEFIT OF EXEMPTION SHOULD BE DENIED TO T HE ASSESSEE SINCE IT HAD VIOLATED THE PROVISIONS OF SE CTION 13(1)(C)/13(1)(D) OF THE ACT. 6 10. THE LD.DR HAS ALSO CONTENDED THAT THE MAIN OBJE CT OF THE ASSESSEE IS NOT EDUCATION BUT CREATING CAPITAL BY GIVING LOANS AND ADVANCES TO GROUP SOCIETIES AND COMPANIES . LD.DR DREW OUR ATTENTION TO THE FINDINGS OF THE AS SESSING OFFICER AT PARA (I),(II) & (III) PAGE 5 AND 6 OF T HE ORDER AS UNDER: (I)ASSESSEE HAS GIVEN UNSECURED LOAN TO ITS SISTER CONCERN WITHOUT ANY CONSIDERATION. ASSESSEE IS NOT TAKING A NY INTEREST FROM THESE SISTER CONCERNS, NEITHER HAVING ANY SECURITY AGAINST THIS, WHICH SHOWS THAT ASSESSEE IS PROVIDING UNDUE BENEFIT TO ITS SISTER CONCERN (II) ASSESSEE HAS GIVEN UNSECURED LOAN TO ITS SISTE R CONCERN FOR CAPITAL INVESTMENTS ONLY, ON PERUSAL OF BALANCE SHEET OF BABA AMARNATH, IT IS CLEAR THAT THIS SOCIETY HAS TA KEN UNSECURED LOAN OF AMOUNT OF RS.80 LAKH/- FOR A.Y. 2 013-14 & INVESTING THE SAME IN CAPITAL INVESTMENTS OF RS.8 CRORE. CAPITAL INVESTMENTS CANNOT BE COUNTED AS EDUCATION AL PURPOSE. THIS SHOWS THAT ASSESSEE INTENTION IS ONLY CREATE THE CAPITAL NOT THE EDUCATION. (III) THE BELOW MENTIONED CHART SHOWS THAT THE TRUS TEES & GROUP SOCIETIES HAVE MODUS OPERANDI TO PROVIDE TH E LOANS TO GROUP CONCERNS & INVESTED THE SAME IN FIXE D ASSETS. DETAILS OF UNSECURED LOAN (TAKEN AND GIVEN) IN THE BOOK S OF ASSESSEE A.Y. 2011-12 UNSECURED LOANS AS A LIABILITY (TAKEN) AMOUNT IN LACS ADVANCE/UNSECURED LOAN AS RECOVERABLE (GIVEN) AMOUNT IN LACS BABA AMARNATH EDUCATIONAL SOCIETY 3000000 AMRITSAR INTEREST. FOUND TRUST 45141722 A.Y. 2012-13 UNSECURED LOANS AS A LIABILITY (TAKEN) AMOUNT IN LACS ADVANCE/UNSECURED LOAN AS RECOVERABLE (GIVEN) AMOUNT IN LACS AMRITSAR INTERNATIONAL FOUNDATION 17052435 BABA AMARNBATH EDU.TRUST 3000000 7 A.Y. 2013-14 UNSECURED LOANS AS A LIABILITY (TAKEN) AMOUNT IN LACS ADVANCE/UNSECURED LOAN AS RECOVERABLE (GIVEN) AMOUNT IN LACS BABA AMARNBATH EDU.TRUST 3000000 AMRITSAR INT. FOUND. TRUST 70523720 DETAILS OF UNSECURED LOAN (TAKEN AND GIVEN) IN THE BOOKS OF M/S BANA AMARNATH HIRA LAL SHARMA 5,00,000.00 AMRITISAR COLLEGE OF ENGG. & TECH. 30,00,000.00 SHIVA EDUCATIONAL TRUST 35,00,000.00 BABA BHOLA NATH EDU SOCIETY 6,47,800.00 IN THE ABOVE FACTS, REPLY OF ASSESSEE THAT THE SISTER TRUSTS ARE NOT COVERED UNDER 13(3) SPECIFIED PERSONS, IS NOT ACCEPTABLE BECAUSE THERE ARE COMMON MEMBERS, WHICH AR E HAVING INTEREST IN THE ALL SISTER CONCERNS. THE DETAIL S OF THE UNSECURED LOANS IN THE BOOKS OF EACH SOCIETY SHOW T HAT ALL THE SOCIETIES ARE HAVING LOAN OR ADVANCES FROM THEIR TRU STEES & SISTER SOCIETIES & SAME DISTRIBUTED AMONG THE SISTE R CONCERNS SOCIETIES & INVESTED INTO CAPITAL AS FIXED ASSETS. TH E ABOVE FACTS SHOW THAT ALL THE TRUSTEES ARE HAVING SUBSTANT IAL INTEREST INTO EACH SISTER SOCIETY. IT IS ALSO A FACT THAT FROM THE PERUSAL OF THEIR INDIVIDUAL BALANCE SHEET OF TRUSTEES, IT IS SEEN THAT THEY HAVE SOURCES OF INCOME FROM SALARY AND IN TEREST FROM GROUP SOCIETIES OR GROUP COMPANIES, THE SAME T HEN INVESTED INTO GROUP SOCIETIES AS LOAN/ADVANCES. THE ABOVE FACTS SHOW THAT THE GROUP SOCIETIES, GROU P COMPANIES & THEIR TRUSTEES & DIRECTORS/SHAREHOLDER HAVE NEXUS BETWEEN ALL OF THEM FOR DIVERSION OF MONEY FROM ONE HAND TO ANOTHER HAND UNDER THE UMBRELLA OF GROUP CONCERNS. THIS FACT IS ALSO CLEAR FROM THE TRANSACTION BETWEEN SHIVA EDUCATIONAL TRUST AND SACHDEVA BUILDING CONTRACTORS PRIVATE LIMITED. IN THIS THE GROUP SOCIETY. SHIVA EDUCATIONAL TRUST HAS PAID 3 3 LACS TO ITS SISTER CONCERN AND GROUP COMPANY- M/S SACHDEVA BUILDING CONTRACTORS PRIVATE LIMITED WITHOUT ADEQUATE SERVICE. THE AGREEMENT BETWEEN BOTH HAS MADE ON A R ANDOM FIGURE, WITHOUT THINKING THAT IS THERE ANY REQUIREMEN T OF MAINTENANCE OF BUILDING OR NOT? 11. PER CONTRA LD. COUNSEL FOR ASSESSEE DREW OUR AT TENTION TO THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE LD.CIT(APPEALS) AND POINTED OUT THEREFROM THAT IN THE FIRST 8 PLACE THE SAID ADVANCE WAS NOT GIVEN IN THE IMPUGNE D YEAR AT ALL BUT IN FACT PERTAINED TO ASSESSMENT YEAR 201 1-12. THE LD. COUNSEL FOR ASSESSEE STATED THAT THIS FACT IS PROVED BY A CHART GIVING DETAILS OF UNSECURED LOANS TAKEN AND GIVEN IN THE BOOKS OF THE ASSESSEE, REPRODUCED IN THE ASS ESSMENT ORDER AT PAGE 6 WHICH CLEARLY MENTION THE AFORESAID ADVANCE AS PERTAINING TO ASSESSMENT YEAR 2011-12 AND WHICH HAD BEEN ACCEPTED BY THE ASSESSING OFFICER. FURTHER TH E LD. COUNSEL FOR ASSESSEE STATED THAT THIS FACT HAS NOT BEEN CONTROVERTED BY THE REVENUE AT ANY STAGE WHEN POINT ED OUT TO IT I.E. EITHER BY THE ASSESSING OFFICER OR THE C IT(APPEALS). THE LD. COUNSEL FOR ASSESSEE STATED THAT FOR THIS R EASON ALONE, THE ASSESSEE CANNOT BE SAID TO HAVE VIOLATED THE PROVISIONS OF SECTION 13(1)(C)/13(1)(D) READ WITH S ECTION 13(3) OF THE ACT, IN THE IMPUGNED YEAR AND THE EXE MPTION, THEREFORE, U/S 10(23C)(VI) COULD NOT HAVE BEEN DENI ED TO THE ASSESSEE. 12. THE NEXT CONTENTION RAISED BY THE LD. COUNSEL F OR ASSESSEE WAS THAT THE PROVISIONS OF SECTION 13(1)(C )/(D) READ WITH SECTION 13(3) DID NOT APPLY TO EXEMPTIONS CLA IMED U/S 10(23C)(VI). 13. WITHOUT PREJUDICE TO THE ABOVE, THE LD. COUNSEL FOR ASSESSEE STATED THAT M/S BABA AMARNATH EDUCATIONAL SOCIETY WAS NOT A SPECIFIED PERSON AS PER THE PROVI SIONS OF SECTION 13(3) OF THE ACT AS DEMONSTRATED BEFORE THE CIT(APPEALS) ALSO BY WAY OF A TABLE REPRODUCED AT P AGES 8 AND 9 OF THE ORDER AND, THEREFORE, THE ASSESSEE CAN NOT BE 9 SAID TO HAVE VIOLATED THE PROVISIONS OF SECTION 13( 1)(C) BY WAY OF GIVING LOAN TO M/S BABA AMARNATH EDUCATIONAL SOCIETY. 14. THE LD. COUNSEL FOR ASSESSEE FURTHER STATED THA T THE ASSESSEE HAD ALSO NOT VIOLATED THE PROVISIONS OF SE CTION 11(5) OF THE ACT WHICH SPECIFIES THE MODES IN WHICH THE FUNDS OF THE TRUST ARE TO BE INVESTED, SINCE THE LO AN HAD BEEN GIVEN IN PURSUANCE OF ITS OBJECT OF ADVANCEMEN T OF EDUCATION, AS M/S BABA AMARNATH EDUCATIONAL SOCIETY WAS ALSO A REGISTERED SOCIETY U/S 12A OF THE ACT HAVING SIMILAR OBJECTIVES AS THE ASSESSEE SOCIETY. THE LD. COUNSE L FOR ASSESSEE RELIED UPON THE FOLLOWING CASE LAWS IN SUP PORT OF ITS ABOVE CONTENTION: JOINT COMMISSIONER OF INCOME TAX (OSD)(EXEMPTIONS)-II, CHENNAI VERSUS M/S. BHAKTAVATSALAM MEMORIAL TRUST 2015 (3) TMI 929 ITAT CHENNAI KANPUR SUBHASH SHIKSHA SAMITI VERSUS DEPUTY COMMISSIONER OF INCOME TAX-1, KANPUR 2012 (8) TMI 728 ITAT LUCKNOW M/S VAIRAMS KINDERGARTEN SOCIETY, RAJAGOPALAPURAM VERSUS THE COMMISSIONER OF INCOME TAX (APPEALS), TIRUCHIRAPALLI. 2015(6) TMI 856 ITAT CHENNAI PATANGRAO KADAM PRATISTHAN BHARATI VIDYAPEETH BHAWAN VERSUS ASST/DEPUTY COMMIISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, (2), PUNE 2013(2) TMI 579 ITAT PUNE DIRECTOR OF INCOME TAX (EXEMPTION) VS. ACME EDUCATIONL SOCIETY 326 ITR 146(DELHI) INCOME TAX APPELLATE TRIBUNAL CHENNAI SOCIETY OF DAUGHTERS OF MARY IMMACULATE & COLLABORATORS VS. DEPARTMENT OF INCOME TAX ON 4 JULY, 2012 ITA NO.963/MDS/2012 10 15. LD.COUNSEL FOR THE ASSESSEE FURTHER STATED THAT THE ABOVE CONTENTIONS OF THE LD.DR WAS ERRONEOUS AS POI NTED OUT BY THE ASSESSEE TO THE LD.CIT(A) ALSO AT PARA 5 OF HIS SUBMISSIONS MADE BEFORE HIM AND REPRODUCED AT PAGE 5 OF THE CIT(A) ORDER AS UNDER: 5.THAT THE ASSESSMENT ORDER IS FULL OF ERRORS.WRONG AND BASELESS FACTS HAVE BEEN PRESENTED TO PROVE AN IMAG INARY NEXUS OF SOME GROUP SOCIETIES,GROUP COMPANIES,GROUP TRUSTEES INVOLVED IN ENTRY SCAM DISREGARDING THE ACTUA L FACTS,NATURE OF TRANSACTIONS AMONG SOCIETIES AND THEIR MAIN ACTIVITIES AT LARGE. IN FACT THERE ARE FOUR SOCIETIES/TRUSTS IE. AMRTISAR INTERNATIONAL FOUNDATION TRUST ( ASSESSEE TRUST ), SHIVA EDUCATIONAL TRUST, BABA BHOLA NATH EDUCATIONAL SOC IETY AND BABA AMARNATH EDUCATIONAL SOCIETY IN WHICH SH. HIRA LAI SHARMA WAS A COMMON MEMBER. ALL OF THESE SOCIETIES/TRUSTS ARE HAVING SIMILAR OBJECTIVES AND ARE REGISTERED U/S 12A OF THE INCOME TAX ACT. DURING THE P ERIOD FROM AY 2009-10 TO AY 2011-12 SHIVA EDUCATIONAL TRUST ,AMRITSAR INTERNATIONAL FOUNDATION, AND BABA BHOL A NATH EDUCATIONAL SOCIETY GAVE FINANCIAL AID, IN THE S HAPE OF CORPUS DONATIONS AND INTEREST FREE LOANS TO BABA AM ARNATH EDUCATIONAL SOCIETY. SINCE ALL THESE SOCIETIES/TRUST EX CEPT BABA AMARNATH EDUCATIONAL SOCIETY WERE ESTABLISHED MORE THAN 10 YEARS BACK, HAVE ADEQUATE FUNDS TO SUPPORT THIS NEWLY ESTABLISHED BABA AMARNATH EDUCATIONAL SOCIETY , THEY RENDER FINANCIAL AID IN THE SHAPE OF CORPUS DO NATIONS AND TEMPORARY LOANS AND THEIR BY PURSUING THEIR OBJE CTIVE OF EDUCATION. SINCE ALL THESE SOCIETIES ARE HAVING SIMILA R OBJECTS AND REGISTERED U/S 12A THE FINANCIAL AID GI VEN TO BABA AMARNATH EDUCATIONAL SOCIETIES BY OTHER SOCIETIES IN CLUDING ASSESSSEE SOCIETY TREATED AS APPLICATION OF INCOME U /S LL(L)/10(23C)(VI) OF THE INCOME TAX ACT. (REFER MO A AND BYLAWS OF AMRTISAR INTERNATIONAL FOUNDATION AND BABA BHOLA NATH EDUCATIONAL SOCIETY AT PAGE NO. 56 OF PAPE R BOOK). SH. HIRA LAI SHARMA HAS ALSO GIVEN A TEMPORARY LOAN TO BABA AMARNATH EDUCATIONAL SOCIETY IN THE AY 2011-12. BABA AMARNATH EDUCATIONAL SOCIETY APPLIED ALL THE FUNDS IN CLUDING THESE CORPUS DONATIONS AND LOANS FOR THE PURPOSE OF PURSUING ITS OBJECTIVES OF EDUCATION BY CREATING INFRASTRUCTURAL FACILITIES FOR THE ESTABLISHMENT OF AN ENGINEERING A ND MANAGEMENT COLLEGE. BESIDES THESE FINANCIAL AID FRO M THESE SOCIETIES AND CHAIRMAN (HIRA LAI SHARMA). BABA AMAR NATH EDUCATIONAL SOCIETY HAVE TO BORROWED LOANS FROM BANKS. ( REFER PAGE NO. 37 & 41 OF PAPER BOOK) 11 THOUGH HAVING ONE COMMON MEMBER IN THESE SOCIETIES! TRUST MAY TECHNICALLY BE CALLED SISTER CONCERNS. NO TRUSTEES OR MEMBER OR RELATIVE OF ANY MEMBER OR ANY CONCERN OR C OMPANY IN WHICH ANY OF THE MEMBERS OR TRUSTEES OF THESE FOUR SOCIETIES HAVE ANY FINANCIAL INTEREST HAS ENTERED IN ANY TRANSA CTION WITH THESE SOCIETIES/TRUST DURING AY 2013-14 OR ANY OF THE PRECEDING ASSESSMENT YEAR. THERE IS NOTHING ON RECOR D WHICH INDICATE ANY NEXUS OF GROUP MEMBERS/TRUSTEES, GROUP SOCIETIES OR GROUP COMPANIES INVOLVED IN ENTRY SCAM A S CLAIMED BY LD. AO IN THE ASSESSMENT ORDER. OUT OF THE TWO CH ART SHOWING DETAILS OF UNSECURED LOANS ARE WRONGLY PRES ENTED AND INTERPRETED. FIRST CHART SHOWN ON PAGE 6 OF THE ASS ESSMENT ORDER RELATES TO AMRITSAR INTERNATIONAL FOUNDATION TR UST, IN WHICH RS.3000000 SHOWN GIVEN TO BABA AMARNATH EDUCA TIONAL SOCIETY IN THE AY 2011-12 AND SHOWN AS IT IS IN THE AY 2012- 13 AND 2013-14, WHERE AS OTHER FIGURES IN THE NAME OF AMRTISAR INTERNATIONAL FOUNDATION IS MISREPORTED. (R EFER PAGE NO. 67 OF THE PAPER BOOK FOR BALANCE SHEET OF AMRITSAR INTERNATIONAL FOUNDATION TRUST). SECOND CHART RELATES TO BABA AMA RNATH EDUCATIONAL SOCIETY IS SHOWING THE DETAILS OF LOANS TAKEN BY THEM FROM OTHER THREE SOCIETIES INCLUDING ASSESSEE SOCIETY AND THE COMMON MEMBER SH. HIRA LAI SHARMA. THIS CHART I S EVIDENT OF THE FACT THAT ONLY BABA AMARNATH EDUCATIONAL SOCIE TY, WHICH WAS FACING FINANCIAL STAGNANCIES IN THE INITIAL STAGE OF ITS ESTABLISHMENT RECEIVED LOAN FROM OTHER SOCIETIES TRU ST AND MEMBERS AND THERE IS NOTHING ON RECORD TO PROVE INTER TRUSTEE MEMBERS, INTER SOCIETIES OR OTHER TRANSACTIONS OR DIST RIBUTION OF FUNDS AMONG THEM AS CLAIMED BY LD AO IN THE ASSES SMENT ORDER. FURTHER, DURING THE ASSESSMENT PROCEEDINGS N O ITR OR BALANCE SHEET OF THE MEMBERS OF THE ASSESSEE TRUST O R GROUP SOCIETY/TRUST CALLED FOR TO ESTABLISH THAT THE TRUSTEE S ARE DRAWING SALARY AND INTEREST FROM GROUP SOCIETIES OR GROUP COMPANIES AND SAME INVESTED INTO GROUP SOCIETIES AS LOAN ADVANCE, AS MENTIONED IN THE ASSESSMENT ORDER. EVEN THE REFERENCE OF A TRANSACTION OF RS.33 LACS BETWEEN SH IVA EDUCATIONAL TRUST AND SACHDEVA BUILDING CONTRACTORS PVT. LTD. GIVEN IN LAST PARAGRAPH OF PAGE 6 OF THE ASSESSMENT ORDER IS WRONG AND FULL OF ERRORS. IN FACT THE TRANSACTION R ELATES TO AMRITSAR INTERNATIONAL TRUST. EVEN THE COMPANY SACHD EVA BUILDING CONTRACTORS PVT LTD IS NOT CONCERNED WITH EI THER OF THE MEMBERS/TRUSTEES OR GROUP OF FOUR SOCIETIES/TRUSTS REFERRED ABOVE. (REFER ROC DETAILS OF COMPANY AT PAGE NO. 55 OF PAPER BOOK). IN THESE CIRCUMSTANCES, THE AGREEMENT BETWEEN AMRITSAR INTERNATIONAL FOUNDATION TRUST AND SACHDEVA BUILDING CONTRACTS PVT. LTD., AS REPRODUCED ON PAGE 7 TO 9 OF THE ORDER IS IRRELEVANT. ALL THE DETAILS REGARDING TRAN SACTIONS BETWEEN THESE TWO ALONG WITH WORK UNDERTAKEN BY SACH DEVA BUILDING CONTRACTS PVT. LTD, DULY FURNISHED DURING ASSESSMENT PROCEEDINGS TO THE SATISFACTION OF WORTHY AO AND IT HAS BEEN ACCEPTED AS SUCH. THIS IS EVIDENT OF THE FACT THAT WHILE DENYING EXEMPTION U/S 10(23C)(VI) ONLY THE AMOUNT OF SURPLU S SHOWN IN THE INCOME AND EXPENDITURE ACCOUNT OF THE TRUST WAS ADDED BACK TO THE RETURNED INCOME. (REFER PAGE 10 OF THE O RDER ). IN FACT THE TRANSACTIONS OF LOANS WHICH ARE REFERRED I N THE ORDER ARE SIMPLE CASE OF GIVING LOAN FROM THREE SISTER SOCI ETIES TO ANOTHER SISTER SOCIETIES WHERE ALL THESE SISTER SOCI ETIES ARE 12 HAVING SIMILAR OBJECTIVES AND ACTIVITIES AND ALL AR E REGISTERED U/S 12A. THE TRANSACTIONS OF GIVING SUCH INTEREST F REE LOAN FROM THREE SISTER SOCIETIES INCLUDING ASSESSEE SOCIETY I S APPLICATION OF INCOME U/S 11(1))/10(23C)(VI) OF THE ACT. 16. WE HAVE HEARD BOTH THE PARTIES ,GONE THROUGH TH E ORDERS OF THE AUTHORITY BELOW AND ALSO THE DOCUMENT S REFERRED TO BEFORE US. WE FIND NO INFIRMITY IN THE ORDER OF THE LD.CIT(APPEALS). CLEARLY THE ONLY REASON FOR FI NDING THE ASSESSEE INELIGIBLE FOR EXEMPTION U/S 10(23C)(VI) I S ON ACCOUNT OF THE INTEREST FREE LOAN GIVEN BY IT TO M/ S BABA AMARNATH CHARITABLE TRUST. THE FACT THAT THE IMPUGN ED LOAN/ADVANCE PERTAINED TO A.Y 2011-12 AND NOT TO T HE YEAR IN APPEAL BEFORE US HAS REMAINED UNCONTROVERTED, SO IN ANY CASE, THERE CANNOT BE SAID TO BE ANY VIOLATION IN T HE IMPUGNED YEAR BY THE ASSESSEE EITHER OF THE PROVISI ONS OF SECTION 13(1)(C) READ WITH SECTION 13(3) OR EVEN S ECTION 13(1)(D) RWS 11(5) OF THE ACT AT ALL. 17. FURTHER, WE FIND THAT THE ASSESSEE HAD DEMONST RATED BY WAY OF A DETAILED CHART LISTING ALL RELATIONSHIP S COVERED U/S 13(3), THAT M/S BABA AMARNATH EDUCATIONAL SOCIE TY IS NOT A SPECIFIED PERSON AS PER THE PROVISIONS OF SEC TION 13(3) OF THE ACT AND THE REVENUE HAS NOT CONTROVERTED THE SAME. LD.DR HAS MERELY REITERATED THE GENERAL AND CASUAL REMARKS OF THE ASSESSING OFFICER OF ESTABLISHING NEXUS BETW EEN THE ASSESSEE AND M/S BABA AMARNATH EDUCATIONAL SOCIETY BY WAY OF HAVING ONE COMMON MEMBER ONLY OR ON ACCOUNT OF INDULGING IN TRANSACTION OF GIVING LOAN TO ONE ANOT HER. CLEARLY, THE LD. DR HAS NOT POINTED OUT AS TO HOW T HE ABOVE SITUATIONS ARE COVERED U/S 13(3) TO ESTABLISH M/S B ABA 13 AMARNATH EDUCATIONAL SOCIETY AS A SPECIFIED PERSON, WHICH IS AN EXHAUSTIVE LIST, LISTING ONLY THE FOLLOWING AS SPECIFIED PERSONS: A) AUTHOR OF THE TRUST OR FOUNDER OF THE INSTITUTI ON B) PERSONS WHO HAVE MADE SUBSTANTIAL CONTRIBUTION TO THE TRUST OR INSTITUTION I.E EXCEEDING RS.50,000/- C) WHERE THE AUTHOR, FOUNDER OR PERSON IS A HUF, MEMBER OF THE HUF D) TRUSTEE OF THE TRUST OR MANAGER OF THE INSTITUT ION E) ANY RELATIVE OF THE AFORESAID PERSONS F) ANY CONCERN IN WHICH AFORESAID PERSONS HAVE SUBSTANTIAL INTEREST. 18. CLEARLY HAVING A COMMON MEMBER OR INDULGING IN A NUMBER OF TRANSACTIONS OF LOAN AND ADVANCES IS NOT ENVISAGED AS ESTABLISHING A SPECIFIED PERSON U/S 13 (3) OF THE ACT. HAVING SAID SO, NO QUESTION ARISES OF THE ASSESSEE INDULGING IN TRANSACTIONS PROHIBITED BY SECTION 13( 1)(C) OF THE ACT, WHICH LISTS TRANSACTIONS WITH PERSONS SPEC IFIED U/S 13(3) OF THE ACT. THEREFORE, WE CONCUR WITH THE LD.CIT(APPEALS) THAT THE PROVISIONS OF SECTION 13(1 )(C) READ WITH SECTION 13(3) ARE NOT APPLICABLE IN THE PRESEN T CASE. 19. WE ALSO FIND THAT THE ASSESSEE HAD STATED ON RE CORD THAT M/S BABA AMARNATH EDUCATIONAL SOCIETY WAS ALSO A CHARITABLE SOCIETY REGISTERED U/S 12A OF THE ACT, F OR THE PURPOSE OF IMPARTING EDUCATION AND LOAN WAS ADVANCE D TO IT TO ASSIST IN CARRYING OUT ITS OBJECTIVES WHICH WAS IDENTICAL TO THAT FOR WHICH THE ASSESSEE SOCIETY WAS ALSO SET UP. 14 THESE FACTS HAVE NOT BEEN CONTROVERTED BY THE REVEN UE. THE SAID LOAN/ADVANCE THEREFORE QUALIFIED AS APPLI CATION OF INCOME BY THE ASSESSEE AND WAS NOT AN INVESTMENT O R DEPOSIT COVERED U/S 11(5) OF THE ACT. THE ASSESSEE, WE HOLD THEREFORE CANNOT BE SAID TO HAVE VIOLATED THE PROV ISIONS OF SECTION 13(1)(D) R.W.S 11(5) OF THE ACT. THE RELIAN CE PLACED BY LD.COUNSEL FOR THE ASSESSEE ON THE DECISION OF T HE HONBLE DELHI HIGH COURT IN THE CASE OF DIRECTOR OF INCOME TAX (EXEMPTION) VS ACME EDUCATIONAL SOCIETY 326 IT R 146 IS APT, WHEREIN AFTER DISCUSSING THE ISSUE AT LENG TH IT WAS HELD THAT INTEREST FREE LOAN GIVEN BY ONE CHARITABL E SOCIETY TO ANOTHER CHARITABLE SOCIETY HAVING SIMILAR OBJEC TS WAS NEITHER A DEPOSIT OR INVESTMENT IN VIOLATION OF SEC TION 13(1)(D) R.W.S. 11(5) OF THE ACT. THE RELEVANT FIND INGS OF THE HONBLE HIGH COURT AT PARA 15 OF ITS ORDER ARE AS UNDER: 15 . KEEPING IN VIEW THE AFORESAID EXPOSITION OF LAW, WE ARE OF THE OPINION THAT INTEREST-FREE LOAN OF RS. 90,50,000 GIVEN BY THE ASSESSEE-SOCIETY TO NAV BHARTI EDUCATIONAL SOCIET Y DOES NOT VIOLATE S. 13(1)(D) R/W S. 11(5) OF ACT, 1961 AS THE SAID LOAN WAS NEITHER AN 'INVESTMENT' NOR A 'DEPOSIT'. THIS IS MORE SO AS BOTH THE SOCIETIES HAD SIMILAR OBJECTS AND WER E REGISTERED UNDER S. 12A OF ACT, 1961 AND HAD APPROV ALS UNDER S. 80G OF THE ACT, 1961. THE FACT THAT THE LOAN WAS IN TEREST- FREE AND HAD BEEN SUBSEQUENTLY RETURNED IS ALSO SIGN IFICANT. IN VIEW OF THE ORDER PASSED BY THE CIT(A) IN THE CAS E OF NAV BHARATI EDUCATIONAL SOCIETY, MS. BANSAL'S ALLEGATION WITH REGARD TO 'ENTRY SCAM' ALSO DOES NOT SURVIVE. CONSEQU ENTLY, THERE IS NO SUBSTANTIAL QUESTION OF LAW INVOLVED IN TH E PRESENT APPEAL AND ACCORDINGLY, APPEAL IS DISMISSED BUT WITH NO ORD ER AS TO COSTS . 20. THE SAID PROPOSITION HAS BEEN REITERATED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS INDI AN NATIONAL THEATRE TRUST (2008)305 ITR 149. LD.COUNS EL FOR THE ASSESSEE HAS ALSO DRAWN OUR ATTENTION TO A NUMB ER OF OTHER DECISIONS WHEREIN IT HAS BEEN HELD THAT GIVIN G LOANS 15 TO OTHER CHARITABLE INSTITUTIONS REGISTERED U/S 12A HAVING SIMILAR OBJECTS ARE NOT IN VIOLATION OF THE PROVISI ONS OF SECTION 13(1)(D) READ WITH SECTION 11(5) OF THE ACT . LD. DR HAS NOT DISTINGUISHED THE CASE LAWS RELIED UPON BY THE ASSESSEE. ON THE CONTRARY, THE RELIANCE PLACED BY T HE LD.DR ON THE DECISION OF THE HON,BLE MADRAS HIGH COURT IN THE CASE OF CIT VS V.G.P. FOUNDATION, WE FIND IS BASED ON DIFFERENT SET OF FACTS, SINCE IN THAT CASE THE ADVA NCE WAS GIVEN TO SISTER CONCERN WITH NO FINDING THAT IT WA S ALSO A CHARITABLE SOCIETY REGISTERED WITH THE SAME OBJECTS AS THE DONOR, WHILE IN THE PRESENT CASE THE LOAN HAS BEEN GIVEN BY ONE SOCIETY TO ANOTHER HAVING SIMILAR OBJECTS AND B OTH SOCIETIES ARE REGISTERED U/S 12A. THEREFORE, WE AGR EE WITH THE LD.CIT(APPEALS) THAT THE IMPUGNED ADVANCE DID N OT VIOLATE THE PROVISIONS OF SECTION 13(1)(D) R.W.S. 1 1(5) OF THE ACT ALSO. 21. IN VIEW OF THE ABOVE, WE CONCUR WITH THE LD.CIT(APPEALS) THAT THE ASSESSEE BY GIVING ADVANCE OF RS.30 LACS TO M/S BABA AMARNATH EDUCATIONAL SOCIETY HAD NOT VIOLATED THE PROVISIONS OF SECTION 13(1)(C) REA D WITH SECTION 13(3) OR SECTION 13(1)(D) R.W.S. 11(5) OF T HE ACT AND, THEREFORE, THERE WAS NO REASON TO DENY EXEMPTION CL AIMED BY THE ASSESSEE U/S 10(23C)(VI) OF THE ACT. 22. WE ARE ALSO IN AGREEMENT WITH THE LD.COUNSEL OF THE ASSESSEE THAT NOTHING HAS BEEN BROUGHT ON RECORD BY THE REVENUE TO PROVE THAT THE MAIN OBJECT OF THE ASSESS EE ACTUALLY WAS GIVING LOANS AND NOT PROVIDING EDUCATI ON. 16 EXCEPT FOR THE FACT OF GIVING LOAN OF RS.30 LACS TO BABA AMARNATH EDUCATIONAL TRUST NO OTHER LOAN GIVEN BY T HE ASSESSEE HAS BEEN SHOWN TO US. THE SAID LOAN HAS AL READY BEEN HELD BY US AS APPLICATION OF ITS INCOME FOR TH E PURPOSE OF ADVANCING ITS OBJECT OF PROVIDING EDUCATION, ABO VE. THEREFORE, THERE IS NO MERIT IN THE CONTENTION OF T HE LD.DR THAT THE ASSESSEE IS INDULGING IN THE ACTIVITY OF G IVING LOANS AND ADVANCES. EVEN THE IDENTICAL ALLEGATION OF THE LD.DR VIS-A-VIS THE ENTIRE GROUP WE FIND REMAINS UNPROVE D SINCE THE TABLE RELIED UPON BY THE LD.DR IN SUPPORT OF IT S CONTENTION REFLECTS ONLY THE LOAN GIVEN BY THE ASSE SSEE AND TWO OTHER TRUSTS OF THE GROUP TO M/S BABA AMARNATH TRUST. THE SAME HAS ALREADY BEEN EXPLAINED BY THE LD.COUNS EL FOR THE ASSESSEE AS HAVING BEEN GIVEN TO LEND FINANCIAL SUPPORT TO THE SAID TRUST IN THE INITIAL YEARS OF ITS SETTI NG UP, WHICH FACT HAS NOT BEEN CONTROVERTED BY THE REVENUE. EVEN OTHERWISE IT FAILS TO BRING TO LIGHT HOW THE ENTIRE GROUP WAS INVOLVED IN CREATING CAPITAL ONLY. EVEN THE REFERE NCE TO THE TRANSACTION BETWEEN SHIVA EDUCATIONAL TRUST AND SAC HDEVA BUILDING CONTRACTORS PVT. LTD. HAS NO RELEVANCE TO THE ISSUE, SINCE AS RIGHTLY POINTED OUT BY THE LD.COUNS EL FOR THE ASSESSEE NO DISALLOWANCE/ADDITION HAS BEEN MADE ON ACCOUNT OF THE SAME. THE CONTENTION OF THE LD.DR, WE HOLD, THEREFORE, HAS NO LEGS TO STAND ON AND IS THUS DISM ISSED IN VIEW OF THE ABOVE, WE HOLD THAT THERE WAS NO BA SIS AT ALL FOR DENYING EXEMPTION TO THE ASSESSEE SOCIET Y U/S 10(23C) (VI) OF THE ACT. WE THEREFORE UPHOLD THE O RDER OF THE 17 LD.CIT(A) DELETING THE ADDITION OF RS.3,64,60,383/- . ALL THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 24. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- ( SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED 8 TH DECEMBER, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH