The ACIT, 2(1), V. M/s H. K. Kalchuri Trust,

ITA 535/IND/2007

• Counselvise Citation: 53522714 RSA 2007
• Duration Of Justice: 3 year(s) 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 04-04-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 15-10-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KESHAVE SAXENA
• Assessee Lawyers: M C MEHTA; HITESH CHIMNANI CAS
• Keywords: Depreciation; Charitable institution; Question of law; Benefit of exemption; Revenue expenditure
• Section: 133A; 80G; 12A; 12AA; 131; 12; 28; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH,JM AND SHRI R.C.SHARMA,A M PAN NO. : AAATH3738-E I.T.A.NOS. 533 TO 535/IND/2007 & 334/IND/2008 A.YS. : 2002-03 TO 2005-06 ACIT, H.K.KALCHURI TRUST, 2(1), BHOPAL. BHOPAL APPELLANT RESPONDENT APPELLANT BY : SHRI KESHAVE SAXENA, CIT DR RESPONDENT BY : S/SHRI M. C.MEHTA AND HITESH CHIMNANI, CAS O R D E R PER BENCH THESE ARE APPEALS FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) FOR THE ASSESSMENT YEAR 2002-03, 2003-04, 2004-05 SAND 2005-06. 2. COMMON GROUNDS HAVE BEEN TAKEN BY THE REVENUE IN AL L THE YEARS. WE ARE REPRODUCING HEREWITH GROUNDS TAKE N BY THE REVENUE IN THE ASSESSMENT YEAR 2002-03 :- -: 2: - 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS ERRED IN 1. DELETING THE DISALLOWANCE OF RS. 5,40,182/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF LAB AND PRACTICAL EQUIPMENTS/CONSUMABLE. 2. DELETING THE DISALLOWANCE OF RS. 1,37,842/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PERSONAL EXPENSES OF THE TRUSTEE. 3. DELETING THE ADDITION AND RS. 1,92,93,896/- MADE BY THE ASSESSING OFFICER AND ALLOWING THE EXEMPTIONS U/S 11 & 12 OF THE INCOME-TAX ACT, TO THE ASSESSEE THOUGH IT WAS NOT ENTITLED FOR THE SAME AS DISCUSSED IN THE BODY OF THE ASSESSMENT ORDER. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUS ED. THE ASSESSEE TRUST WAS INCORPORATED ON 8.5.1998. IT WAS REGISTERED UNDER THE M.P. PUBLIC TRUST ACT, 1951, O N -: 3: - 3 13.1.1999. THE ASSESSEE TRUST HAD EARLIER BEEN GRAN TED REGISTRATION U/S 12A OF THE INCOME-TAX ACT, 1961, A S PER ORDER OF CIT DATED 17.11.2004 , W.E.F. 1.4.2003. AGAINST THE ORDER OF CIT GRANTING REGISTRATION U/S 12A W.E.F. 1.4.2003, IN PLACE OF THE DATE OF INCEPTION OF THE TRUST, THE ASSESSEE FI LED APPEAL BEFORE THE TRIBUNAL. THE TRIBUNAL VIDE ITS ORDER DA TED 12.3.2007 GRANTED REGISTRATION TO THE ASSESSEE TRUS T W.E.F. 13.1.1999 I.E. FORM THE DATE OF ITS CREATION. DURIN G THE ASSESSMENT YEAR 2002-03, THE ASSESSEE TRUST WAS RUN NING A FOLLOWING EDUCATIONAL INSTITUTION :- LAXMI NARAYAN COLLEGE OF TECHNOLOGY, BHOPAL. C.L.C. MEMORIAL HOMEOPATHIC MEDICAL COLLEGE, BILASPUR, AND CHOUKSEY ENGINEERING COLLEGE, BILASPUR. THE MAIN OBJECTIVES OF THE TRUST AS PER ITS OBJECTS ARE TO OPEN AND RUN TECHNICAL EDUCATION COLLEGES I.E. ENGINEERI NG COLLEGES, COLLEGES OF M. C. A., BUSINESS MANAGEMENT COLLEGE, HOMEO MEDICAL COLLEGE ETC. BESIDES THIS, THERE ARE OTHER CHARITABLE OBJECTS ALSO -: 4: - 4 4. DURING THE COURSE OF ASSESSMENT FOR ASSESSMENT YEAR 2002-03, THE AO OBSERVED THAT THE SURVEY U/S 133A W AS CONDUCTED ON 3.7.2001 AT ASSESSEES PREMISES SITUAT ED AT 31, SHAMLA HILLS, BHOPAL. ACCORDINGLY, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. THEREAFTER, BOOKS OF THE ASSESSEE WERE REFERRED FOR SPECIAL AUDIT U/S 142(2A). DURING THE COURSE OF SCRUTINY ASSESSMENT, THE AO OBSERVED THAT THE AS SESSEE H.K.KALCHURI EDUCATION TRUST, BHOPAL, WAS INCORPORA TED ON 8.5.1998 AND REGISTERED WITH THE REGISTRAR PUBLIC T RUST, BHOPAL, VIDE REGISTRATION NO.3/98 AS PER THE REGIST RATION CERTIFICATE DATED 13.1.1999. IT TOOK OVER ALL THE A SSETS OF HAIHAYA KSHATRIYA EDUCATION SOCIETY, BHOPAL, BY EXE CUTING A TRUST DEED ON STAMP PAPER OF RS. 500/-. IT OWNS AND RUNS THE FOLLOWING EDUCATIONAL INSTITUTIONS :- I) LAXMI NARAYAN COLLEGE OF TECHNOLOGY, BHOPAL. II) C.L.C. MEMORIAL HOMEOPATHIC MEDICAL COLLEGE, BILASPUR. III) CHOUKSEY ENGG. COLLEGE, BILASPUR. -: 5: - 5 5. THE AO ALSO OBSERVED THAT IN VIEW OF THE ORDER OF T HE CIT, BHOPAL, DATED 17.11.2004, THE ASSESSEE TRUST WAS GR ANTED REGISTRATION U/S 12A W.E.F. 1.4.2003. ACCORDINGLY, IT WAS HELD THAT EXEMPTION U/S 11 WAS NOT AVAILABLE TO THE ASSE SSEE TRUST IN THE YEAR UNDER CONSIDERATION I.E. ASSESSMENT YEA R 2002-03. THE AO FURTHER OBSERVED THAT THE ASSESSEE TRUST WAS ALSO NOT APPROVED U/S 10(23C)(VI), ALTHOUGH ITS RECEIPTS WER E IN EXCESS OF RS. 1 CRORE DURING THE YEAR UNDER CONSIDERATION. THE AO FURTHER NOTED THAT IN CONNECTION WITH THE SURVEY PR OCEEDINGS U/S 133A SUMMONS U/S 131 WAS SERVED ON SMT. POONAM CHOUKSEY ( W/O SHRI JAINARAYAN CHOUKSEY, MANAGING T RUSTEE ) AND HER STATEMENT WAS RECORDED ON OATH ON 3.7.200 1. THE AO FURTHER STATED THAT AS PER THE OBSERVATION MADE IN THE AUDIT REPORT U/S 142(2A), THE FEE RECEIVED IN THE F ORM OF DEVELOPMENT FUND IS REVENUE INCOME OF THE TRUST. TH E ASSESSEE-TRUST HAS RECEIVED CONSOLIDATED DEVELOPMEN T FUND DURING THE FINANCIAL YEAR 2001-02 FOR RS. 1,31,77,0 00/- .CONSIDERING THE REVENUE NATURE OF THIS AMOUNT OF R S. 1,31,77,000/-, THE SAME WAS INCLUDED IN CALCULATION OF TOTAL INCOME FOR ASSESSMENT YEAR 2002-03. -: 6: - 6 6. THE AO FURTHER STATED THAT AS PER AUDIT REPORT U/14 2(2A), THE EXPENSES CHARGED TOWARDS PURCHASE OF LAB EQUIPM ENTS WERE NOT VERIFIABLE IN MANY CASES IN ABSENCE OF PRO PER SUPPORTING VOUCHERS. BY OBSERVING THAT THE ASSESSEE HOWEVER COULD NOT MAKE NECESSARY VERIFICATION OF SUCH EXPEN SES OR FURNISH BIFURCATION BETWEEN EXPENSES ON PURCHASE OF FRESH EQUIPMENTS AND EXPENSES ON CONSUMABLES ETC. AO DISA LLOWED A PART OF EXPENSES. AS PER SCHEDULE B THE ASSESSE E HAS WRITTEN OFF 33.33 % OF THE GROSS VALUE OF RS. 76,42 ,376.48 AS ON 31.3.2002. THE TOTAL PURCHASES DURING THE YEAR H AVE BEEN SHOWN AT RS. 36,01,217/- UNDER THE HEAD LAB AND PRA CTICAL EQUIPMENTS/CONSUMABLES. THE AO STATED THAT PURCHASE S LACK VERIFIABILITY IN THE ABSENCE OF PROPER SUPPORTING V OUCHERS AND BIFURCATION BETWEEN EXPENSES ON FRESH EQUIPMENTS AN D FRESH CONSUMABLES, ACCORDINGLY EXPENDITURE IN RESPECT OF PURCHASES DURING THE YEAR WAS DISALLOWED ON ESTIMATE BASIS. A CCORDINGLY, SUCH DISALLOWANCE WAS WORKED OUT AT RS. 5,40,182/-. 7. BY OBSERVING THAT SUPPORTING VOUCHER ON CONSTRUCTIO N OF BUILDING WAS NOT AVAILABLE, THE AO ALSO DISALLOWED DEPRECATION TO THE EXTENT OF 5 % OF THE COST OF EXPENDITURE. -: 7: - 7 8. BY REFERRING TO THE STATEMENT OF SMT. POONAM CHOUKS EY W/O SHRI JAI NARAYAN CHOUKSEY, MANAGING TRUSTEE, AO DISALLOWED EXPENSES ON ACCOUNT OF SALARY PAID TO DR IVER, WATCHMAN, PEON AND MALI TO THE EXTENT OF 50 %. SIMI LARLY, OUT OF PETROL AND DIESEL EXPENSES, 20 % WAS DISALLOWED. CORRESPONDING DISALLOWANCE WAS ALSO MADE UNDER THE HEAD DEPRECIATION CLAIM IN RESPECT OF THESE VEHICLES. FINALLY BY ALLEGING THAT PERSONAL BENEFIT WAS TAKEN BY THE TRU STEE ENTIRE INCOME OF THE TRUST WAS BROUGHT TO TAX NET BY DECLI NING CLAIM OF EXEMPTION U/S 11. 9. BEFORE THE CIT(A), CONTENTION OF THE ASSESSEE WAS T HAT DEVELOPMENT FUND FEE RECEIVED BY THE ASSESSEE WAS C APITAL RECEIPT NOT LIABLE TO TAX. IT WAS SUBMITTED THAT AS PER THE GUIDELINES ISSUED BY AICTE, ALL THE COLLEGES ARE RE QUIRED TO COLLECT DEVELOPMENT FUND FEE FROM STUDENTS, WHICH I S PART OF CORPUS OF THE COLLEGE. THE AMOUNT IN THE DEVELOPME NT FUND IS TO BE UTILIZED FOR DEVELOPMENT AND INFRASTRUCTURE F ACILITY OF THE COLLEGE AND NOT FOR ANY REVENUE EXPENDITURE NOR FOR ANY OTHER PURPOSE. THEREFORE, DEVELOPMENT FUND FEE ARE CONTRI BUTIONS RECEIVED FROM STUDENTS BY THE COLLEGE TO FORM PART OF THE -: 8: - 8 CORPUS OF THE COLLEGE. THE SAME IS NOT REVENUE INCO ME. IT WAS ALSO SUBMITTED THAT THE AO ERRED IN HOLDING THAT TH E EDUCATIONAL INSTITUTIONS RUN BY THE TRUST WAS SIMIL AR TO BUSINESS ENTITY, THUS NOT ENTITLED TO EXEMPTION OF ITS INCOME. HE SUBMITTED THAT THE AO FAILED TO APPRECIATE THAT THE EDUCATIONAL INSTITUTIONS RUN BY THE ASSESSEE TRUST ARE RECOGNIZED BY AICTE, A BODY OF MINISTRY OF HUMAN RE SOURCES AND DEVELOPMENT, GOVERNMENT OF INDIA. 10. BY THE IMPUGNED ORDER, THE LD. CIT(A) HELD THAT INC OME OF THE ASSESSEE TRUST WAS EXEMPT U/S 11. FOLLOWING WAS THE PRECISE OBSERVATION OF THE CIT(A) :- I HAVE CONSIDERED THE DETAILED SUBMISSIONS OF THE LD. AUTHORIZED REPRESENTATIVE. I HAVE ALSO CONSIDERED THE FINDINGS OF THE AO MENTIONED IN THE ASSESSMENT ORDER. AFTER DUE CONSIDERATION OF THE FACTS, I HOLD THAT THE AO WAS NOT JUSTIFIED IN HOLDING THAT THE EDUCATIONAL INSTITUTIONS RUN BY THE ASSESSEE TRUST WERE SIMILAR TO BUSINESS ENTITY NOT ENTITLED TO EXEMPTION OF ITS INCOME. I HAVE ALREADY HELD THAT THE ASSESSEE TRUST IS -: 9: - 9 ENTITLED TO EXEMPTION U/S 11 OF THE INCOME-TAX ACT FOR THE CURRENT ASSESSMENT YEAR. THE AO HAS NOWHERE CONTRADICTED THAT THE ASSESSEE TRUST IS NOT RUNNING EDUCATIONAL INSTITUTIONS. THE AO HAS NOWHERE HELD THAT THE RECEIPTS/INCOME OF THE ASSESSEE TRUST ARE NOT GENERATED FROM THE EDUCATIONAL INSTITUTIONS RUN BY IT. THE FACT STANDS THAT THE ASSESSEE TRUST HAS BEEN GRANTED REGISTRATION U/S 12A OF THE INCOME-TAX ACT, BY VERIFYING ITS OBJECTS AND ACTIVITIES OF EDUCATIONAL INSTITUTIONS W.E.F. 13.1.1999 ONWARDS. ACCORDINGLY, I HOLD THAT THE AO WAS NOT JUSTIFIED IN HOLDING THAT THE ASSESSEE TRUST IS A BUSINESS ENTITY. AS REGARDS, DEVELOPMENT FUND FEES, AFTER DUE CONSIDERATION OF THE FACTS, I HOLD THAT THE AO WAS JUSTIFIED IN HOLDING THAT RECEIPT OF FEES UNDER THE DEVELOPMENT FUND ACCOUNT DURING THE CURRENT ASSESSMENT YEAR OF RS. 1,31,77,000/- IS REVENUE INCOME. EVEN IF THE ASSESSEE TRUST HAS -: 10: - 10 DIRECTLY CREDITED THE ABOVE RECEIPT IN THE SAID ACCOUNT IN THE BALANCE SHEET AND NOT SHOWN IN THE INCOME & EXPENDITURE ACCOUNT, THE REVENUE NATURE OF THE FEE RECEIPTS WOULD NOT CHANGE. I ALSO NEGATE THE CONTENTION OF THE LD. AUTHORIZED REPRESENTATIVE THAT FEE RECEIPT UNDER DEVELOPMENT FUNDS FORM PART OF THE CORPUS OF THE COLLEGE AS THESE FEES UNDER THE DEVELOPMENT FUND IS BEING RECEIVED EVERY YEAR. SINCE DURING THE CURRENT ASSESSMENT YEAR, I HAVE HELD THAT THE INCOME OF THE ASSESSEE TRUST IS EXEMPT U/S 11 OF THE ACT, THE AO IS DIRECTED TO INCLUDE THE FEE FOR DEVELOPMENT FUND AS REVENUE INCOME AND ALLOW EXEMPTION U/S 11 OF THE ACT. THUS, GROUND NO. 4 IS DECIDED ACCORDINGLY. 11. DISALLOWANCE ON LAB EQUIPMENT AND PRACTICAL EQUIPME NT EXPENSES AMOUNTING TO RS. 5,40,182/- WAS DELETED BY THE LD. CIT(A) AFTER HAVING THE FOLLOWING OBSERVATIONS :- -: 11: - 11 I HAVE CONSIDERED THE SUBMISSIONS OF THE LD. AUTHORIZED REPRESENTATIVE. I HAVE ALSO CONSIDERED THE AOS OBSERVATIONS MENTIONED IN THE ASSESSMENT ORDER. AFTER DUE CONSIDERATION OF THE FACTS, I HOLD THAT THE AO WAS NOT JUSTIFIED IN MAKING DISALLOWANCE OF RS. 5,40,182/- OUT OF LAB AND PRACTICAL EQUIPMENT/CONSUMABLES ON ESTIMATE AND NOT BY SPECIFIC FINDING IN THE RESPECT OF PARTICULAR ITEMS OF EXPENSE/PURCHASE AS NON GENUINE IN THE ASSESSEE TRUSTS CASE. ACCORDINGLY, THE DISALLOWANCE OF RS. 5,40,182/- OUT OF LAB AND PRACTICAL EQUIPMENT/CONSUMABLES IS DELETED. THE GROUND NO.5 IS DECIDED IN FAVOUR OF THE ASSESSEE. THUS, TH E APPEAL ON THIS GROUND IS ALLOWED. 12. WITH REGARD TO DISALLOWANCE OF PART OF ADMINISTRATI VE EXPENSES, CONTENTION OF THE ASSESSEE BEFORE THE CIT (A) WAS THAT THE AO WAS NOT JUSTIFIED IN MAKING THE DISALLO WANCE ON THE BASIS OF THE REPORT OF THE INSPECTOR WITHOUT GI VING ADEQUATE TIME TO THE ASSESSEE TO REBUT THE SAME. -: 12: - 12 13. IN RESPECT OF ELECTRICITY BILLS/ TELEPHONE BILLS, S ALARY GIVEN TO DRIVER, WATCHMAN, PEON AND MALI, THE LD. A UTHORIZED REPRESENTATIVE SUBMITTED THAT THE TRUSTS CORPORATE OFFICE RUN FROM 31, SHYAMLA HILLS, BHOPAL. THAT THE TRUST OCCU PIES MOST OF THE PREMISES AS ITS OFFICE. BESIDES ONE PORTION OF 31, SHYAMLA HILLS, BHOPAL BEING USED BY THE TRUSTEES AS THEIR RESIDENCE. THE OFFICE OF THE TRUST CONSISTS OF TWO ROOMS FOR ACCOUNTS & ADMINISTRATIVE STAFFS, ONE MEETING ROOM BESIDES TRUSTEES CHAMBERS. IT IS SUBMITTED THAT SINCE THE EDUCATIONAL INSTITUTION COLLEGE IS AT THE OUT SKIRTS OF BHOPAL AT RAISEN ROAD, THE TRUST OFFICE AT SHYAMLA HILLS, BHOPAL, SE RVES AS THE ONLY LOCAL OFFICE WITHIN BHOPAL CITY. 14. IT WAS FURTHER SUBMITTED THAT THE TRUSTEES ARE CHA RGING NO RENT FROM THE TRUST OR COLLEGE AGAINST THE USE O F THE PREMISES FOR THE OFFICE SPACE. THE EXPENSES OF THIS OFFICE SITUATED AT 31, SHYAMLA HILLS BELONGING TO THE ASSE SSEE TRUST ARE BEING MET BY THE LNCT COLLEGE. 15. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT SI NCE THE TRUSTS OFFICE RUNS FROM THE PORTION OF THE RES IDENCE OF THE TRUSTEES, TELEPHONE EXPENSES AND ELECTRICITY CHARGE S IN -: 13: - 13 CONNECTION WITH THE OFFICE USE ARE DEBITED IN THE C OLLEGE BOOKS AS THE SAME PERTAIN TO EXPENSES INCURRED FOR TRUST S USE AND NOT FOR PERSONAL USE OF THE TRUSTEES. THE TELEPHONE , IN THE NAME OF THE TRUSTEE IS ALSO USED FOR OFFICIAL WORK OF THE TRUST. HE SUBMITTED THAT SINCE THE COLLEGE IS LOCATED AWAY FROM THE MAIN CITY AND THERE IS NEED FOR HAVING A CITY OFFIC E WHEREFROM BANKING TRANSACTIONS, MEETING VARIOUS OFFICIALS AND OTHER COMPLIANCE WORK IS REQUIRED TO BE CARRIED OUT. LIKE WISE, THERE ARE VEHICLES OF THE TRUST AND COLLEGE, WHICH COMMUT E BETWEEN THE TRUST OFFICE AT 31, SHYAMALA HILLS AND ITS COLL EGE SITUATED AT RAISEN ROAD. THE INSPECTOR ON SEEING THE DRIVER AT THE TRUST OFFICE AT 31, SHYAMALA HILLS CAME TO A CONCLUSION T HAT THIS DRIVERS SERVICES ARE BEING USED FOR PERSONAL PURPO SES BY THE TRUSTEES. LIKEWISE, THE INSPECTOR FAILED TO REPORT THAT BESIDES THE TRUSTEES RESIDENCE, THERE IS FULL FLEDGED OFFI CE OF THE TRUST BEING RUN FROM THE SAID ADDRESS. THE PEON AND OTHER SERVANTS ENGAGED IN PROVIDING SERVICES AT THE TRUST OFFICE A RE ONLY BEING DEBITED IN THE LNCT COLLEGE BOOKS. 16. BEFORE THE LD. CIT(A), THE ALLEGATION OF THE AO THA T THE DRIVER, PEON & MALIS FOUND TO BE WORKING IN THE PR EMISES AT -: 14: - 14 31, SHYAMLA HILLS, BHOPAL, ARE FOR PERSONAL USE OF THE TRUSTEES, IS STRONGLY REBUTTED BY THE LD. AUTHORIZED REPRESEN TATIVE HE SUBMITTED THAT ALL THESE PERSONS ARE EMPLOYEES OF T HE TRUST AND WORKING EXCLUSIVELY FOR THE TRUST. THE PEON IS FOR DOING OFFICE WORK ENTERTAINING OF STAFF/GUESTS OF THE TRU ST. SIMILARLY, THE DRIVER DUTY IS TO COMMUTE BETWEEN BHOPAL OFFICE AT SHYAMLA HILLS AND LNCT COLLEGE AT RAISEN ROAD, BHOP AL. THUS, IN NO CASE THESE EMPLOYEES OF THE TRUST CAN B E SAID TO BE OF PERSONAL USE OF THE TRUSTEES. THE TRUSTEES AS IT IS HAVING SEPARATE MAID/SERVANT FOR THEIR RESIDENTIAL PREMISE S AND PAY SEPARATELY TO THEM FROM THEIR DRAWINGS. LIKEWISE, T HE TRUST ALSO USES ELECTRICITY OF THE PREMISES IT OCCUPIES A T 31, SHYAMLA HILLS FOR OFFICIAL WORK. THERE IS NO PERSONAL ELEME NT OF THE TRUSTEES THEREIN. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT NO DISALLOWANCES ARE CALLED FOR UNDER THESE HE ADS. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT THERE IS N O SUCH OBSERVATION BY THE SPECIAL AUDITOR IN HIS AUDIT REP ORT ABOUT THE USE OF ASSETS OF THE TRUST BY THE TRUSTEES WITH IN THE MEANING OF SECTION 13(1)(C) OF THE INCOME-TAX ACT, 1961. THEREFORE, DISALLOWANCES FOR SUCH PERSONAL BENEFITS FROM USE OF -: 15: - 15 ASSETS OF THE TRUST IS NOT REQUIRED AS THE ASSETS O F THE TRUST ARE NOT BEING USED BY THE TRUSTEES AS THE TRUSTEES USE THEIR OWN VEHICLES. THE AO OBSERVED FROM THE CONSOLIDATED BALANCE SHEET AS AT 31.3.2002 ENCLOSED WITH AUDITORS REPOR T U/S 142(2A) THAT THE ASSESSEE-TRUST HAS MADE INVESTMENT /ADVANCE IN THE ASSOCIATE SOCIETY NAMELY RISHI RAJ SINGH MEM . WEL. SOCIETY, BHOPAL AND THE DEBIT BALANCE AGAINST IT IS RS. 10,00,000/- AS ON 31.3.2002. HE HELD THAT AS SUCH, IN THE INSTANT CASE, THE ASSESSEE TRUST IS FOUND OTHERWISE ALSO NOT ELIGIBLE FOR GRANT OF EXEMPTION OF ITS INCOME DURIN G THE YEAR. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT TH E LOAN WAS GIVEN TO THE AFORESAID SOCIETY AT THE TIME WHEN THE SAID SOCIETY NEEDED FUNDS FOR MEETING EXPENSES OF RUNNING ITS CO LLEGE. HE SUBMITTED THAT THE AFORESAID SOCIETY IS PURELY EDUC ATIONAL AND CHARITABLE SOCIETY AND REGISTERED U/S 12AA OF THE I NCOME-TAX ACT. THE OBJECT OF THE ASSESSEE TRUST COVERS GRANTI NG SUCH ADVANCES TO OTHER SOCIETIES ENGAGED IN PROVIDING ED UCATION TO THE NEEDY PEOPLE AND TO PROVIDE HIGHER AND TECHNICA L EDUCATION TO THE STUDENTS. THE OBJECT OF THE ASSESS EE TRUST AND THE SAID SOCIETY TO WHOM LOAN WAS GIVEN IS SAME AND -: 16: - 16 TEMPORARY ADVANCE WAS GIVEN WITH THE OBJECT OF UPLI FTMENT OF THE EDUCATION. THE TEMPORARY ADVANCE WAS SINCE INTE REST FREE WITH THE UNDERSTANDING THAT AS SOON AS THE SURPLUS FUND COMES IN THE SOCIETY, IT WILL REPAY THE ADVANCE. TH E LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE ASSESS EE TRUST IS PURELY AN EDUCATIONAL IN NATURE AND NOT A BUSINESS CONCERN WHERE PROVISION OF INTEREST WAS MADE FOR EACH AND E VERY ADVANCE. THE PURPOSE OF ADVANCE WAS ALSO FOR THE PR OMOTION OF EDUCATION AND HENCE INTEREST WAS NOT CHARGED. THE L D. AUTHORIZED REPRESENTATIVE PLACED RELIANCE ON THE DE CISION IN THE CASE OF FIFTH GENERATION EDUCATION, 185 ITR 634 , ALLAHABAD HIGH COURT WHEREIN IT WAS HELD THAT CIT W AS TO EXAMINE THE ISSUE OF APPLICATION OF TRUST INCOME. H E HAS MERELY REQUIRED TO SEE WHETHER THE PROCEDURE HAS BE EN FOLLOWED AND WHETHER THE OBJECT IS CHARITABLE. 17. BY THE IMPUGNED ORDER, THE LD. CIT(A) DELETED THE ADDITION OF RS. 1,37,842/- AFTER HAVING THE FOLLOWI NG OBSERVATIONS :- I HAVE CONSIDERED THE DETAILED SUBMISSIONS OF THE LD. AUTHORIZED REPRESENTATIVE. I HAVE ALSO CONSIDERED -: 17: - 17 THE AOS OBSERVATIONS AND FINDINGS MENTIONED IN THE ASSESSMENT ORDER. AFTER DUE CONSIDERATION OF THE FACTS, I HOLD THAT THE AO WAS NOT JUSTIFIED IN MAKI NG ADDITION OF RS. 1,37,842/- OUT OF EXPENSES IN THE NATURE OF SALARY, VEHICLE MAINTENANCE AND DEPRECIATION, ELECTRICITY AND TELEPHONE ON ESTIMATE . THE AOS RELIANCE ON THE FINDING OF THE INSPECTORS REPORT CANNOT BE APPROVED. FURTHER, THERE IS NEITHE R ANY ADVERSE REMARK IN THE AUDITED FINANCIAL STATEMENTS BY THE AUDITOR NOR BY THE SPECIAL AUDITO R IN HIS AUDIT REPORT OF THE ASSESSEE TRUST FOR THE CURRENT ASSESSMENT YEAR ABOUT PERSONAL EXPENSES OF THE TRUSTEES BEING DEBITED BY THE TRUST/COLLEGE IN ITS BOOKS. I FIND FORCE IN THE LD. AUTHORIZED REPRESENTATIVES SUBMISSION THAT SINCE TRUSTS OFFI CE WAS RUNNING FROM 31, SHYAMLA HILLS, BHOPAL, BESIDES THE TRUSTEES RESIDENCE, THE AO HAD WRONGLY CONCLUDED THAT THE ABOVE EXPENSES OF RS. 1,37,842/- ARE OF PERSONA NATURE FOR THE BENEFIT OF TRUSTEES. THE ADDITION OF RS.1,37,842/- MADE BY THE ASSESSING -: 18: - 18 OFFICER IS TO BE DELETED. I ALSO RELY ON THE JUDGEM ENT OF THE HON'BLE JURISDICITONAL HIGH COURT IN THE CAS E OF DEO RADHA MADHWA LALJI GENDA TRUST VS. PROPER TAX OFFICER, 251 ITR 531, WHEREIN IT WAS HELD THAT MAINTENANCE OF THE TRUST PROPERTY, PAYMENT TO EMPLOYEES AND OTHER EXPENSES WHICH ARE INCIDENTAL TO AND CONNECTED WITH THE OBJECTS OF THE CHARITABLE TRUST ARE ALLOWABLE. ACCORDINGLY, GROUND NOS. 7 & 8 ARE DECIDED IN FAVOUR OF THE ASSESSEE. THUS, THESE GROUNDS OF APPEAL ARE ALLOWED. 18. AGGRIEVED BY THE ABOVE ORDER OF LD. CIT(A), THE REV ENUE IS IN FURTHER APPEAL BEFORE US. 19. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOU ND THAT THE ASSESSMENT FOR ASSESSMENT YEAR 2002-03 WAS PASSED B Y THE AO ON 16.11.2005. AT THAT TIME, THE CERTIFICATE OF REGISTRATION AVAILABLE WITH THE AO WAS W.E.F. 1.4.2003 DATED 17. 11.2004. ACCORDINGLY, THE AO MADE ADDITIONS BY TREATING THE ASSESSEE AS NOT REGISTERED DURING THE RELEVANT ASSESSMENT YE AR UNDER CONSIDERATION. HOWEVER, PURSUANT TO THE ORDER OF TH E TRIBUNAL -: 19: - 19 DATED 12.3.2007, THE REGISTRATION WAS GRANTED TO TH E ASSESSEE TRUST W.E.F. 13.1.1999 I.E. THE DATE ON WHICH IT WA S REGISTERED WITH THE REGISTRAR OF PUBLIC TRUST. WITH THE GRANT OF REGISTRATION W.E.F. 13.1.1999, THE INCOME OF THE IN STITUTION WAS EXEMPT FROM TAX. THE CIT(A) HAS THOROUGHLY CONSIDER ED THE SUBMISSIONS MADE BEFORE HIM, ALLOWED THE EXPENDITUR E AND TREATED THE INCOME AS EXEMPT IN VIEW OF THE ASSESSE E TRUST HAVING BENEFIT OF EXEMPTION AVAILABLE U/S 11. FROM THE RECORD, WE FOUND THAT BEFORE THE CIT(A), THE ASSESSEE HAS S UBMITTED LIST OF CASES IN WHICH VARIOUS ISSUES REGARDING ASS ESSMENT OF PUBLIC TRUST WAS DEALT WITH IN ADDITION TO IT A STA TEMENT GIVING DETAILS, HOW THE INCOME OF THE TRUST IS TO BE CALCU LATED BASED ON THE DECISIONS OF VARIOUS HIGH COURTS AND SUPREME COURTS, WHICH HAS BEEN DISCUSSED BY THE CIT(A) IN HIS ORDER . IN THE RESULT, THE LD. CIT(A) DELETED THE ADDITION OF RS.1 ,92,93,896/- DUE TO NON ALLOWANCE OF EXEMPTION U/S 11 & 12 OF TH E INCOME- TAX ACT, 1961. THE LD. CIT(A) HAS ALSO DEALT IN DET AIL THE ISSUE WITH REGARD TO DISALLOWANCE OUT OF LAB AND PRACTICA L EQUIPMENTS/CONSUMABLES AND THE EXPENSES, WHICH WERE DISALLOWED ON THE PLEA OF PERSONAL EXPENSES OF TRUS TEES, IN THE -: 20: - 20 ASSESSMENT YEAR 2004-05. THE LD. CIT(A) HAS EXAMINE D THE FACTS OF THE CASE AND BUY APPLYING THE LEGAL PROPOS ITION AS DISCUSSED IN THE ORDER ALLOWED RELIEF TO THE ASSESS EE. THE FINDINGS RECORDED BY THE LD. CIT(A) HAS NOT BEEN CO NTROVERTED BY THE DEPARTMENT, WE, THEREFORE, DO NOT FIND ANY I NFIRMITY IN HIS ORDER FOR ALLOWING EXEMPTION IN RESPECT OF INCO ME FOR THE ASSESSMENT YEAR 2002-03. 20. IN THE ASSESSMENT YEAR 2003-04, THE AO HAS OBSERVE D THAT THE ASSESSEE TRUST HAS BEEN GRANTED REGISTRATI ON U/S 12A W.E.F. 1.4.2003, THE BENEFIT OF SAID CERTIFICATE WA S HELD TO BE NOT ALLOWABLE TO THE ASSESSEE FOR THE ASSESSMENT YE AR 2003-04. IN THE RESULT, HE HELD THAT CERTIFICATE U/S 12A ISS UED W.E.F. 1.4.2003 WOULD NOT ENTITLE THE ASSESSEE TO CLAIM EX EMPTION U/S 11 FOR THE ASSESSMENT YEAR 2003-04 UNDER CONSID ERATION. HE ASSESSED THE INCOME OF TRUST UNDER REGULAR PROVI SIONS OF THE INCOME-TAX ACT, 1961, I.E. SECTION 28 TO 44. AS DISCUSSED HEREINABOVE, THE TRIBUNAL HAS ALLOWED THE REGISTRAT ION TO THE ASSESSEE TRUST WITH THE DATE OF ITS INCEPTION AND T HE CHIEF CIT HAS ISSUED FRESH CERTIFICATE U/S 12A ON 12.3.2007 G RANTING REGISTRATION TO THE TRUST W.E.F. 13.1.1999, THE DAT E WHEN THE -: 21: - 21 TRUST WAS FORMED. TAKING INTO CONSIDERATION THE FRE SH REGISTRATION GRANTING W.E.F. 13.1.1999, THE LD. CIT (A) AFTER CONSIDERING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, ALLOWED THE EXEMPTION TO THE ASSESSEES INCOME U/S 11 TO 13. THUS, THE ADDITION OF RS. 1,55,01,050/-DUE TO NON A LLOWANCE OF EXEMPTION U/S 11 & 12 WAS DELETED BY THE LD. CIT (A). THE LD. CIT(A) HAS ELABORATELY DISCUSSED THE SUBMISSIONS MA DE BEFORE HIM AND ALSO THE OBSERVATION OF THE AO. SIMILARLY, THE DISALLOWANCE OUT OF LAB AND PRACTICAL EQUIPMENTS/CONSUMABLES, AND IN RESPECT OF EXPENSES OF THE TRUSTEES, THE LD. CIT(A) HAS DEALT IN DETAIL IN THE APPELLATE ORDER FOR ASSESSMENT YEAR 2004-05 AND AFTER PROPER EXAMINATION OF THE FACTS OF THE CASE AND LEGAL POSI TION, GRANTED DUE RELIEF TO THE ASSESSEE. 21. IN THE ASSESSMENT YEAR 2004-05, THE AO HAS NOT GRAN TED EXEMPTION U/S 12A ON THE PLEA THAT MERE GRANTING OF REGISTRATION U/S 12A BY THE CIT DOES NOT AUTOMATICA LLY ENTITLE THE ASSESSEE FOR EXEMPTION U/S 11 TO 12. THE AO ALS O OBSERVED THAT THERE WERE UN-VOUCHED EXPENSES AS POINTED OUT BY THE SPECIAL AUDITOR U/S 142(2A), THEREFORE, THE INSTITU TION WAS RUN -: 22: - 22 FOR PROFIT. THE AO ALSO STATED THAT THE ASSESSEE TR UST HAS DIVERTED ITS FUND FOR BENEFIT OF TRUSTEES BY MEETIN G CERTAIN PERSONAL EXPENSES OF THEM AND OTHER INSTITUTIONS UN DER THE SAME MANAGEMENT BY GIVING ADVANCES. THE ASSESSEE HA S FURNISHED FULL REPLY TO MEET ALL THE OBJECTIONS OF THE AO, HOWEVER, THE AO DID NOT AGREE AND DECLINE BENEFIT O F SECTION 12A. HOWEVER, THE LD. CIT(A) HAS DISCUSSED EACH OBJ ECTION OF THE AO AND REPLY FILED BY THE ASSESSEE WITH THE DOC UMENTARY EVIDENCE AND OBSERVED THAT ,NO DOUBT, THE GRANTING OF REGISTRATION DOES NOT AUTOMATICALLY LEAD TO EXEMPTI ON OF INCOME OF THE TRUST. HOWEVER, THE SINCE THE ASSESSE E TRUST HAS NOT CONTRAVENED ANY OF THE PROVISIONS OF SECTION 11 TO 13, THE ASSESSEE TRUST IS ENTITLED TO EXEMPTION OF ITS INCO ME. IT WAS FURTHER OBSERVED BY THE LD. CIT(A) THAT AUDIT OF AC COUNTS OF ALL THE THREE EDUCATIONAL INSTITUTIONS WERE COMPLETED E ARLIER TO THE FILING OF THE INCOME TAX RETURN OF THE TRUST ON 26. 10.2004. HOWEVER, DUE TO IGNORANCE OF THE COUNSEL, THE SAME WERE NOT ENCLOSED WITH THE RETURN OF INCOME. IT WAS CATEGORI CALLY OBSERVED THAT ALL THESE REQUIREMENTS WERE COMPLIED BEFORE THE COMPLETION OF ASSESSMENT AND THE SAME HAVE BEEN CON SIDERED -: 23: - 23 BY THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER. T HE LD. CIT(A) ALSO OBSERVED THAT DENIAL OF EXEMPTION U/S 1 0(23C) AND SECTION 80G DOES NOT AFFECT THE GRANTING OF REGISTR ATION TO THE INCOME OF THE ASSESSEE TRUST, WHEN THE SAME IS OTHE RWISE EXEMPT U/S 11 TO 13. IT WAS OBSERVED THAT ALL THE V OUCHERS WERE PRODUCED BEFORE THE AUDITOR WHO DID THE STATUT ORY AUDIT, HOWEVER, BY THE TIME SPECIAL AUDITOR WAS APPOINTED, THE ORIGINAL STAFF WAS CHANGED AND THE NEW STAFF COULD NOT TRACE ALL THE RELEVANT FACTS AND THE FILES AT THE TIME OF SPECIAL AUDIT. AFTER EXAMINATION OF THE FACTS AND OBSERVATION OF T HE AO, THE CIT(A) FOUND THAT NO PERSONAL ADVANTAGE WAS GIVEN T O THE TRUSTEES OF THE TRUST AND THAT ADVANCES GIVEN TO TH E ASSOCIATE INSTITUTIONS WERE TEMPORARY ADVANCERS GIVEN TO THE EDUCATIONAL INSTITUTION FOR THE PURPOSE OF OBJECTS OF THE TRUST, BEING OBJECTS NO.12 ON PAGE 52 OF THE COMPILATION F ILED BEFORE HIM WITH REGARD TO DISALLOWANCE OF RS. 3,02,965/- W ITH RESPECT TO EXPENDITURE ON LAB AND PRACTICAL EQUIPMENTS/CONS UMABLES, WE FOUND THAT LNCT COLLEGE HAD SPENT RS. 20.19 LAKH S ON ACCOUNT OF LAB AND PRACTICAL EQUIPMENTS/CONSUMABLES . THE AO HAS DISALLOWED 15 % OF PURCHASES ON THE PLEA THA T AUDIT -: 24: - 24 REPORT U/S 142(2A) MENTIONED REGARDING NON-VERIFIAB ILITY OF SOME OF THE EXPENSES AND THAT NO BIFURCATION WAS AV AILABLE AS TO THE EXPENSES ON PURCHASES OF EQUIPMENTS VIS--VI S PURCHASE OF CONSUMABLES. THE LD. CIT(A) HAS RECORDE D A CATEGORICAL FINDING TO THE EFFECT THAT ALL THESE EX PENSES WERE DULY RECORDED IN THE REGULAR BOOKS OF ACCOUNT MAINT AINED BY THE ASSESSEE AND THE SAME WAS FULLY VOUCHED AND PRO DUCED BEFORE THE AUDITOR AT THE TIME OF REGULAR AUDIT. AS DISCUSSED ABOVE, DUE TO CHANGE IN THE STAFF, DIFFERENT FILES IN WHICH THESE VOUCHERS WERE PLACED COULD NOT BE LOCATED. ACCORDIN GLY, IT WAS HELD THAT ESTIMATED DISALLOWANCE WAS WRONG AND UNCA LLED FOR. SIMILARLY, ADDITION OF RS. 3,01,000/- WAS MADE ON T HE PLEA OF PERSONAL EXPENSES OF THE TRUSTEES. IN THIS REGARD, WE FOUND THAT THE RESIDENCE OF THE MANAGING TRUSTEE WAS SITU ATED AT SHYAMLA HILLS, WHICH IS IN THE HEART OF THE CITY, W HEREAS THE COLLEGES ARE SITUATED AT RAISEN ROAD, WHICH IS ABOU T 10-12 KMS. AWAY FROM THE CITY. THE TRUSTEE HAS GIVEN THRE E ROOMS AND LODGING OF HIS RESIDENCE, FREE OF RENT TO THE S OCIETY FOR HANDLING ITS BANKING AND OTHER ADMINISTRATIVE WORK. WE ALSO FOUND THAT MANAGING TRUSTEE OWNS HIS OWN CAR AND TE LEPHONE -: 25: - 25 AND WAS ALSO EMPLOYING PERSONAL SERVANTS FOR HIS HO USE HOLD WORK. SIMILARLY, TRUST WAS ALSO USING ELECTRICITY O F THE PREMISES, IT OCCUPIED FOR OFFICIAL WORK. IN VIEW OF THESE FINDINGS BY CIT(A) THE AO WAS NOT CORRECT IN ALLEGING THAT P ERSONAL BENEFIT HAS BEEN DERIVED BY THE TRUSTEES WHEN, IN F ACT, THE TRUSTEE IS NOT CHARGING ANY RENT FOR THE SIZEABLE P ORTION OF THE PROPERTY LET OUT TO THE TRUST. IT WAS ALSO FOUND TH AT NO PERSONAL EXPENSES OF THE TRUSTEE WERE DERIVED BY THE TRUST. RELIANCE PLACED ON THE STATEMENT OF THE WIFE OF THE MANAGING TRUSTEE WAS MISPLACED WITHOUT CONSIDERING TOTALITY OF THE F ACTS. AFTER RECORDING DETAILED FINDINGS, THE LD. CIT(A) HAS DEL ETED THE ADDITION ALLEGED TO BE TOWARDS PERSONAL EXPENSES OF THE TRUSTEE, WHICH HAS NOT BEEN CONTROVERTED, WE, THERE FORE, DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE CI T(A) FOR SUCH DELETION. 22. ADDITION OF RS. 2.26 CRORES WAS MADE BY THE ASSESSI NG OFFICER TOWARDS NET INCOME OF THE ASSESSEE, THE CAL CULATION OF THE AO WAS AS UNDER :- INCOME AS PER AUDITED ACCOUNTS SUBJECT TO ADJUSTMENT OF DEPRECIATION, INTEREST AND ITEMS RS. 94,12,964 -: 26: - 26 DISALLOWED BY AO TOWARDS UNVOUCHED EXPENSES, PERSONAL EXPENSES ETC. ADD: FEE RECEIVED IN THE FORM OF DEVELOPMENT FUND RS. 1,38,83,870 RS. 2,32,96,834 LESS: ADDITION TOWARDS LAB EQUIPMENTS ( GR. 1) RS. 3,02,965 LESS: ADDITION TOWARDS PERSONAL EXPENSES (GR. 2) 3,01,593 RS. 2,26,92,276 23. BY APPLYING THE DECISION OF THE HON'BLE HIGH COURT AND SUPREME COURT, THE CORRECT COMPUTATION OF INCOM E WORKS OUT TO BE AS UNDER :- GROSS RECEIPTS OF THE TRUST & 3 COLLEGES 8,54,99,3 71 LESS: 15 % ALLOWED FOR ACCUMULATION 1,28,24,906 7,26,74,465 LESS: EXPENSES ACTUALLY INCURRED 5,44,39,890 1,82,34,575 LESS: DEPRECIATION DEBITED BELOW THE LINE IN BOOKS (ALLOWED BY AO AT RS. 1,45,07,536/-)(PAGE 24 OF COMPILATION) 99,57,272 82,77,303 LESS: INTEREST (NOT CONSIDERED IN TOTAL EXPENSES) (PAGE 24 OF COMPILATION) 85,43,019 EXCESS APPLICATION OF INCOME (-)2,65,716 SUBJECT TO OTHER NOTES/CLAIMS FOR CALCULATING ACCUMULATION OF INCOME AS PER STATEMENT ENCLOSED. -: 27: - 27 24. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) FOR DELETING THE ADDITION OF RS . 2.26 CRORES MADE BY THE ASSESSING OFFICER. 25. IN THE ASSESSMENT YEAR 2004-05, THE REVENUE HAS RAI SED SIMILAR ISSUE WITH REGARD TO ALLOWING EXEMPTION U/S 11, DELETION OF ADDITION ON ACCOUNT OF LAB AND EQUIPMEN T CONSUMABLES, DEPRECIATION ON LAB AND EQUIPMENT AND ALSO DELETING OF EXPENSES ALLEGED TO BE ON PERSONAL ACCO UNT OF THE TRUSTEE. BY OBSERVING THAT THE ASSESSEE TRUST WAS R UNNING FOR EDUCATIONAL COLLEGES, THE INCOME OF THE ASSESSEE TR UST HAVING DERIVED SOLELY FROM THESE EDUCATIONAL INSTITUTIONS AND ITS ACTIVITIES WERE NOT FOR PROFIT, THE CIT(A) ALLOWED EXEMPTION U/S 11. THE CIT(A) ALSO RECORDED A CATEGORICAL FINDING THAT THE ASSESSEE TRUST HAS BEEN GRANTED REGISTRATION U/S 12 A BY VERIFYING ITS OBJECT AND ACTIVITIES OF EDUCATIONAL COLLEGES, RUN BY IT. THESE FINDINGS HAVE NOT BEEN CONTROVERTED AN D THE SAME ARE AS PER MATERIALS PLACED ON RECORD, NO INTERFERE NCE IS REQUIRED THEREIN. 26. WITH REGARD TO THE TREATMENT OF AMOUNT RECEIVED TOW ARDS DEVELOPMENT FUND AS REVENUE INCOME, THE CIT(A) UPHE LD THE -: 28: - 28 DECISION OF THE AO. HOWEVER, IN VIEW OF THE FACT TH AT THE ENTIRE INCOME OF THE ASSESSEE TRUST WAS EXEMPT U/S 11, HE HELD THAT TREATMENT OF SUCH RECEIPT AND REVENUE WOULD NOT AFF ECT THE ASSESSEE TRUST SINCE ITS INCOME IS SUBJECT TO EXEMP TION U/S 11 GRANTED ON THE INCOME OF THE ASSESSEE TRUST. 27. DISALLOWANCE OF RS. 6,86,716/- ON ACCOUNT OF PURCHA SES OF LAB EQUIPMENT AND CONSUMABLES, WAS DELETED BY TH E LD. CIT(A) AFTER OBSERVING THAT NO DISALLOWANCE ON ESTI MATE BASIS WAS WARRANTED WITHOUT RECORDING SPECIFIC FINDING WI TH RESPECT TO PARTICULAR ITEMS OF EXPENSES/VOUCHERS AS NON-GEN UINE. AFTER HAVING A DETAILED OBSERVATION AS GIVEN IN THE EARLIER ASSESSMENT YEARS, THE CIT(A) DELETED THE DISALLOWAN CES. NOTHING WAS BROUGHT ON RECORD TO CONTROVERT THE FIN DING OF CIT(A), WE, THEREFORE, DO NOT FIND ANY REASON TO IN TERFERE IN THE DELETION OF ADDITION OF RS. 6.86 LAKHS ON ACCOUNT O F PURCHASE OF LAB EQUIPMENTS AND CONSUMABLES. 28. WITH REGARD TO THE DISALLOWANCE OF EXPENSES INCURRE D ON CONSTRUCTION OF DIFFERENT COLLEGES, THE CIT(A) OBSE RVED THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS, ALL THE RELEV ANT VOUCHERS WERE MADE AVAILABLE BEFORE THE AO AND THE AO HAS -: 29: - 29 MISPLACED ITS RELIANCE ON THE FINDINGS GIVEN IN THE SPECIAL AUDIT REPORT OF THE EARLIER ASSESSMENT YEARS AND APPLIED THE SAME IN THE CURRENT ASSESSMENT YEARS. IN VIEW OF OUR DISCUS SIONS MADE IN EARLIER YEARS WITH REGARD TO SUCH DISALLOWANCE, WE CONFIRM THE ACTION OF THE CIT(A) FOR DELETING THE SAME. SIM ILARLY, DISALLOWANCE MADE ON ACCOUNT OF DEPRECIATION ON LAB EQUIPMENTS AND BUILDING, ON THE VERY SAME REASONING AND ANALOGY, WE DELETE THE DISALLOWANCE SO MADE. SIMILA RLY, DISALLOWANCE MADE ON ACCOUNT OF SALARY TO EMPLOYEES , VEHICLE EXPENSES, ELECTRICITY EXPENSES AND TELEPHONE EXPENS ES, BY FOLLOWING THE SAME REASONING AS GIVEN IN EARLIER YE ARS, WE CONFIRM THE ACTION OF THE CIT(A) FOR DELETING THESE DISALLOWANCES. 29. DURING THE COURSE OF HEARING, THE LD. CIT DR RELIE D ON DECISION OF HON'BLE KERALA HIGH COURT REPORTED AT 2 26 ITR 211, WHEREIN EXEMPTION U/S 11 WAS DENIED ON THE BASIS OF FINDING OF PERSONAL BENEFIT TO THE TRUSTEE. WE HAD GONE THR OUGH THIS DECISION AND FOUND THAT EXEMPTION U/S 11 WAS DECLIN ED TO THE ASSESSEE TRUST FOR THE BENEFIT GIVEN TO THE TRUSTEE WITHIN THE MEANING OF SECTION 13(3). HOWEVER, IN THE INSTANT C ASE BEFORE -: 30: - 30 US, WE FOUND THAT NO PERSONAL BENEFIT WAS GIVEN TO THE TRUSTEE, THUS, THE CONCLUSION DRAWN IN THE CASE CITED BY THE LD. CIT DR IS NOT APPLICABLE TO THE FACTS OF THE INSTANT CASE. 30. THE LD. CIT DR ALSO RELIED ON THE DECISION OF HON'B LE MADRAS HIGH COURT REPORTED AT 246 ITR 164. IN THIS CASE, THE AO INVOKED PROVISIONS OF SECTION 13(1)(C) IN REGARD TO THE PAYMENTS MADE TO ITS OFFICE BEARER AND THE EXEMPTIO N CLAIMED U/S 11 WAS DECLINED. HOWEVER, IN THE INSTANT CASE B EFORE US, AS OBSERVED ABOVE, NO PERSONAL BENEFIT WAS GIVEN TO THE OFFICE BEARER, THEREFORE, THIS CASE IS OF NO HELP TO THE R EVENUE. 31. RELIANCE WAS ALSO PLACED BY THE LD. CIT DR ON THE DECISION OF HON'BLE SUPREME COURT REPORTED AT 82 IT R 540, WHEREIN REFERENCE WAS DECLINED IN VIEW OF THE FINDI NG OF FACT ARRIVED AT BY THE TRIBUNAL. IT WAS OBSERVED BY HON' BLE SUPREME COURT THAT IT IS WITHIN THE PROVINCE OF THE TRIBUNAL TO ACCEPT RECITALS IN THE TRUST DEED UNLESS THE CONCLU SION IS SHOWN TO BE PERVERSE OR BASED ON IRRELEVANT MATERIA LS. IT WAS HELD THAT HIGH COURT CANNOT INTERFERE WITH THE FIND ING OF THE TRIBUNAL, THUS, NO QUESTION OF LAW AROSE OUT OF THE ORDER OF THE TRIBUNAL. HOWEVER, IN THE INSTANT CASE BEFORE US, T HE FINDING OF -: 31: - 31 THE CIT(A) IS AS PER MATERIAL PLACED ON RECORD AND AS PER OUR DISCUSSION MADE HEREINABOVE, SUCH FINDING IS UPHELD . ACCORDINGLY, THIS CASE IS OF NO HELP TO THE REVENUE . 32. RELIANCE WAS ALSO PLACED ON THE JUDGMENT OF HON'BL E RAJASTHAN HIGH COURT REPORTED AT 258 ITR 725, WHERE IN EXEMPTION U/S 11 WAS DECLINED ON THE FINDING THAT P ROPERTY OF THE TRUST WAS GIVEN AT A MEAGER RENT TO THE FIRM IN WHICH ONE OF THE TRUSTEES WAS PARTNER. HOWEVER, THE FACTS OF THE INSTANT CASE ARE QUITE DISTINGUISHABLE WHEREIN PROPERTY OF THE TRUSTEES WERE GIVEN FREE OF RENT FOR THE PURPOSE OF TRUST, T HUS, THERE WAS NO CONTRAVENTION OF PROVISIONS OF SECTION 13(2)(B). THUS, THIS DECISION IS NOT APPLICABLE TO THE FACTS OF THE INST ANT CASE. 33. IN VIEW OF THE DISCUSSION MADE HEREINABOVE AND THE FINDINGS RECORDED BY THE LD. CIT(A), WHICH IS AS PE R MATERIAL ON RECORD WITH RESPECT TO ASSESSMENT YEARS 2002-03 TO 2005-06, WE DO NOT FIND ANY REASON TO INTERFERE IN THESE FIN DINGS. 34. IN THE RESULT, ALL THE APPEALS OF THE REVENUE ARE DISMISSED. -: 32: - 32 THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 24 TH MAY, 2011. SD/- SD/- ( R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 24 TH MAY, 2011. CPU* 435235