ACIT, Jaipur V. M/S PODDAR SANSTHAN, Jaipur

ITA 579/JPR/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5488 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 12-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BATEJA
• Assessee Lawyers: RAJEEV SOGANI C A DHK
• Keywords: Charitable institution; Question of law
• Section: 80G; 12A; 10; 11

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA-@ ITA NOS. 579/JP/2012 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2009-10 . THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-5, JAIPUR. CUKE VS. M/S. PODDAR SANSTHAN, SECTOR-7, MANSAROVAR, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AAATP 8054 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI O.P. BATEJA (ADDL.CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY S BY : SHRI RAJEEV SOGANI (C.A.) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 27.01.2016.A ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 5/02/2016. VKNS'K@ ORDER PER SHRI LALIET KUMAR, J.M. THE PRESENT APPEAL FILED BY THE REVENUE IS ARISING FROM THE ORDER DATED 20.03.2012 PASSED BY THE LEARNED CIT (A)-II, JAIPUR FOR THE A.Y. 2009-10. THE REVENUE HAS RAISED THE FOLLOWING GROUND OF APPEAL :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT (APPEALS) HAS ERRED IN ALLOWING EXEMPTION U/S 11 OF THE I.T. ACT, 1961 NOT WITHSTANDING THE FACT THAT ASSESSEE TRUST VIOLATED THE PROVISIONS OF SECT ION 13(1)(C) AND 13(2)(A)/(B)/(G) OF THE I.T. ACT, 1961. 2 ITA NO. 579/JP/2012 A.Y. 2009-10. ACIT VS. PODDAR SANSTHAN 2. THE BRIEF FACTS OF THE CASE ARE THAT THE RESPOND ENT ASSESSEE IS A SOCIETY IS REGISTERED UNDER THE RAJASTHAN SOCIETIES REGISTRATI ON ACT, 1958, AND WAS DULY REGISTERED UNDER SECTION 12A OF THE I.T. ACT, 1961. THE SOCIETY IS PRIMARILY ENGAGED IN IMPARTING EDUCATION AND RUNNING PODDAR INTERNATIONA L COLLEGE. THE ASSESSEE RESPONDENT SOCIETY HAS FILED ITS RETURN OF INCOME F OR THE A.Y. 2009-10 DECLARING TOTAL INCOME AT NIL ON 29.09.2009 AFTER CLAIMING EXEMPTIO N UNDER SECTION 11 OF THE IT ACT. IN THE RETURN OF INCOME FILED BY THE ASSESSEE, THE ASSESSEE SOCIETY HAS SHOWN TO HAVE EXTENDED LOAN OF RS. 42,69,615/- TO ANOTHER EDUCATI ONAL INSTITUTION, NAMELY PMTI (A UNIT OF PODDAR TRUST). THE SAID LOAN WAS ALLEGED T O HAVE BEEN ADVANCED TO HELP THE SAID PMTI FOR THE PURPOSE OF RUNNING EDUCATIONAL IN STITUTIONS AND IMPARTING EDUCATION VIZ. B.ED., MBA AND OTHER DIPLOMA COURSES AND ALSO S OME OTHER COURSES RECOGNIZED BY NATIONAL OPEN SCHOOL. THE SAID, PODDAR TRUST RUNNI NG PMTI IS ALSO REGISTERED UNDER SECTION 12A AND IS HAVING THE SAME OBJECTIVES AS TH AT OF THE ASSESSEE SOCIETY. 3. THE AO WHILE PASSING THE ASSESSMENT ORDER FOR TH E A.Y. 2009-10 HAS MENTIONED THAT THE GOVERNING PERSONS OF BOTH THE TRUSTS ARE M ORE OR LESS THE SAME. IT WAS FURTHER MENTIONED THAT IT WAS A FAMILY AFFAIR AS BO TH THE TRUSTS ARE CONTROLLED BY PODDAR FAMILY. IT WAS MENTIONED THAT IN ONE TRUST, WIFE IS THE KEY PERSON AND IN ANOTHER TRUST THE HUSBAND IS THE KEY PERSON. IT WAS ALSO MENTION ED THAT IN PODDAR SANSTHAN, ASSESSEE BEFORE US, SMT. SHARDA PODDAR IS THE PRESI DENT OF THE SOCIETY AND IN M/S. PODDAR TRUST, SHRI ANAND PODDAR HUSBAND OF SMT. SHA RDA PODDAR IS THE KEY PERSON. FURTHER, IT WAS RECORDED BY THE AO THAT IN THE PREV IOUS ASSESSMENT YEAR PODDAR TRUST HAD CONTRIBUTED RS. 6,59,293/- AS LOAN TO THE ASSES SEE AND IN THE PRESENT ASSESSMENT 3 ITA NO. 579/JP/2012 A.Y. 2009-10. ACIT VS. PODDAR SANSTHAN YEAR, THE ASSESSEE HAS LENT THE MONEY TO PODDAR TRU ST. AFTER RECORDING THE DETAILS OF PAYMENT MADE DURING THE ASSESSMENT YEAR BETWEEN APR IL, 2008 TO FEBRUARY, 2009 TO THE EXTENT OF RS. 42,69,615/-, IT WAS CONCLUDED BY THE AO THAT THE INCOME APPLIED IS NOT TAKEN BACK AND THE AO BY APPLYING PROVISIONS OF SEC TION 11(5) AND 13 OF THE IT ACT HAS MENTIONED THAT THE SECTIONS WERE INTRODUCED WITH T HE OBJECTIVE TO KEEP CHECK ON THE TRUSTS SO THAT THEY MAY NOT MISUSE FUNDS COLLECTED IN THE NAME OF CHARITY. THE AO HAS FURTHER CONCLUDED THAT THE LOAN WAS GIVEN WITHOUT A DEQUATE INTEREST, THEREFORE, THERE IS VIOLATION OF SECTION 13(1)(C) IN GENERAL AND 13(2)( A)/(B)/(G) IN PARTICULAR AND THEREFORE AO HAS DENIED THE EXEMPTION TO THE ASSESSEE AND HAS TAKEN THE AMOUNT OF RS.70,01,172/- TO THE TOTAL INCOME OF THE ASSESSEE. 3. AGAINST THE ORDER PASSED BY THE AO, ASSESSEE HAS FILED APPEAL BEFORE LD. CIT (A). THE LD. CIT (A) HAS ALLOWED THE APPEAL OF THE ASSES SEE AND HAS GRANTED THE EXEMPTION UNDER SECTION 11 OF THE IT ACT. 4. NOW THE REVENUE IS BEFORE US. 4.1. THE LD. D/R FOR THE REVENUE RELIED UPON THE OR DER OF THE AO AND HAS SUBMITTED THAT PODDAR TRUST IS A SPECIFIED PERSON IN TERMS OF SECTION 13(3) OF THE ACT AND HAS SUBMITTED THAT THE JUDGMENTS RELIED UPON BY THE LD. CIT (A) IN THE MATTER OF THANTHI TRUST 239 ITR 502 (SC) AND ACME EDUCATIONAL SOCIETY 326 ITR 146 (DELHI) ARE NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CA SE. HE HAS SUBMITTED THAT THE ORDER OF THE AO IS REQUIRED TO BE UPHELD. 4.2. ON THE CONTRARY, THE LD. A/R OF THE ASSESSEE H AS SUBMITTED THAT THE LD. CIT (A) HAS EXAMINED THE SCOPE OF SPECIFIED PERSON WITHIN T HE MEANING OF SECTION 13(3) OF THE 4 ITA NO. 579/JP/2012 A.Y. 2009-10. ACIT VS. PODDAR SANSTHAN IT ACT AND HAS COME TO THE CONCLUSION THAT PODDAR T RUST IS NOT A SPECIFIED PERSON. IT WAS ALSO HELD THAT THE LOAN SO GIVEN WAS NOT AN INV ESTMENT BUT WAS APPLICATION OF INCOME. IT WAS ALSO SUBMITTED THAT THE LD. CIT (A) HAS ALSO EXAMINED THE FACT, THAT VIDE NOTIFICATION NO. 1827 DATED 20.08.2010 THE ASSESSEE WAS GRANTED THE APPROVAL U/S 10(23C) AFTER MAKING NECESSARY ENQUIRIES AND, THERE FORE, THERE IS NO VIOLATION OF SECTION 13 OF THE ACT. THE LD. A/R FURTHER RELIED UPON THE JUDGMENT PASSED IN THE CASES OF CIT VS. KAMLA TOWN TRUST, 279 ITR 89 (ALL.), DIRECTOR O F INCOME TAX VS. ACME EDUCATIONAL SOCIETY, 326 ITR 146 (DELHI), KANPUR SUBHASH SHIKSH A SAMITI VS. DCIT (LUCKNOW) 11 ITR (TRIB.) 23 (LUCKNOW), DIRECTOR OF INCOME TAX (EX EMPTION) VS. PARIWAR SEWA SANSTHAN, 254 ITR 268 (DELHI) AND CHAMPA CHARITABLE TRUST VS. CIT, 214 ITR 764 (BOM.). LASTLY, THE LD. A/R CONTENDED THAT GIVING INTEREST FREE LOAN BY THE RESPONDENT SOCIETY TO PODDAR TRUST IS NOT VIOLATIVE OF SECTION 13 AND THE EXEMPTION UNDER SECTION 11 COULD NOT BE DENIED. FOR THAT PURPOSE HE RELIED UPON THE JUDGMENT PASSED IN THE MATTER OF MAA VAISHNAV EDUCATION SOCIETY, 38 TAXMANN .COM 193 (M.P) TO THE FOLLOWING EFFECT :- WE HAVE CONSIDERED THE CONTENTION OF THE APPELLAN T AND FIND THAT MERELY THE RESPONDENT SOCIETY HAD GIVEN INTEREST FR EE LOAN TO ANOTHER SOCIETY, SO THE LOAN WAS NEITHER INVESTMENT NOR DEPOSIT. THE PROVISIONS AS CONTAINED IN SECTION 13(3) OF THE ACT WERE NOT APPLICABLE. THE AFORESAID IS A FINDING OF FACT REC ORDED BY TRIBUNAL IN WHICH WE DO NOT FIND ANY ERROR OR SUBSTANTIAL QU ESTION OF LAW. APART FROM THIS, THE QUESTION WAS ALREADY DECIDED B Y THE TRIBUNAL FOR THE ASSESSMENT YEAR 2004-05, AGAINST WHICH NO A PPEAL WAS PREFERRED. IN VIEW OF THE AFORESAID FACTUAL POSITION INVOLVED IN THESE CASES, WE FIND THAT THE PRESENT APPEALS DO NOT INVOLVE ANY SU BSTANTIAL QUESTIONS OF LAW FOR OUR CONSIDERATION. APART FROM THIS, DELHI HIGH 5 ITA NO. 579/JP/2012 A.Y. 2009-10. ACIT VS. PODDAR SANSTHAN COURT IN DIT (EXEMPTION) V. ACME EDUCATIONAL SOCIETY (2010) 326 ITR 146 HAVE EXAMINED THE SIMILAR ISSUE AND DECIDED THE MATTER IN FAVOUR OF THE ASSESSEE. 4.3 LASTLY, IT WAS CONTENDED THAT THE AO WHILE PASS ING THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2011-12 HAS NOT DENIED THE EXEMPTIO N UNDER SECTION 11, EVEN WHEN THE LOAN TO PODDAR TRUST WAS SUBSISTING DURING THE YEAR. 5.1. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. THE REASON FOR DENIAL OF EXEMPTION UNDER SECTION 11 TO THE ASSESSEE WAS ON ACCOUNT OF THE CONCLUSION THAT PODDAR TRUST IS A PERSON WITHIN THE MEANING OF SECTION 13(3) OF THE IT ACT AND FURTHER THAT THE LOANS HAVE BEEN GIVEN A ND RECEIVED FROM PODDAR TRUST. SECTION 13(3) PROVIDES AS UNDER :- SECTION 13(3) : THE PERSONS REFERRED TO IN CLAUSE (C) OF SUB-SECTION (1) AND SUB-SECTION (2) ARE THE FOLLOWING, NAMELY :- (A) THE AUTHOR OF THE TRUST OR THE FOUNDER OF THE INSTI TUTION; (B) ANY PERSON WHO HAS MADE A SUBSTANTIAL CONTRIBUTION TO THE TRUST OR INSTITUTION [THAT IS TO SAY, ANY PERSON WH OSE TOTAL CONTRIBUTION UP TO THE END OF THE RELEVANT PREVIOUS YEAR EXCEEDS (FIFTY) THOUSAND RUPEES]; (C) WHERE SUCH AUTHOR, FOUNDER OR PERSON IS A HINDU UND IVIDED FAMILY, A MEMBER OF THE FAMILY; (CC) ANY TRUSTEE OF THE TRUST OR MANAGER (BY WHATEV ER NAME CALLED) OF THE INSTITUTION]; (D) ANY RELATIVE OR ANY SUCH AUTHOR, FOUNDER, PERSON,(M EMBER, TRUSTEE OR MANAGER) AS AFORESAID; 6 ITA NO. 579/JP/2012 A.Y. 2009-10. ACIT VS. PODDAR SANSTHAN (E) ANY CONCERN IN WHICH ANY OF THE PERSONS REFERRED TO IN CLAUSES (A), (B), (C) [(CC)] AND (D) HAS A SUBSTANTIAL INTE REST. SECTION 13(1) ( C ) PROVIDES AS UNDER :- SEC. 13(1)(C) : IN THE CASE OF A TRUST FOR CHARITAB LE OR RELIGIOUS PURPOSES OR A CHARITABLE OR RELIGIOUS INSTITUTION, ANY INCOME THEREOF - (I) IF SUCH TRUST OR INSTITUTION HAS BEEN CREATED OR ES TABLISHED AFTER THE COMMENCEMENT OF THIS ACT AND UNDER THE TE RMS OF THE TRUST OR THE RULES GOVERNING THE INSTITUTION, A NY PART OF SUCH INCOME ENURES, OR ( II ) IF ANY PART OF SUCH INCOME OR ANY PROPERTY OF THE TRUST OR THE INSTITUTION (WHENEVER CREATED OR ESTABLISHED) IS DURING THE PREVIOUS YEAR USED OR APPLIED, DIRECTLY OR INDIRECT LY FOR THE BENEFIT OF ANY PERSON 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 APPLICATION , WHETHER DIRECTLY OR INDIRECTLY, OF ANY PART OF SUCH INCOME OR ANY PROPERTY OF THE TRUST OR INSTITUTION FOR THE BENEFIT OF ANY PER SON REFERRED TO IN SUB-SECTION (3), IF SUCH USE OR APPLICATION IS BY W AY OF COMPLIANCE WITH A MANDATORY TERM OF THE TRUST OR A MANDATORY R ULE GOVERNING THE INSTITUTION : PROVIDED FURTHER THAT IN THE CASE OF A TRUST FOR RELIGIOUS 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 APPLICATION, WHETHE R DIRECTLY OR INDIRECTLY, OF ANY PART OF SUCH INCOME OR ANY PROPERTY OF THE TRUST OR INSTITUTION FOR THE BENEFIT OF ANY PER SON REFERRED TO IN SUB-SECTION (3) IN SO FAR AS SUCH USE OR APPLICATIO N RELATES TO ANY PERIOD BEFORE THE 1ST DAY OF JUNE, 1970; 7 ITA NO. 579/JP/2012 A.Y. 2009-10. ACIT VS. PODDAR SANSTHAN 5.2 THE CONJOINT READING OF SECTION 13(1)(C) AND 13(3), LEAVES NO DOUBT THAT THE TRUSTEE OF THE TRUST, THE FOUNDER OF THE TRUST, AUT HOR OF THE TRUST, MEMBER OF THE FAMILY, RELATIVE OF SUCH AUTHOR OR ANY CONCERN IN WHICH ANY OF THE PERSON REFERRED IN CLAUSE (A) TO (D) HAS A SUBSTANTIAL INTEREST COMES WITHIN THE DEFINITION OF THE CONCERNED PERSONS REFERRED IN CLAUSE (C) OF SUB SECTION (1) OF SECTIO N 13. 5.3 FURTHER, SECTION 2(31) DEFINES A PERSON INCLUD ES AN ASSOCIATION OF PERSONS OR BODY OR INDIVIDUALS WHETHER INCORPORATED OR NOT. TH E EXPLANATION TO SEC. 2(31) PROVIDES AS UNDER :- 'PERSON' 85 INCLUDES ( I ) AN INDIVIDUAL 85 , ( II ) A HINDU UNDIVIDED FAMILY 85 , ( III ) A COMPANY, ( IV ) A FIRM 86 , ( V ) AN ASSOCIATION OF PERSONS 86 OR A BODY OF INDIVIDUALS 86 , WHETHER INCORPORATED OR NOT, ( VI ) A LOCAL AUTHORITY, AND ( VII ) EVERY ARTIFICIAL JURIDICAL PERSON, NOT FALLING WITHIN ANY OF THE PRECEDING SUB-CLAUSES. 87 [ EXPLANATION. FOR THE PURPOSES OF THIS CLAUSE, AN ASSOCIATION OF PERSONS OR A BODY OF INDIVIDUALS OR A LOCAL AUTHORITY OR AN ARTIFICIAL JURIDICAL PERSON SHALL BE DEEMED TO BE A PERSON, WHETHER OR NOT SUCH PERS ON OR BODY OR AUTHORITY OR JURIDICAL PERSON WAS FORMED OR ESTA- BLISHED OR INCORPORATED WITH THE OBJECT OF DERIVING INCOME, PROFITS OR GAIN S;] THUS IT IS CLEAR THAT A TRUST REGISTERED UNDER THE TRUST ACT IN WHICH THE FAMILY MEMBER OF THE ASSESSEE IS /ARE HAVING INTEREST COMES WITHI N THE REALM OF SECTION 13(3)(B) OF THE 8 ITA NO. 579/JP/2012 A.Y. 2009-10. ACIT VS. PODDAR SANSTHAN ACT AND IS A PROHIBITED PERSON . THEREFORE, IN OUR VIEW, THE AO WAS RIGHT IN CONCLUDING THAT THE TRANSACTION HAS TAKEN PLACE BETWEEN THE PR OHIBITED PERSON. 5.4 THE CONTENTION OF THE ASSESSEE THAT TRANSACTION LIKE CURRENT ACCOUNT WAS GOING ON BETWEEN BOTH THE TRUSTS AND BOTH THE TRUSTS WERE LENDING MONEY TO EACH OTHER, IN FACT GOES AGAINST THE ASSESSEE IN VIEW OF THE JUDGM ENT OF HONBLE DELHI HIGH COURT IN THE MATTER OF DCIT VS. CHARANJIV CHARITABLE TRUST I N ITA NO. 321 TO 323 OF 2013, (2014) 233 TAXMAN 071 (DELHI) WHEREIN IN PARA 25 THE IDENT ICAL CONTENTIONS HAVE BEEN DEALT WITH BY THE HONBLE HIGH COURT AND AFTER CONSIDERIN G THE IDENTICAL CONTENTION, THE EXEMPTION UNDER SECTION 11 WAS HELD TO BE NOT AVAIL ABLE TO THE ASSESSEE, FOR THE PURPOSE OF CONVENIENCE, WE ARE HEREBY REPRODUCING T HE FINDING OF THE HONBLE DELHI HIGH COURT IN THE ABOVE SAID MATTER :- 25. COUNSEL FOR THE ASSESSEE WOULD, HOWEVER, CONTEN D THAT THE CHART SET OUT IN THE ORDER OF THE TRIBUNAL WOULD SHOW THA T THE ACCOUNT BETWEEN THE ASSESSEE AND THE APIL IS A RUNNING ACCO UNT AND IF THE ENTRIES ARE TAKEN AS A WHOLE IT WOULD BE SEEN THAT IT IS APIL WHICH IS FUNDING THE ASSESSEE AND NOT THE OTHER WAY ROUND. I T WAS AGAIN SUBMITTED THAT IN THE 12 MONTH PERIOD ENDED ON 31.0 3.2006, NO MONIES FLOWED OUT FROM THE ASSESSEE TO ANY PROHIBIT ED PERSON. THIS LATTER SUBMISSION HAS ALREADY BEEN DEALT WITH BY US SUPRA. AS TO THE CONTENTION THAT IT IS ONLY A RUNNING ACCOUNT BETWEE N THE ASSESSEE AND THE APIL, WE ARE UNABLE TO GIVE EFFECT TO THE SUBMI SSION SINCE SECTION 13(1)(C)(II) READ WITH SECTION 13(2) DOES NOT APPEA R TO MAKE ANY DISTINCTION BETWEEN A RUNNING ACCOUNT WHERE THERE I S INTER-FLOW OF FUNDS AND A CASE OF PURE ADVANCE. SECTION 13(2) MAK ES IT CLEAR THAT THE INSTANCES LISTED IN ITS CLAUSES (A) TO (H) ARE ONLY ILLUSTRATIVE AND WITHOUT PREJUDICE TO THE GENERALITY OF THE PROVISIO NS OF SECTION 13(1)(C). THE PROHIBITION IS ON THE USE OR APPLICAT ION OF ANY PART OF THE INCOME OR PROPERTY OF THE TRUST, DURING THE RELEVAN T PREVIOUS YEAR, FOR THE DIRECT OR INDIRECT BENEFIT OF ANY PROHIBITED PE RSON. WHEN FUNDS OF ASSESSEE TRUST ARE LYING WITH APIL EVEN THOUGH TH EY WERE NOT ADVANCED IN THE RELEVANT ACCOUNTING YEAR AND NO I NTEREST OR SECURITY IS TAKEN, IT IS A CASE OF DIRECT USE OF THE FUNDS F OR THE BENEFIT OF A 9 ITA NO. 579/JP/2012 A.Y. 2009-10. ACIT VS. PODDAR SANSTHAN PROHIBITED PERSON. CLAUSE (A) OF SECTION 13(2) SAYS THAT EVEN IF THE INCOME OR PROPERTY OF THE TRUST CONTINUES TO REMAIN LENT TO ANY PROHIBITED PERSON FOR ANY PERIOD DURING THE RELEVAN T PREVIOUS YEAR WITHOUT SECURITY OR INTEREST, IT WOULD BE A CASE OF DEEMED MISAPPLICATION. THIS SHOWS THAT IT IS NOT NECESSARY THAT THERE SHOULD BE ANY ADVANCE PAYMENT TO THE PROHIBITED PERSON IN THE RELEVANT ACCOUNTING YEAR. AT THIS JUNCTURE IT IS RELEVANT TO POINT OUT A CRUCIAL ASPECT. THE PROVISION MAKES REFERENCE TO INCOME OR PROPERTY OF THE TRUST BEING 'LENT' OR CONTINUED TO BE 'LENT' TO ANY PROHIBITED PERSON. IF THE FUNDS OF THE ASSESSEE HAD BEEN GIVEN TO APIL WI THOUT ANY AGREEMENT TO SELL BEING ENTERED INTO THERE WOULD HA VE BEEN NO DEFENCE TO THE ASSESSEE AS THAT WOULD HAVE BEEN A C LEAR CASE OF MONIES LENT OR CONTINUE TO BE LENT WITHOUT INTEREST OR SECURITY. IT IS ONLY IN ORDER TO GET OUT OF THE CLUTCHES OF THE SAI D CLAUSE THAT THE ASSESSEE APPEARS TO HAVE CONCEIVED OF A DEVICE AND ENTERED INTO DOCUMENTATION WITH APIL TO MAKE IT APPEAR AS IF THE MONIES WERE NOT 'LENT' TO APIL, BUT WERE GIVEN FOR THE PURPOSE OF A CQUIRING LANDS UNDER AGREEMENTS TO SELL, FOR THE OBJECTS OF THE TRUST. T HIS EXPLAINS WHY THE ASSESSEE ADMITTED BEFORE THE ASSESSING OFFICER IN I TS FIRST LETTER THAT IT HAD NOT TAKEN POSSESSION OF THE LANDS, BUT RESILED FROM THAT POSITION IN ITS SECOND LETTER, REALISING ITS FAUX PAR, CITING S OME CLAUSES IN THE AGREEMENTS. TAKING POSSESSION OF THE LANDS HAS NOT BEEN ESTABLISHED AS A FACT BY ADDUCING EVIDENCE. 26. THE ARGUMENT OF THE COUNSEL FOR THE ASSESSEE TH AT THE CIT (APPEALS) AND THE TRIBUNAL HAVE ENTERED CONCURRENT FINDINGS OF FACT WHICH SHOULD NOT NORMALLY BE DISTURBED UNLESS THEY ARE PERVERSE IS TECHNICALLY CORRECT; HOWEVER, WE ARE IN AGREEMENT W ITH THE SUBMISSION OF THE COUNSEL FOR THE REVENUE THAT THE FINDINGS OF THE CIT (APPEALS) (FOR THE ASSESSMENT YEAR 2006-07) AND THE TRIBUNAL ARE SUPERFICIAL AND HAVE NOT TAKEN NOTE OF THE NORMAL COURSE OF HUMAN C ONDUCT AND PROBABILITIES. A LITTLE PROBING OR SCRATCHING OF TH E SURFACE WAS ALL THAT WAS REQUIRED ON THE PART OF THE TRIBUNAL TO FIND OU T THE TRUTH ABOUT THE CLAIM OF THE ASSESSEE. THE TRIBUNAL HAS CHOSEN, ERR ONEOUSLY THIS WE SAY WITH RESPECT TO IGNORE THE NORMAL COURSE OF H UMAN CONDUCT AND PROBABILITIES OF THE CASE AND HAS PREFERRED TO BE L ED SIMPLY BY THE DOCUMENTATION PRESENTED BY THE ASSESSEE. EACH AND E VERY OBJECTION TAKEN BY THE ASSESSING OFFICER HAS BEEN ATTEMPTED T O BE EXPLAINED AWAY BY THE ASSESSEE AND THE TRIBUNAL OVERLOOKED TH AT THE FACTS HAVE TO BE LOOKED AT CUMULATIVELY AND AS A WHOLE; IT FAI LED TO REALISE THAT AND THE REAL TRANSACTION BETWEEN THE ASSESSEE AND A PIL IS NOT JUST AN AGGREGATE OF THE SEVERAL COMPONENT PARTS THEREOF; T HE AUTHENTICITY OF THE TRANSACTION HAS TO BE EXAMINED BY KEEPING IN VI EW THE CONSPECTUS OF THE FACTS WITHOUT MISSING THE WOODS FOR THE TREE S. 27. IN THE AFORESAID VIEW OF THE MATTER, WE HOLD TH AT THE FINDINGS OF THE TRIBUNAL ON THIS ASPECT CANNOT BE UPHELD. WE UP HOLD THE FINDINGS OF THE ASSESSING OFFICER AND HOLD THAT IN ADVANCING THE AMOUNT OF RS.8,60,16,000/- TO APIL THE ASSESSEE COMMITTED A V IOLATION OF THE PROVISIONS OF SECTION 13(1)(C)(II) READ WITH SECTIO N 13(2) AND SECTION 10 ITA NO. 579/JP/2012 A.Y. 2009-10. ACIT VS. PODDAR SANSTHAN 13(3) OF THE ACT. THE TRUST WAS ACCORDINGLY NOT ELI GIBLE FOR THE EXEMPTION UNDER SECTION 11 OF THE ACT FOR BOTH THE YEARS. THE RELIANCE PLACED BY LD. CIT (A) ON THE JUDGMENT OF ACME EDUCATIONAL SOCIETY IS ILL FOUNDED. OUR READING SHOWS THAT THE ISSUE OF APPLI CABILITY OF SECTION 13(3) WAS NOT AN ISSUE IN THE JUDGMENT IN THE CASE OF DIRECTOR OF IN COME-TAX VS. ACME EDUCATIONAL SOCIETY , SO FAR AS PROHIBITED PERSON IS CONCERNED. THE DISCUSSION IN THE SAID JUDGMENT, ON THE QUESTION INVOLVED IN THE IT APPEAL, WAS MENT IONED IN PARA 12 TO 15, AS UNDER :- 12 . THIS COURT IN THE CASE OF DIRECTOR OF INCOME-TAX (EXEMPTION) V. ALARIPPU [2000] 244 ITR 358 HAS POINTED OUT THAT THE WORDS 'INVESTMENT', 'DEPO SIT', AND 'LOAN' HAVE DIFFERENT MEANINGS. THE RELEVANT OBSERV ATIONS IN THE SAID JUDGMENT ARE REPRODUCED HEREINBELOW (HEADNOTE): 'THE EXPRESSIONS USED IN BOTH THE PROVISIONS QUOTED ABOVE, ARE 'INVESTMENT' AND 'DEPOSIT'. THE FORMER EXPRESSION MEANS TO LAY OUT M ONEY IN BUSINESS WITH A VIEW TO OBTAIN AN INCOME OR PROFIT. DEPOSIT, ON THE OTHE R HAND, MEANS THAT WHICH IS PLACED ANYWHERE, AS IN ANY ONE'S HANDS FOR SAFE-KEE PING, SOMETHING ENTRUSTED TO THE CARE OF ANOTHER. THESE TWO EXPRESSIONS HAVE BEE N USED IN A COGNATE SENSE AND HAVE TO BE UNDERSTOOD AS SUCH. IN ORDER TO CONSTITU TE AN INVESTMENT THE AMOUNT LAID DOWN SHOULD BE CAPABLE OF ANY RESULT OF ANY IN COME, RETURN OR PROFIT TO THE INVESTOR AND IN EVERY CASE OF INVESTMENT, THE INTEN TION AND POSITIVE ACT ON THE PART OF THE INVESTOR SHOULD BE TO EARN SUCH INCOME, RETU RNS, PROFIT IN ORDER TO CONSTITUTE AN INVESTMENT, THE MONIES SHALL BE LAID OUT IN SUCH A MANNER AS TO ACQUIRE SOME SPECIES OF PROPERTY WHICH WOULD BRING IN AN INCOME TO THE INVESTOR. A LOAN, ON THE OTHER HAND, IS GRANTING TEMPORARY USE OF MONEY, OR TEMPORARY ACCOMMODATION. THE WORDS 'INVESTMENT', 'DEPOSIT' AND 'LOAN' ARE CE RTAINLY DIFFERENT. SECTION 11(5) REFERS TO PATTERN OF INVESTMENT BY THE ASSESSEE. SE CTION 11(5) WAS INTRODUCED BY THE FINANCE ACT, 1983, WITH EFFECT FROM APRIL 1, 19 83, I.E. , FOR AND FROM THE ASSESSMENT YEAR 1983-84. IT PRESCRIBES THE FORMS AN D MODES OF INVESTING AND DEPOSITING MONEY REFERRED TO IN SECTION 11(2)( B ). SUBSEQUENTLY, NEW FORMS AND MODES HAVE BEEN ADDED. SECTION 13(1)( D ) AS AMENDED BY THE FINANCE ACT, 1983, PROVIDES THAT THE INCOME OF ANY CHARITABLE OR RELIG IOUS TRUST OR INSTITUTION WILL NOT BE ENTITLED TO EXEMPTION UNDER SECTIONS 11 AND 12, IF CERTAIN CONDITIONS STIPULATED THEREIN ARE NOT COMPLIED WITH. THE WORD 'DEPOSIT' D OES NOT COVER TRANSACTION OF LOAN WHICH CAN BE MORE APPROPRIATELY DESCRIBED AS D IRECT BAILMENT. THE ESSENCE OF DEPOSIT IS THAT THERE MUST BE A LIABILITY TO RET URN IT TO THE PARTY BY WHOM OR ON 11 ITA NO. 579/JP/2012 A.Y. 2009-10. ACIT VS. PODDAR SANSTHAN WHOSE BEHALF HAS BEEN MADE ON FULFILMENT OF CERTAIN CONDITIONS. IN THE COMMERCIAL SENSE, THE TERM IS USED TO INDICATE THE AFORESAID TRANSACTION AS DEPOSIT OF MONEY FOR EMPLOYMENT, IN BUSINESS, DEPOSITS FOR VALUE TO INITIATE SECURITY FOR DEPOSIT OF TITLE DEEDS, SIMILAR DOCUMENTS AS SECURI TY FOR LOAN, DEPOSIT OF MONEY BILLS IN A BANK IN THE ORDINARY COURSE OF BUSINESS OF CURRENT ACCOUNT AND DEPOSITS OF A SUM AT INTEREST AT A FIXED DEPOSIT IN A BANK.' 13. IN BAIDYA NATH PLASTIC INDUSTRIES (P) LTD. V. K.L ANAND, ITO [1998] 230 ITR 522 (DELHI) A LEARNED SINGLE JUDGE OF THIS COURT POINTED OUT T HAT THE DISTINCTION BETWEEN 'LOAN' AND 'DEPOSIT' IS THAT IN THE CASE OF THE FORMER IT IS ORDINARILY THE DUTY OF THE DEBTOR TO SEEK OUT THE CREDITOR AND TO REPAY THE MONEY ACCORDING TO THE AGREEMENT, WHILE IN THE CASE OF THE LATTER IT IS GE NERALLY THE DUTY OF THE DEPOSITOR TO GO TO THE BANKER OR TO THE DEPOSITEE, AS THE CASE M AY BE, AND MAKE A DEMAND FOR IT. 14. A DIVISION BENCH OF THIS COURT IN CASE OF DIRECTOR OF INCOME-TAX (EXEMPTION) V. PARIWAR SEWA SANSTHAN [2002] 254 ITR 268 (DELHI) HAS HELD THAT NO QUESTION OF LAW ARISES FROM THE ORDER OF THE INCOME-TAX APPE LLATE TRIBUNAL HOLDING THAT THERE WAS NO VIOLATION OF THE PROVISION OF SECTION 13(1)( D ) OF THE ACT, 1961 WHERE LOAN HAD BEEN GIVEN BY ONE SOCIETY TO ANOTHER SOCIE TY HAVING SIMILAR OBJECTS. 15. KEEPING IN VIEW THE AFORESAID EXPOSITION OF LAW, W E ARE OF THE OPINION THAT INTEREST FREE LOAN OF RS. 90,50,000 GIVEN BY THE AS SESSEE-SOCIETY TO NAV BHARTI EDUCATIONAL SOCIETY DOES NOT VIOLATE SECTION 13(1)( D ) READ WITH SECTION 11(5) OF THE ACT, 1961 AS THE SAID LOAN WAS NEITHER AN 'INVE STMENT' NOR A 'DEPOSIT'. THIS IS MORE SO AS BOTH THE SOCIETIES HAD SIMILAR OBJECTS A ND WERE REGISTERED UNDER SECTION 12A OF THE ACT, 1961 AND HAD APPROVALS UNDER SECTIO N 80G OF THE ACT, 1961. THE FACT THAT THE LOAN WAS INTEREST FREE AND HAD BEEN S UBSEQUENTLY RETURNED IS ALSO SIGNIFICANT. IN VIEW OF THE ORDER PASSED BY THE COM MISSIONER OF INCOME-TAX (APPEALS) IN THE CASE OF NAV BHARATI EDUCATIONAL SOCIETY, MS. BANSAL'S ALLEGATION WITH REGARD TO 'ENTRY SCAM' ALSO DOES NOT SURVIVE. CONSEQUENTLY, THERE IS NO SUBSTANTIAL QUESTION OF LAW INVOLVED IN THE PRESENT APPEAL AND ACCORDINGLY, THE APPEAL IS DISMISSED BUT WITH NO ORDER AS TO COSTS. 12 ITA NO. 579/JP/2012 A.Y. 2009-10. ACIT VS. PODDAR SANSTHAN 5.5 THE RELIANCE OF THE LD. A/R ON THE JUDGMENT OF CIT VS. MAA VAISHNAV EDUCATION SOCIETY, (2013) 38 TAXMANN.COM 193, SO FAR AS PROH IBITED PERSON IS CONCERNED ,IN OUR VIEW IS NOT APPLICABLE. 5.6 HAVING HELD THAT THE PODDAR TRUST COMES WITHIN THE LIST OF PROHIBITED PERSONS UNDER SECTION 13(3), NOW WE ARE LEFT TO EXAMINE THE TRANSACTION WHICH HAS TAKEN PLACE BETWEEN THE ASSESSEE AND THE SAID M/S. PODDAR TRUST . THE AO, AFTER EXAMINATION HAS FOUND THAT THE ASSESSEE HAS GIVEN A LOAN OF RS. 42, 69,615/- TO PMTI COLLEGE, A UNIT OF M/S. PODDAR TRUST WHICH IS A PROHIBITED PERSON WITH IN THE MEANING OF SECTION 13(3) OF THE ACT. IN OUR VIEW, THE FACT OF GIVING THE LOAN BY THE ASSESSEE TRUST TO M/S. PODDAR TRUST DOES NOT VIOLATE SECTION 13(1)(D) READ WITH S ECTION 11(5) OF IT ACT, 1961, AS THE SAID LOAN IS NEITHER AN INVESTMENT NOR A DEPOSIT AN D THE SAID AMOUNT HAS BEEN GIVEN TO M/S. PODDAR TRUST WHICH IS ALSO A REGISTERED TRUST HAVING THE SIMILAR OBJECTS UNDER THE ACT OF 1961. THE SAID TRUST HAS, IN FACT, RETURNED BACK THE MONEY TO THE ASSESSEE TRUST IN THE SUBSEQUENT ASSESSMENT YEAR AND, THEREFORE, T HE AO HAS NOT DISALLOWED THE EXEMPTION. IN VIEW THEREOF, THOUGH M/S. PODDAR TRU ST IS A PROHIBITED PERSON WITHIN THE MEANING OF SECTION 13(3) OF THE ACT, HOWEVER, THE T RANSACTION OF RS. 42,69,615/- DOES NOT FALL WITHIN THE PROVISIONS OF SECTION 13(1)(D) READ WITH SECTION 11(5) OF THE ACT. IN VIEW THEREOF, THE ASSESSEE IS ENTITLED TO THE EXEMP TION UNDER SECTION 11 OF THE ACT. THUS THE APPEAL OF THE REVENUE IS DISMISSED. 13 ITA NO. 579/JP/2012 A.Y. 2009-10. ACIT VS. PODDAR SANSTHAN 6. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 5/02/2016 . SD/- SD/- VH-VKJ-EHUK YFYR DQEKJ (T.R. MEENA) (LALIET KUMAR) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 5/02/2016. DAS/ VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE ASSTT. CIT, CIRCLE-5, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- PODDAR SANSTHAN, JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDRVIHY@ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 579/JP/2012) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR 14 ITA NO. 579/JP/2012 A.Y. 2009-10. ACIT VS. PODDAR SANSTHAN