DCIT, C-1 (Exemptions), Chandigarh V. CT Educational Society, Jalandhar

ITA 700/CHANDI/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3742 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 26-08-2021
• Assessment Year: 2015-2016
• Appeal Filed On: 08-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Transfer pricing; Charitable institution; Rule of consistency; Bonafide belief; Source of fund; Notional interest; TDS; Capital Gains
• Section: 11; 143(3); 194LA; 13; 20

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH A , CHANDIGARH , ! ' # $ , BEFORE: SHRI SANJAY GARG, JUDICIAL MEMBER AND SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NO. 1135/CHD/2017 / ASSESSMENT YEAR : 2014-15 ./ ITA NO. 700/CHD/2019 / ASSESSMENT YEAR : 2015-16 / REVENUE BY : SMT. MEENAKSHI VOHRA, ADDL. CIT / ASSESSEE BY : SHRI ASHRAY SARNA,C.A. / DATE OF HEARING : 26.08.2021 / DATE OF PRONOUNCEMENT : 04.10.2021 VIRTUAL HEARING / ORDER PER SANJAY GARG, JUDICIAL MEMBER : THE PRESENT APPEALS HAVE BEEN PREFERRED BY THE REVE NUE AGAINST THE ORDER DATED 24.04.2017 AND 15.02.2019 PASSED U/S 250(6) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) OF THE DY.CIT, CIRCLE-1 (EXEMPTIONS), CHANDIGARH. M/S C.T. EDUCATIONAL SOCIETY, GREATER KAILASH MAQSUDAM, JALANDHAR. % ./PAN NO: AAATC4867F THE DY.CIT, CIRCLE-1 (EXEMPTIONS), CHANDIGARH. M/S C.T. EDUCATIONAL SOCIETY, MAQSUDAM,GREATER KAILASH JALANDHAR. % ./PAN NO: AAATC4867F ITA 1135/CHD/2017 & ITA 700/CHD/2019 A.Y. 2014-15 & 2015-16 PAGE 2 OF 12 THE COMMISSIONER OF INCOME TAX-2, JALANDHAR (HEREIN AFTER REFERRED TO AS CIT(A) RESPECTIVELY FOR THE ASSESSME NT YEAR 2014- 15 AND 2015-16. 2. SINCE THE FACTS AND CIRCUMSTANCES IN BOTH THE A PPEALS ARE IDENTICAL, THEREFORE, BOTH THE APPEALS ARE BEING TA KEN UP TOGETHER FOR THE SAKE OF CONVENIENCE. ITA 1135/CHD/2017 ( A.Y. 2014-15 3. THE REVENUE IN THIS APPEAL HAS TAKEN THE FOLLOWI NG MODIFIED GROUNDS OF APPEAL : 1. THAT THELD. CIT(A)-2, JALANDHAR HAS ERRED IN LAW AS THE FINDINGS RECORDED ARE PERVERSE AND CONTRARY TO THE EVIDENCE/ MATERIAL AVAILABLE ON RECORD & FACTS OF THE CASE AND DULY CONSIDERED BY THE ASSE SSING OFFICER. 2. THAT THE LD. CIT(A)-2, JALANDHAR HAS ERRED IN LA W WHILE ALLOWING THE BENEFIT UNDER SECTION 11 OF THE ACT WITHOUT APPRECIATING THAT THERE WAS A CLEAR VIOLATION OF SECTION 13 OF THE INCOME TAX ACT, 1961. 3. THAT THE LD. GT(A)-2 JALANDHAR HAS ERRED IN LAW IN TREATING INCOME OF RS. 37,31,000/- AS EXEMPT UNDER SECTION 11 OF THE INCOME TAX ACT, 1961 DESPITE THE ASSESSEE TRUST HAVING CONTRAVENED THE PROVISION S OF SECTION 13(2)(C) OF THE INCOME TAX ACT, 1961. 4. THAT THE LD. CIT(A)-2 JALANDHAR HAS ERRED IN LAW IN WHILE DELETING THE ADDITION OF RS. 1,98,48,600/- MADE ON ACCOUNT OF IN TEREST @12% P.A. ON ADVANCES PAID TO MEMBERS OF THE SOCIETY WITHOUT APP RECIATING THAT THESE ADVANCES ARE NOT COVERED U/S 13(L)(C) & 13(L)(D) R. W. 13(3). 5. THAT THE LD. CIT(A)-2 JALANDHAR HAS ERRED IN LAW IN APPRECIATING THE FACT THAT SALARY PAID TO THE PERSONS COVERED U/S 13 IS A MERE 2.5% OF THE TOTAL QUANTUM IS FLAWED IN LIGHT OF THE 29% INCREASE SHOW N IN THESE CASE AND DIRECTLY INTENDED TO BENEFIT THESE PERSONS AND ADDITIONALLY CORROBORATED BY THE OBJECTS AND THE INCREASE THEREOF ARE NOT CORROBORATED BY TH E OBJECTS CLAUSE OF SOCIETY. 6. THAT THE ID. CIT(A) JALANDHAR HAS ERRED IN LAW IN IGNORING THAT ADVANCES PAID TO MEMBERS OF SOCIETY AMOUNTS TO MISUTILIZATION OF REC EIPTS OF THE SCHOOL IN THE SHAPE OF TRANSFER FOR PROPERTY AND AS PER SCHEME THAT DOESN'T REFLECT ALTRUISM ON PART OF THE MEMBERS SEL LING LAND TO THEIR OWN SOCIETY. ITA 1135/CHD/2017 & ITA 700/CHD/2019 A.Y. 2014-15 & 2015-16 PAGE 3 OF 12 7. THAT THE ID. CIT(A)-2 JALANDHAR HAS ERRED IN LAW IN DELETING INTEREST AMOUNT EVEN WHEN THE ADVANCES PAID WERE MA DE TO MEMBERS OF THE SOCIETY, MUCH PRIOR TO EXECUTION OF SALE WITH TWO MEMBERS IN AY 2015-16 AND WHATSOEVER NONE WITH THIRD MEMBER EVEN TILL AY 2016-17, FOR PURCHASE OF LAND THAT WAS ADDITIONALLY NOT EVIDENCED TO BE IN PURSUANCE OF TH E SOCIETY'S OBJECTS 4. A PERUSAL OF THE ABOVE GROUNDS OF APPEAL REVEAL THAT THE REVENUE IS AGGRIEVED BY THE ACTION OF THE CIT(A) IN ALLOWING EXEMPTION U/S 11 OF THE INCOME TAX ACT,1961 ( IN SH ORT THE ACT) TO THE ASSESSEE SOCIETY ON TWO GROUNDS. FIRS TLY THAT THE ASSESSEE SOCIETY HAD MADE THE INTEREST FREE ADVANCE S TO ITS MEMBERS WHICH TRANSACTION WAS COVERED UNDER THE PRO VISIONS OF SECTION 13(1)(C) AND 13(1)(D) READ WITH SECTION 13(3) OF THE ACT AND FURTHER THAT THE ASSESSEE SOCIETY HAD PAID EXCESSIVE SALARY TO ITS MEMBERS HAVING CONTRAVENED THE PROVIS IONS OF SECTION 13(2)(C) OF THE ACT. THE LD. ASSESSING OFF ICER (IN SHORT AO) MADE THE ADDITION OF RS. 1,98,48,600/- ON ACC OUNT OF NOTIONAL INTEREST @ 12% P.A. ON THE INTEREST FREE A DVANCES PAID TO ITS MEMBERS BY THE SOCIETY AND FURTHER DISALLOWE D A SUM OF RS. 46,75,933/- PAID TO MEMBERS TOWARDS SALARY. HO WEVER, THE LD. CIT(A) DELETED THE DISALLOWANCE SO MADE BY THE AO. 5. IN RESPECT OF INTEREST FREE ADVANCES GIVEN TO IT S MEMBERS, IT WAS EXPLAINED BY THE SOCIETY THAT THE SAME WERE INFACT NOT INTEREST FREE ADVANCES, RATHER THE SAME WAS TOWARDS PAYMENT/CONSIDERATION FOR THE PURCHASE OF LAND FROM THE MEMBERS OF THE SOCIETY. THE LAND, INFACT WAS GIVEN BY THE ITA 1135/CHD/2017 & ITA 700/CHD/2019 A.Y. 2014-15 & 2015-16 PAGE 4 OF 12 MEMBERS TO THE SOCIETY FOR CONSTRUCTION OF BUILDING FOR EDUCATIONAL ACTIVITY OF THE SOCIETY. HOWEVER, THE PAYMENT OF CONSTRUCTION WAS SPREAD OVER A PERIOD AS PER AVAILA BILITY OF THE FUNDS AND FINALLY THE SALE DEED OF THE LAND WAS EXE CUTED BY THE MEMBERS IN FAVOUR OF THE ASSESSEE. THAT THE SALE C ONSIDERATION WAS FIXED AT ARMS LENGTH PRICE/COLLECTOR RATE AND T HERE IS NO ALLEGATION THAT ANY EXCESSIVE PAYMENT WAS MADE BY T HE SOCIETY FOR THE PURCHASE OF THE AFORESAID LAND. THE LD. CI T(A) CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE ADDITIONS SO MADE BY THE AO, OBSERVING AS UNDER : 4.4 I HAVE GONE THROUGH THE ASSESSMENT ORDER PASSE D BY THE AO AS WELL AS DETAILED SUBMISSIONS MADE BY THE APPELLANT INCLUDING JUDICIAL CITATIONS GIVEN THEREIN AND FIND THAT AN ADDITION O F RS. 1,98,48,600 HAS BEEN MADE BY THE AO ON THE GROUND THAT INTEREST FRE E ADVANCES AMOUNTING TO RS. 16,54,05,000 HAVE BEEN MADE BY THE SOCIETY TO THE PERSONS, WHO ARE MEMBERS OF THE SOCIETY. IT IS STAT ED BY THE AO THAT INTEREST AT THE RATE OF 12% PER ANNUM HAS TO BE CHA RGED ON THESE ADVANCES BASED ON THE MARKET RATE OF INTEREST. 4.5 IT IS FURTHER HELD BY THE AO THAT AMOUNT P AID TO THE MEMBERS OF THE SOCIETY AS ADVANCES ARE COVERED UNDER SECTION 1 3(L)(C) AND 13(L)(D) R.W.S. 13(3) OF THE IT ACT AND THEREFORE, CANNOT BE TREATED AS AN APPLICATION OF INCOME. IT IS ALSO STATED THAT THESE ADVANCES PAID ARE NOT AS PER THE MODES SPECIFIED IN THE PROVISIONS OF SUB SECTION 5 OF SECTION 11 OF THE IT ACT. THEREFORE, INTEREST AT THE RATE O F 12% P. A. ON THE TOTAL AMOUNT OF INTEREST FREE ADVANCES AMOUNTING TO RS.16,54,05,000, WHICH COMES TO RS. 1,98,48,600 HAS BEEN ADDED TO TH E INCOME OF THE SOCIETY. 4.6 THE APPELLANT HAS STATED THAT ADVANCES OF RS. 16,54,05,000 HAVE BEEN GIVEN TO 3 PERSONS NAMELY- SH. HARPREET SINGH, SMT. PARMINDER KAUR AND SH. MANBIR SINGH. A COPY OF ACCOUNT OF THE THREE PERSONS EXPLAINING THE NATURE OF TRANSACTIONS AND PURPOSE O F THE SAME HAS BEEN FILED IN THE COURSE OF ASSESSMENT PROCEEDINGS. IT I S STATED THAT AMOUNT HAS BEEN PAID BY THE SOCIETY AS ADVANCE PURCHASE OF LAND FOR THE PURPOSES OF SOCIETY. THE SOCIETY IS ENGAGED IN EDUC ATIONAL ACTIVITIES AND THEREFORE, FUNDS HAVE BEEN PAID OVER A PERIOD O F TIME TO THESE PERSONS AND DETAILS OF PAYMENTS MADE OVER A PERIOD OF 4 YEARS, IS AS UNDER:- ITA 1135/CHD/2017 & ITA 700/CHD/2019 A.Y. 2014-15 & 2015-16 PAGE 5 OF 12 NAME A.Y. 2012-13 A.Y. 2013-14 A.Y. 2014-15 A.Y. 20 15-16 HARPREET SINGH 2,20,00,000/- 6,20,00,000/- 6,86,80, 000/- 9,60,00,000/- PARMINDER KAUR 1,10,00,000/- 5,50,00,000/- 6,40,00,000/- 7,05,15,0 00.- MANBIR SINGH 2,20,00,000/- 2,20,00,000/- 3,27,25,00 0/- 4,62,00,000-- TOTAL 5,50,00,000/- 13,90,00,000/-, 16,54,05,000/- 21,27,15,000 - 4.7 THE APPELLANT HAS FURTHER STATED THAT NO UN-DU E BENEFIT HAS BEEN TAKEN BY THESE PERSONS AS THE SALE OF LAND HAS BEEN EXECU TED BY SH. HARPREET SINGH FOR RS. 9.60 CRORES AND BY SH. MANBIR SINGH FOR RS. 4.62 CRORES IN THE NAME OF THE SOCIETY. THE LAND IS SITUATED AT GREATER KAI LASH, MAQSUDAN, JALANDHAR AND TAX WAS DEDUCTED @ 1% ON THE TOTAL AMOUNT OF SALE CONSIDERATION. THE CAPITAL GAIN EARNED BY THESE PERSONS HAS ALSO BEEN DECLARED IN THEIR INCOME TAX RETURNS AND A COPY OF THE SAME HAS ALSO BEEN FI LED ON RECORD. IT IS FURTHER STATED THAT SMT. PARMINDER KAUR HAS BEEN PA ID AN ADVANCE OF RS. 7,05,15,000 FOR PURCHASE OF LAND AND THE SALE DEED IS TO BE EXECUTED IN THE YEAR 2016-17. A COPY OF THE ACCOUNT ALONG WITH CONF IRMATION AND COPY OF BANK STATEMENT, HAS BEEN PLACED ON RECORD AND WAS A LSO FILED IN THE COURSE OF ASSESSMENT PROCEEDINGS. 4.8 THE APPELLANT HAS SUBMITTED THAT THESE MEMBERS OF THE SOCIETY HAVE IN THE INITIAL YEARS CONTRIBUTED THEIR PROPERTY CONSIS TING OF LAND TO THE CAUSE EDUCATION BY GIFTING THIS LAND FREE OF COST TO THE SOCIETY. IT IS STATED THAT NO BENEFIT HAS BEEN TAKEN BY THE MEMBERS ON ACCOUNT OF SALE OF THIS LAND TO THE SOCIETY AS THE TRANSACTION HAS BEEN EXECUTED AT THE PREVAILING MARKET RATE WHICH IS IN ACCORDANCE WITH THE VALUE DETERMINED BY THE STAMP VALUATION AUTHORITY. IT IS ALSO STATED THAT CAPITAL GAINS TAX HAS ALSO BEEN PAID BY THESE PERSONS ON THE GAINS EARNED ON SALE OF LAND TO THE SOCIETY AND A COPY OF THE ITRS FILED BY THESE PERSONS HAS ALSO BEEN PLACED ON RECORD TO SUPPORT ITS CONTENTIONS. 4.9 I HAVE CAREFULLY CONSIDERED THE DETAILED SUBMIS SIONS MADE IN THIS REGARD AND FIND THAT IT IS AN ACCEPTED FACT THAT IN THE INITIAL PHASE OF THE SOCIETY, LAND HAS BEEN CONTRIBUTED AS FREE OF COST BY THESE MEMBERS TO THE SOCIETY. FURTHER, IT IS NOT DISPUTED THAT THESE TRA NSACTIONS FOR PURCHASE OF LAND HAS BEEN EXECUTED BY THE SOCIETY AT ARMS LENGT H I.E. AT THE PRICES FIXED BY THE STAMP VALUATION AUTHORITY. HOWEVER, AS REGARDS THE PAYMENT OF PURCHASE CONSIDERATION IS CONCERNED THE ONLY ISS UE IS THAT PAYMENT OF THIS CONSIDERATION HAS BEEN MADE IN A PHASED MANNER SPREAD OVER A PERIOD OF 3-4 YEARS. NOW, THE ISSUE FOR CONSIDERATI ON IS WHETHER IT AMOUNTS TO GIVING UN-DUE BENEFIT TO THE MEMBERS OF THE SOCIETY? 4.10 IN THIS CASE, THE PAYMENT HAS BEEN MADE BY THE SOCI ETY OVER A PERIOD OF 3-4 YEARS BASED ON THE AVAILABILITY OF FU NDS IN THEIR HANDS. THE OTHER ALTERNATIVE BEFORE THE SOCIETY COULD HAVE BEE N TO MAKE THE PAYMENT IN YEAR 1 ITSELF- BY CONTRIBUTING THE AMOUNT WHICH HAS BEEN GIVEN AS ADVANCE TO THE MEMBERS IN YEAR FROM OWN RESOURCES A ND BORROWING THE BALANCE FUNDS FROM THE BANK/MARKET. THIS WOULD HAVE MEANT MAKING THE RE-PAYMENT OF LOAN TO THE BANK/MARKET OF AN AMOUNT WHICH HAS BEEN PAID AS ADVANCE IN YEAR 2, YEAR 3 AND YEAR 4 ALONG WITH AN ELEMENT OF INTEREST COST. ITA 1135/CHD/2017 & ITA 700/CHD/2019 A.Y. 2014-15 & 2015-16 PAGE 6 OF 12 4.11 THUS, IN VIEW OF THE ABOVE MENTIONED FACTS, I FIND THAT IT IS THE OTHER WAY ROUND AS IT IS THE MEMBERS WHO HAVE SOLD THE LAND TO THE SOCIETY HAVE LOST OUT ON THE INTEREST COMPONENT WHI CH THEY WOULD HAVE EARNED HAD THE SALE PRICE BEEN PAID IN ONE INSTALME NT. THEREFORE, THIS TRANSACTION AMOUNTS TO SUITING THE CONVENIENCE OF T HE BUYER OF THE PROPERTY AS THE SALE PRICE HAS BEEN PAID OVER A PER IOD OF TIME AS AND WHEN THE FUNDS WERE AVAILABLE IN THEIR HANDS. FURTH ER, I FIND THAT THESE TRANSACTIONS HAVE BEEN ACCEPTED BY THE AO IN THE PR ECEDING THREE YEARS. ACCORDINGLY, I DO NOT FIND ANY JUSTIFICATION IN THE ACTION OF THE AO IN CHARGING NOTIONAL INTEREST @12% PER ANNUM ON THE AM OUNT OF ADVANCES GIVEN BY THE SOCIETY TO THE MEMBERS AGAINST PURCHAS E OF LAND. 4.12 IN THE COURSE OF APPELLATE PROCEEDINGS, THE AR OF T HE APPELLANT WAS ASKED VIDE NOTE SHEET ENTRY DATED 23.03.2017 AS TO WHETHER ANY TDS UNDER THE PROVISIONS OF SECTION 194-IA WAS MADE BY THE SOCIETY ON PART PAYMENT OF SALE CONSIDERATION TO SMT. PARMINDER KAU R, IN WHOSE CASE THE SALE DEED HAS NOT YET BEEN EXECUTED. THE APPELLANT HAS IN RESPONSE TO THIS IN THE WRITTEN REPLY FILED STATED THAT TDS WILL BE DEDUCTED AT THE TIME OF FULL PAYMENT AND REGISTRATION AS WAS DONE IN THE OT HER TWO CASES AS WELL. THE APPELLANT IS UNDER A BONAFIDE BELIEF THAT TDS I S TO BE MADE AT THE TIME OF EXECUTION OF SALE DEED PAYMENT. 4.13 IT WOULD BE RELEVANT AT THIS STAGE TO EXAMINE THE PROVISIONS OF SECTION 194IA OF THE IT ACT, WHICH FOR THE SAKE OF CONVENIENCE ARE RE- PRODUCED AS UNDER :- 194-I.A. (1) ANY PERSON, BEING A TRANSFEREE, RESPON SIBLE FOR PAYING (OTHER PERSON REFERRED TO IN SECTION 194LA ) TO A RESIDENT TRANSFEROR ANY SUM CONSIDERATION FOR TRANSFER OF ANY IMMOVABLE PROPERT Y (OTHER THAN AGRICULTURAL LAND) SHALL, AT THE TIME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE TRANSFEROR OR AT PAYMENT OF SUCH SUM IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY AN\ (I WHICHEVER IS EARLIER, DEDUCT AN AMOUNT EQUAL TO ONE PER CENT OF SUCH SUM AS TAX THEREON. (2) NO DEDUCTION UNDER SUB-SECTION (1) SHALL BE MADE WH ERE THE CONSIDERATION FI TRANSFER OF AN IMMOVABLE PROPERTY IS LESS THAN FIFTY LAKH RUPEES. (3) THE PROVISIONS OF SECTION 203A SHALL NOT APPLY TO A PERSON REQUIRED TO DEDUT IN ACCORDANCE WITH THE PROVISIONS OF THIS SEC TION. EXPLANATION. FOR THE PURPOSES OF THIS SECTION, (A) 'AGRICULTURAL LAND' MEANS AGRICULTURAL LAND IN INDI A, NOT BEING A LAND SITUATE I AREA REFERRED TO IN ITEMS (A) AND (B) OF SUB-CLAUSE (III) OF CLAUSE (14) OF SECTION 2; (B) 'IMMOVABLE PROPERTY' MEANS ANY LAND (OTHER THAN AGR ICULTURAL LAND) BUILDING OR PART OF A BUILDING.] 4.14 THUS, IT MAY BE SEEN FROM THE ABOVE THAT THIS SECTI ON HAS BEEN INSERTED THE FINANCE ACT 2013, W.E.F. 01.06.2013 AN D IT APPLIES TO ANY PERSON WHO RESPONSIBLE FOR MAKING A PAYMENT TO A TR ANSFEROR ANY SUM BY WAY CONSIDERATION FOR TRANSFER OF ANY IMMOVEABLE PR OPERTY SHALL AT THE TIME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE TR ANSFEROR OR PAYMENT OF ITA 1135/CHD/2017 & ITA 700/CHD/2019 A.Y. 2014-15 & 2015-16 PAGE 7 OF 12 SUCH SUM I CASH OR CHEQUE OR DRAFT, WHICHEVER IS EA RLIER, DEDUCT AN AMOUNT EQUAL TO 1/ SUCH SUM AS INCOME TAX THEREON. THEREFORE, I FIND THAT APPELLANT HAS FAILED TO COMPLY WITH THE PROVISIONS OF SECTION 194-IA OF THE IT ACT AND IS THEREFORE LIABLE FOR PENAL PROVIS IONS UNDER THE PROVISIONS OF IT ACT- PERSON LIABLE FOR MAKING DED UCTION OF TAX FAILED TO DO SO. 4.15 ACCORDINGLY, A COPY OF THIS ORDER IS BEING FORWARDE D TO THE COMMISSIONER -TDS, HAVING JURISDICTION OVER THE CAS E OF THE CASE OF THE APPELLANT BEING THE BUYER(WHO IS RESPONSIBLE FOR DE DUCTION OF TAX SOURCE, WHILE MAKING PART PAYMENT TO THE SELLER) FOR NECESS ARY ACTION REQUIRED UNDER THE PROVISIONS OF THE ACT. 4.16 TO SUM UP, AN ADDITION OF RS. 1,98,48,600 MADE BY THE AO ON ACCOUNT OF NOTIONAL INTEREST CHARGED ON THE AMOUNT OF ADVANCE PAID BY THE SOCIETY IS DELETED. 6. BEFORE US, THE LD. DR HAS SUBMITTED THAT THE ALL EGED AGREEMENT TO SELL EXECUTED BY THE MEMBERS WAS UNREG ISTERED AND FURTHER THAT THE PAYMENT WAS MADE OVER THE YEAR S AND THAT THE SAME WERE INFACT INTEREST FREE ADVANCES AND FUR THER THAT THE TDS WAS NOT EFFECTED ON THE PAYMENTS AND THUS, THE ASSESSEE SOCIETY HAD VIOLATED THE PROVISIONS OF SEC TION 194I(A) OF THE ACT. 7. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESS EE HAS SUBMITTED THAT THE TDS WAS DULY DEDUCTED IN RESPECT OF PAYMENTS MADE BY THE SOCIETY TO THE SELLERS. HOWEV ER, IN CASE OF SMT. PARMINDER KAUR, WHOSE SALE DEED WAS YET TO BE EXECUTED, THE TDS WAS NOT DEDUCTED AS THE SOCIETY H AD DEDUCTED TDS AT THE TIME OF FULL PAYMENT AND REGIST RATION OF THE SALE DEED. ITA 1135/CHD/2017 & ITA 700/CHD/2019 A.Y. 2014-15 & 2015-16 PAGE 8 OF 12 THAT THE LD. CIT(A) TAKING NOTE OF THE ABOVE FACT H AS ALREADY DENIED RELIEF IN CASE OF THE PAYMENT MADE TO SMT. P ARMINDER KAYUR AS DISCUSSED IN PARA 4.13 TO 4.15 OF THE IMPU GNED ORDER. HE HAS FURTHER SUBMITTED THAT BECAUSE OF ANY TECHNI CAL LAPSE, IT CANNOT BE SAID THAT THE TRANSACTION WAS NOT BONAFID E AND THAT THE LD. CIT(A) TAKING INTO OVERALL FACTS AND CIRCUM STANCES OF THE CASE, HAS RIGHTLY DELETED THE ADDITIONS MADE BY THE AO ON THIS ISSUE. 9. WE HAVE CONSIDERED THE SUBMISSIONS AND GONE THRO UGH THE RECORD. IN OUR VIEW, IT IS NOT A CASE OF ANY U NDUE FAVOUR BY THE ASSESSEE TO ITS MEMBERS. IN THIS CASE, THE LD. CIT(A) HAS DISCUSSED THAT THE MEMBERS OF THE SOCIETY HAD ALREADY OFFERED THEIR LA ND FOR THE CONSTRUCTION OF BUILDING FOR TECHNICAL ACTIVITIES O F THE ASSESSEE SOCIETY. THE ASSESSEE SOCIETY, AS PER ITS CONVENIE NCE, PAID THE SALE CONSIDERATION IN INSTALLMENTS, WHICH WERE SPRE AD OVER A PERIOD AND ULTIMATELY THE SALE DEEDS HAVE BEEN EXEC UTED AT THE COLLECTOR RATE. WE, THEREFORE, DO NOT FIND ANY INF IRMITY IN THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. 10. THE LD. DR, HOWEVER, HAS RELIED UPON THE FOLLOW ING DECISIONS OF THE HON'BLE HIGH COURTS : 1. CIT VS SADHU SINGH HAMDARD TRUST (2014) 49 TAXMANN.COM 317 (P&H) 2. KANAHYA LAL PUNJ CHARITABLE TRUST V DIT (EXEMPTION) (2008) 171 TAXMAN 134 (DELHI) ITA 1135/CHD/2017 & ITA 700/CHD/2019 A.Y. 2014-15 & 2015-16 PAGE 9 OF 12 3. CIT VS V.G.P. FOUNDATION (2004) 134 TAXMAN 663 (MADRAS) 11. WE HAVE GONE THROUGH THE AFORESAID DECISIONS RE LIED UPON BY THE LD. DR. WE FIND THAT THE AFORESAID CASE LAW S ARE NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE PR ESENT CASE. IN THE CASE OF CIT VS V.G.P. FOUNDATION (2004) 134 TAXMAN 663 (MADRAS), THE ASSESSEE TRUST HAD ADVANCED CERTA IN AMOUNT TO ITS SISTER CONCERN, A PRIVATE LIMITED COMPANY OF WHICH THE TRUSTEES OF THE ASSESSEE SOCIETY WERE ALSO DIRECTOR S AND THE MONEY HAD REMAINED LYING WITH THE COMPANY FOR THE W HOLE OF THE YEAR WITHOUT HAVING SPENT. IN THESE CIRCUMSTANCES, THE HON'BLE HIGH COURT HELD THAT IT CANNOT BE SAID THAT THE MON EY HAD BEEN APPLIED BY THE ASSESSEE FOR CHARITABLE PURPOSES IN THE RELEVANT ASSESSMENT YEAR. 12. IN THE CASE OF KANAHYA LAL PUNJ CHARITABLE TRUS T VS DIT (EXEMPTION) (SUPRA), THE ASSESSEE TRUST HAD ADVANCE D HUGE AMOUNTS TO A COMPANY WHICH HAD SUBSTANTIAL INTEREST IN TRUST WITHOUT ANY SECURITY AND ADEQUATE INTEREST. IN THE CASE OF CIT VS SADHU SINGH HAMDARD TRUST (SUPRA), THE PAYMENTS WERE MADE TO TRUSTEES BY THE ASSESSEE SOCIETY WITHOUT AN Y JUSTIFICATION. THE FACTS IN THIS CASE, AS SUCH ARE QUITE DISTINGUISHABLE. IN ALL THESE CASE LAWS, THE ASSES SEE SOCIETY COULD NOT JUSTIFY THE PAYMENTS MADE BY THE ASSESSEE TRUST TO ITA 1135/CHD/2017 & ITA 700/CHD/2019 A.Y. 2014-15 & 2015-16 PAGE 10 OF 12 ITS MEMBERS. HOWEVER, IN THE CASE IN HAND, IT IS D ULY PROVED ON THE FILE THAT THE PAYMENTS WERE MADE TO THE MEMB ERS FOR THE PURCHASE OF LAND AND SUCH PAYMENTS WERE MADE AT ARM S LENGTH PRICE. THEREFORE, IN VIEW OF THE ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) AND THE SAME I S UPHELD ON THIS ISSUE. 13. SO FAR AS THE SECOND ISSUE OF PAYMENT OF SALARY TO CERTAIN MEMBERS OF THE SOCIETY IS CONCERNED, WE FIND THAT I T IS NOT THE CASE OF THE DEPARTMENT THAT THE SALARY HAS BEEN PAI D IN EXCESS OF WHAT MAY BE REASONABLY PAID FOR SUCH SERVICES. THE ONLY OBJECTION BY THE AO WAS THAT THE PAYMENT DURING THE YEAR WAS INCREASED TO LARGE EXTENT AS COMPARED TO THE PAYMEN TS MADE IN EARLIER YEARS. THE LD. COUNSEL FOR THE ASSESSEE HA S SUBMITTED THAT MERELY BECAUSE IN EARLIER YEARS THE MEMBERS FO R THEIR SERVICES HAD ACCEPTED LOWER PAYMENTS AS COMPARED TO THE PAYMENTS REASONABLY PAID FOR SUCH SERVICES, DOES NOT MEAN TH AT ANY EXCESS PAYMENT HAS BEEN MADE BY THE ASSESSEE SOCIET Y IN THIS YEAR TOWARDS SALARY OF THE MEMBERS WHO HAD RENDERED THEIR EXPERT/PROFESSIONAL SERVICES TO THE SOCIETY. WE FI ND THAT THE SAID ISSUE HAS BEEN DISCUSSED BY THE LD. CIT(A) IN PARA 5.4 ONWARDS OF THE IMPUGNED ORDER. RELEVANT PART IS RE PRODUCED AS UNDER : 5.4 I HAVE GONE THROUGH THE ASSESSMENT ORDER PASSED BY THE AO AS WELL AS SUBMISSIONS MADE BY THE APPELLANT INCLUDING JUDICIA L CITATIONS GIVEN THEREIN AND FIND THAT AN ITA 1135/CHD/2017 & ITA 700/CHD/2019 A.Y. 2014-15 & 2015-16 PAGE 11 OF 12 ADDITION OF RS.46,75,933 HAS BEEN MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF SALARY, INTEREST PAID TO THE SPECIFIED PERSONS WHO ARE MEMB ERS OF THE SOCIETY. THE DISALLOWANCE HAS BEEN MADE BY THE AO ON THE GROUND THAT EXCESSIVE PA YMENTS HAVE BEEN MADE TO THESE PERSONS WHICH ARE NOT REASONABLE & PERMISSIBLE UNDER SECTIO N 13(L)(C) OF THE IT ACT. THESE PERSONS ARE COVERED UNDER THE PROVISIONS OF SECTION 13(3) O F THE IT ACT. AO HAS ALSO STATED IN THE ORDER THAT THESE PERSONS ARE HAVING THEIR OWN INDEP ENDENT SOURCES OF INCOME AND ARE THEREFORE NOT EXCLUSIVELY ENGAGED IN PROVIDING THEI R SERVICES TO THE SOCIETY. IT IS STATED THAT ALL THESE MEMBERS HAVE BEEN PAID SALARIES WHICH ARE UNR EASONABLE GIVEN THE FACTS AND CIRCUMSTANCES OF THE CASE. 5.5 THE APPELLANT HAS STATED THAT AO HAS FAILED TO APPRECIATE THAT THESE PERSONS HAVE BEEN PROVIDING THEIR SERVICES TO THE SOCIETY AND PAYMENT S HAVE BEEN MADE TO THEM IN THE PRECEDING FEW YEARS WHICH WERE ACCEPTED BY THE DEPA RTMENT EVEN IN THE ORDERS PASSED UNDER SECTION 143(3) OF THE IT ACT. IT IS SUBMITTED THAT PAYMENTS MADE TO THESE PERSONS ARE IN ACCORDANCE WITH THE NORMS LAID DOWN BY THE UGC AND OTHER PERSONS WORKING IN THE SOCIETY HAVE BEEN PAID MUCH HIGHER AMOUNTS THAN THESE PERSO NS. THE APPELLANT HAS ALSO SUBMITTED THAT SALARIES PAID TO SPECIFIED PERSONS CONSTITUTE 0.90% OF THE TOTAL EXPENDITURE AND THEREFORE CANNOT BE STATED AS UNDER REASONABLE. IT IS STATED THAT PRINCIPLE OF CONSISTENCY HAS TO BE APPLIED BY THE AO. 5.6 THE APPELLANT HAS ALSO STATED THAT INTEREST HAS BEEN PAID TO A SPECIFIED PERSON, WHICH IS A COMPANY AND UNDER THE PROVISIONS OF THE COMPANIES A CT LOANS AND ADVANCES CANNOT BE GIVEN INTEREST-FREE TO THE RELATED PARTIES. IT IS STATED THAT INTEREST HAS BEEN PAID TO THIS PARTY IN THE PRECEDING TWO YEARS AS WELL, WHICH WAS ACCEPTED BY THE DEPARTMENT. 5.7 I HAVE GONE THROUGH THE DETAILED SUBMISSIONS MADE I N THIS REGARD AND FIND THAT AO HAS HELD THAT THESE PAYMENTS MADE BY THE SOCIETY ON ACCOUNT OF SALARY AND INTEREST AS UNREASONABLE MAINLY ON ACCOUNT OF THE FACT THAT THE SE PERSONS ARE ENGAGED IN OTHER ACTIVITIES AND HAVE THEIR OTHER SOURCES OF INCOME. I FIND THAT THE TOTAL PERCENTAGE OF EXPENSES INCURRED BY THE SOCIETY ON ACCOUNT OF PAYMENTS MADE TO THESE PERSONS CONSTITUTE LESS THEN 1% OF THE TOTAL EXPENSES INCURRED BY THE SOCIETY. FURTHER THE TOTAL PAYMENTS MADE BY THE SOCIETY ON ACCOUNT OF SALARIES TO THESE PERSONS ARE LESS THEN 2.5% OF THE TOTAL EXPENDITURE INCURRED ON ACCOUNT OF SALARIES. 5.8 THUS, I FIND THAT THESE FACTS AND FIGURES HAVE NOT BEEN CONSIDERED BY THE AO BEFORE MAKING THE DISALLOWANCE. ALSO, I FIND THAT NO ADVER SE MATERIAL HAS BEEN BROUGHT ON RECORD BY THE AO TO HOLD THAT SERVICES HAVE NOT BEEN RENDERED BY THESE PERSONS AND PAYMENTS MADE TO THESE SPECIFIED PERSONS ARE EXCESSIVE AND UNREASONABLE. I N VIEW OF THESE FACTS, I HOLD THAT THERE IS NO JUSTIFICATION IN THE ACTION OF THE AO FOR MAKING A DISALLOWANCE UNDER THIS HEAD. ACCORDINGLY, THIS GROUND OF APPEAL IS ALLOWED. 14. AFTER CONSIDERING THE RIVAL CONTENTIONS OF BOTH THE PARTIES ON THIS ISSUE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) ON THIS ISSUE ALSO. 15. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE AND THE SAME IS, ACCORDINGLY, DISMISSED. ITA 1135/CHD/2017 & ITA 700/CHD/2019 A.Y. 2014-15 & 2015-16 PAGE 12 OF 12 16. SINCE THE FACTS, ISSUES AND CIRCUMSTANCES ARE I DENTICAL IN BOTH THE APPEALS, THEREFORE, OUR FINDINGS GIVEN IN ITA 1135/CHD/2017 ( ASSESSMENT YEAR 2014-15) WOULD MUTA TIS- MUTANDIS APPLY TO THE REVENUES APPEAL IN ITA 700/C HD/2019 ( ASSESSMENT YEAR 2015-16) ALSO. IN VIEW OF THIS, TH IS APPEAL OF THE REVENUE IS ALSO DISMISSED. 17. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED ON4TH OCTOBER, 2021. SD/- SD/- ( ! ' # $ ) ( ) (ANNAPURNA GUPTA) (SANJAY GARG) / ACCOUNTANT MEMBER ' / JUDICIAL MEMBER POONAM & '( )( / COPY OF THE ORDER FORWARDED TO : 1. %* / THE APPELLANT 2. &+%* / THE RESPONDENT 3. , / CIT 4. , ( )/ THE CIT(A) 5. (-. & / , / , 012.3 / DR, ITAT, CHANDIGARH 6. .2 / GUARD FILE