The Lakshya Bhartee Foundation, New Delhi V. ITO (E) WARD-2(3), New Delhi

ITA 8392/DEL/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 9638 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2016-2017
• Appeal Filed On: 24-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 80G; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-2, NEW DELHI BEFORE SH. BHAVNESH SAINI, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) ITA NO. 8392/DEL/2019 : ASSTT. YEAR : 2016-17 THE LAKSHYA BHARTEE FOUNDATION, B-98, PUSHPANJALI ENCLAVE, OUTER RING ROAD, PITAMPURA, NEW DELHI-110034 VS INCOME TAX OFFICER(E), WARD-2(3), NEW DELHI-110002 (APPELLANT) (RESPONDENT) PAN NO. A ACFT7894B ASSESSEE BY : SH. K. SAMPTH, ADV. REVENUE BY : SH. FARAT KHAN, ADDL. CIT DR DATE OF HEAR ING: 11 . 0 3 .20 2 1 DATE OF PRONOUNCEMENT: 15 .03 .20 2 1 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A)-40, NEW DELHI DATED 22. 08.2019. 2. THE ASSESSEE SOCIETY IS REGISTERED U/S 12AA OF T HE INCOME TAX ACT, 1961 VIDE REGISTRATION NO. DIT(E)/200203/T - 789/02/432 DATED 27.06.2003 AND REGISTERED U/S 80G VIDE ORDER DATED 01.12.2005 OF DIT(E), DELHI. 3. THE ASSESSEE HAS GIVEN ADVANCE OF RS.17,34,400/- TO A SPECIFIED PERSON AS PER SECTION 13(3) OF THE ACT WH O PROVIDED THE HOSTEL SERVICES EXCLUSIVELY TO THE STUDENT OF T HE SOCIETY. THE AO HAS CONSIDERED THE ADVANCE GIVEN AS DIVERSION OF THE INCOME ITA NO. 8392/DEL/2019 LAKSHYA BHARTEE FOUNDATION 2 OF THE SOCIETY TO THE SPECIFIED PERSON IN VIOLATION OF THE PROVISIONS OF SECTION 13(1)(C) OF THE ACT. 4. THE LD. CIT (A) CONFIRMED THE ACTION OF THE ASSE SSING OFFICER. 5. HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERU SED THE MATERIAL AVAILABLE ON RECORD. 6. WE FIND THAT THE RECIPIENT LBIHM PVT. LTD. WHO W AS A SPECIFIED PERSON U/S 13(3) IS PROVIDING THE STUDENT S OF THE ASSESSEE SOCIETY, ACCOMMODATION AND PROVISION OF FO OD AND THERE WAS NO UNDUE BENEFIT OBTAINED BY THE RECIPIEN T BY WAY OF THE TRANSACTION. THE MOU BETWEEN THE RECIPIENT AND THE ASSESSEE HAS BEEN ENTERED IN THE YEAR 2008 AND CONT INUING TILL TODAY. AS PER THE MOU, THE RECIPIENT WILL PROVIDE L ODGING AND BOARDING FACILITIES EXCLUSIVELY TO THE STUDENT ON N O PROFIT NO LOSS BASIS. THE RECIPIENT WOULD TAKE ON RENT AND PROVIDE BOARDING FACILITIES AND FOR SUCH PURPOSE, THE ASSESSEE WOULD PAY INTEREST FREE REFUNDABLE SECURITY ADVANCE WHICH WOULD BE REF UNDED IN CASE SURPLUS IS GENERATED FROM ITS OPERATION. 7. WE FIND THAT REVENUE HAS NOT DISPUTED THE STATED POSITION FOR THE LAST 7 ASSESSMENT YEARS. THE ADVANCE PROVID ED AS SECURITY DEPOSIT IS IN TURN FOR THE ACCOMMODATION O BTAINED BY THE ASSESSEE SOCIETY FROM LBIHM PVT. LTD. THE REVEN UE COULD NOT PROVE THAT THE AMOUNT PAID IS A DEVICE TO PASS ON ANY BENEFIT TO THE RECIPIENT. JUST BECAUSE THE RECIPIEN T IS A SPECIFIED PARTY AS PER SECTION 13(3) IT DOESNT AUTOMATICALLY CALL FOR DISALLOWANCE. NO DISALLOWANCE IS CALLED FOR UNLESS THE AMOUNT PAID IS PROVEN TO BE BEYOND THE MARKET RATE /SYSTEM AND ONLY ITA NO. 8392/DEL/2019 LAKSHYA BHARTEE FOUNDATION 3 TO PASS ON THE BENEFIT AND GIVE UNDUE ADVANTAGE TO THE RECIPIENT. THE RECIPIENT IS PROVIDED SERVICES TO TH E ASSESSEE WHICH HAS NOT BEEN DISPUTED AND THE PAYMENT HAS NOT BEEN FOUND TO BE OF ANY EXTRANEOUS OR BENEFICIAL TO THE RECIPIENT. 8. HENCE, WE DIRECT THAT THE DISALLOWANCE MADE BY T HE AO BE OBLITERATED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15/03/2021. SD/- SD/- (BHAVNESH SAINI) (DR. B. R. R. KUMAR) JUDICIAL MEMBER ACC OUNTANT MEMBER DATED: 15/03/2021 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR