ITO(E), Jaipur V. RAJKALA COMPLEX, JHUNJHUNU

ITA 903/JPR/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 5662 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 14-10-2016

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO.903/JP/16 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2012-13 THE INCOME TAX OFFICER (EXEMPTIONS), WARD-2, JAIPUR CUK E VS. RAJKALA CHARITABLE TRUST, CHIRAWA, DISTT. JHUNJHUNU. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAATR 1208D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.A. VERMA (ADDL. CIT ) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 04.01.2017 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 11/01/2017. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A)-III, JAIPUR DATED 25.07.2016 WHEREIN THE REVENUE HAS T AKEN FOLLOWING GROUNDS OF APPEAL: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.1 ,46,09,448/- MADE BY THE AO WHEN THE AO HAS ELABORATED THE REASONS FOR TREATING THE RECEIPTS OF VOLUNTARY CONTRIBUTION AND CORPUS DONATION AS TAXABLE INCOME THERE BEING VIOLATION OF PROVISION OF SECTION 13(3) DESERVING DISALLOWANCE OF EXEMPTION CLAIMED BY THE ASSESSEE U/S 11(1)(D) OF T HE ACT. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PUBLIC CHARITABLE TRUST CONSTITUTED ON 30.03.1996 WITH OBJECTS TO RUN AND MANAGE EDUCATIONAL INSTITUTIONS, HOSPITALS, WATER SUPPLY SCHEME, DHARA MSHALA FOR PUBLIC GOOD AND ITA NO. 903/JP/16 RAJKALA CHARITABLE TRUST VS. ITO(EXEMPTION), WARD -2, JAIPUR 2 DO ALL OTHER PUBLIC WELFARE ACTIVITIES FROM TIME TO TIME AS DECIDED BY THE TRUSTEES. RETURN DECLARING NIL INCOME AFTER CLAIMIN G EXEMPTION U/S 11 WAS FILED ON 01.10.2012. THE AO IN THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT ASSESSEE HAS ADVANCED RS.17,76,000/- TO SMT. MADHU ADUKIA AND RS. 22,16,000/- TO M/S RAJKALA INDUSTRIES PVT. LT D., SMT. MADHU ADUKIA IS THE TRUSTEE IN THE ASSESSEE TRUST AND W/O SHRI AJIT KUM AR ADUKIA , THE SETTLER OF THE TRUST. SHE IS ALSO ONE OF THE DIRECTOR OF M/S RAJK ALA INDUSTRIES PVT. LTD. ACCORDINGLY, THE AO, VIDE SHOW CAUSE NOTICE DATED 0 5.03.2015 REQUIRED THE ASSESSEE TO SHOW CAUSE AS TO WHY IT SHOULD NOT BE D EEMED THAT INCOME OF THE TRUST HAS BEEN APPLIED FOR THE BENEFIT OF PROHIBITE D CATEGORY OF PERSONS REFERRED U/S 13(2)(A). IN RESPONSE TO SAME, THE ASS ESSEE SUBMITTED ITS REPLY VIDE LETTER DATED 23.03.2015 WHICH IS REPRODUCED AT PAGE 3 TO 6 OF THE ASSESSMENT ORDER. NOT ACCEPTING THE ASSESSEES SUB MISSION, THE AO DISALLOWED THE ASSESSEES CLAIM OF EXEMPTION U/S 11 AND HELD T HAT THE INCOME AMOUNTING TO RS.1,46,09,448/- AS THE ASSESSEES TOTAL INCOME CHARGEABLE TO TAX AT MAXIMUM MARGINAL RATE BY GIVING THE FOLLOWING FINDI NGS: (I) IN RESPECT OF ADVANCE OF RS.17,76,269/- TO SMT. MADHU ADUKIA, THE ASSESSEES SUBMISSION THAT THE ADVANCE OF RS. 10 LA KHS GIVEN DURING THE YEAR UNDER CONSIDERATION IS FOR THE OBJECTS OF THE TRUST IS NOT ACCEPTABLE IN AS MUCH AS THE TRANSFER WAS NOT DIRECT TO THE G YAN SINDHU GIRLS COLLEGE WHICH MIGHT HAVE SIMILAR OBJECTS , BUT TO THE TRUSTEE FOR BUILDING ROOMS ON HER LAND. (II) IN RESPECT OF ADVANCE OF RS.22,16,000/- TO M/S RAJAKALA INDUSTRIES PVT. LTD. THE ASSESSEES SUBMISSION REGARDING AN AMOUNT OF RS. 20 LAKHS IS ACCEPTABLE TO THE EXTENT THAT IT IS THE OPENING BAL ANCE AND HAS ALREADY BEEN CONSIDERED BY THE AO AND THE CIT(A) IN A.Y. 20 11-12 AS A VIOLATION U/S 13 OF THE ACT. NO EVIDENCE HAS BEEN PRODUCED B Y THE ASSESSEE THAT THE ADVANCE WAS GIVEN AFTER ENSURING ADEQUATE SECUR ITY OR ADEQUATE INTEREST. (III) THE ASSESSEES SUBMISSION THAT THE ADVANCE WA S FOR THE OBJECTS OF THE TRUST IS NOT MAINTAINABLE AS THE LEGISLATURE HAS PR OVIDED OTHER METHODS FOR HELPING AN ORGANISATION HAVING SIMILAR OBJECTS. ITA NO. 903/JP/16 RAJKALA CHARITABLE TRUST VS. ITO(EXEMPTION), WARD -2, JAIPUR 3 2.1 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R IN APPEAL BEFORE THE LD CIT(A). THE LD. CIT(A) DELETED THE ADDITION MADE BY THE AO BY HOLDING THAT IT IS SEEN THAT THE ADVANCE OF RS. 20,00,000/- IS COMING FROM THE LAST YEAR AND THE ITAT IN ASSESSEES OWN CASE FOR A.Y. 2011-12 HAS HE LD THAT THE SAME IS FOR THE PURPOSE OF THE TRUST. THE AMOUNT OF RS. 2,1,6,000/ - IS THE INTEREST EARNED ON THE AMOUNT OF RS. 20,00,000/-. SIMILARLY THE ADVAN CE OF RS.10,00,000/- IS FOR CONSTRUCTION OF THE CLASS ROOM . EVEN OTHERWISE, THERE IS AN ALTERNATE ARGUMENT OF THE ASSESSEE THAT WHERE THERE IS VIOLAT ION OF SECTION 13, THE ENTIRE INCOME OF THE TRUST IS NOT CHARGEABLE. ONLY THE INCOME EARNED OUT OF THE SAME CAN BE CHARGED TO TAX. SIMILAR ADDITION WA S MADE IN A.Y. 2011-12 IN ASSESSEES OWN CASE AND HONBLE ITAT DELETED THE AD DITION MADE BY THE AO. SINCE THE FACTS OF A.Y. 2010-11 WHERE HONBLE ITAT ALLOWED THE APPEAL OF THE ASSESSEE ARE IDENTICAL WITH THE FACTS OF THIS YEAR AND NO NEW/FRESH MATERIAL WAS BROUGHT ON RECORD BY AO WHO REPEATED SAME ARGU MENT FOR MAKING DISALLOWANCE. THUS BY FOLLOWING THE DECISION OF ORD ER OF ITAT, JAIPUR BENCH IN ASSESSEES OWN CASE, THE AO IS DIRECTED TO ALLOW THE EXEMPTION TO THE APPELLANT TRUST U/S 11 AND THE ADDITION MADE BY THE AO WAS DELETED. 2.2 THE LD. AR, AT THE OUTSET, SUBMITTED THAT THE A DVANCE OF RS. 20 LACS WAS GIVEN BY THE ASSESSEE TO M/S RAJKALA INDUSTRIES PVT . LTD. IN LAST YEAR I.E. A.Y. 2011-12. THIS ADVANCE WAS TREATED BY THE LOWER AUT HORITIES AS A LOAN IN VIOLATION OF SECTION 13(1)(C) OF THE IT ACT. HOWEVE R, THE HONBLE ITAT VIDE ORDER DATED 28.04.2016 IN ITA NO. 140/JP/15 AND PAGE 12 & 13 OF THE ORDER HELD AS UNDER: RESPECTFULLY FOLLOWING THE ABOVE DECISIONS, IT IS HELD THAT WERE THERE IS VIOLATION OF SECTION 13, THE ENTIRE INCOME OF THE T RUST IS NOT CHARGEABLE TO TAX AT MAXIMUM MARGINAL RATE AND IT IS ONLY THAT INCOME WHICH HAS VIOLATED ITA NO. 903/JP/16 RAJKALA CHARITABLE TRUST VS. ITO(EXEMPTION), WARD -2, JAIPUR 4 SECTION 13 WHICH SHALL SUFFER MAXIMUM MARGINAL RATE AS PER PROVISO TO SECTION 164(2) OF THE ACT. FURTHER THE APPELLANT HAS SUBMITTED THAT THE AMOUN T OF RS. 20,00,000/- WITH INTEREST OF RS. 2,16,000/- I.E. RS. 22,16,000/- WA S RECEIVED BACK BY THE TRUST AND THE INTEREST INCOME OF RS. 2,16,000/- OFFERED I N THE RETURN FOR A.Y. 2012-13 AND THERE IS NO INCOME GENERATED ON AMOUNT OF RS. 2 0,00,000/- ADVANCED TO M/S RAJKALA INDUSTRIES PT. LTD. DURING THE YEAR. THERE IS NOTHING ON RECORD TO CONTROVERT THE SAID SUBMISSIONS OF THE APPELLANT. T HUS, THERE IS NO INCOME DURING THE YEAR WHICH CAN BE BROUGHT TO TAX AT MAXI MUM MARGINAL RATE IN THE HANDS OF THE TRUST IN A SCENARIO WHERE IT IS HELD T HAT THERE IS VIOLATION OF PROVISIONS OF SECTION 13. IN VIEW OF THE SAME, WE DO NOT THINK IT WOULD BE RELEVANT TO EXAMINE WHETHER THE APPELLANT TRUST HAS VIOLATED THE PROVISIONS OF SECTION 13 OF THE ACT AS THE SAME HAS BECOME INFRUC TIOUS IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. THE AO IS ACCOR DINGLY, DIRECTED TO ALLOW EXEMPTION TO THE APPELLANT TRUST U/S 11 AND THE ADD ITION MADE BY THE AO AND CONFIRMED BY CIT IS HEREBY DELETED. 2.3 IT WAS FURTHER SUBMITTED THAT THE ADVANCE OF RS . 20 LACS WAS GIVEN BY THE TRUST TO M/S RAJKALA INDUSTRIES PVT. LTD ON 27.08.2 010 AS PER THE UNDERSTANDING DATED 16.08.2010 AS THE TRUST HAS ENTRUSTED M/S RA JKALA INDUSTRIES PVT. LTD TO SEARCH FOR A SUITABLE LAND FOR CONSTRUCTION OF KIT CHEN AND START MANUFACTURING MEAL ON PILOT BASIS FOR ONE MONTH WITH THE RECRUITE D STAFF , BEFORE HANDING OVER THE OPERATIONAL INFRASTRUCTURE TO THE TRUST F OR FURTHER RUNNING. THE UNDERSTANDING ALSO ENVISAGED THAT THE COMPANY WAS T O START THE PROJECT BEFORE THE END OF THE F.Y. OTHERWISE THE ADVANCE WOULD CA RRY INTEREST @12%. THE COMPANY VIDE ITS LETTER DATED 28.03.2011 AFTER MAK ING DETAILED STUDY RECOMMENDED NOT TO ESTABLISH SUCH PROJECT AS THE LA ND WAS AVAILABLE NEITHER AT A SUITABLE NOR AT AFFORDABLE RATE AND THEREFORE THE PROJECT WAS DROPPED. ACCORDINGLY, THE AMOUNT OF RS. 20 LACS WITH INTERES T OF RS. 2,16,000/- I.E. RS. 22,216,000/- WAS RECEIVED BACK ON 07.11.2012/26.12. 2012. THE INTEREST INCOME OF RS. 2,16,000/- WAS OFFERED IN THE RETURN FOR THE YEAR UNDER CONSIDERATION. THUS THE ADVANCE TO RAJAKALA INDUST RIES PVT. LTD WAS FOR THE ITA NO. 903/JP/16 RAJKALA CHARITABLE TRUST VS. ITO(EXEMPTION), WARD -2, JAIPUR 5 OBJECT OF THE TRUST. ALL THESE FACTS ARE EVIDENT FR OM PAGE 5 AND 6 OF THE ORDER OF HONBLE ITAT. 2.4 IN RESPECT OF ADVANCE OF RS. 17,76,269/- TO SMT . MADHU ADUKIA, IT WAS SUBMITTED BY THE LD AR THAT AN AMOUNT OF RS. 7,76,2 69/- IS THE OPENING BALANCE AND IN A.Y. 11-12, THE LD. CIT(A) HAS HELD THAT THIS AMOUNT IS ONLY AN ACCOUNTING ADJUSTMENT AND NOT A CASE OF INCOME OF T HE TRUST USED OR APPLIED FOR THE BENEFIT OF THE TRUSTEES. IN RESPECT OF BAL ANCE AMOUNT OF RS. 10 LACS ADVANCED DURING THE YEAR UNDER CONSIDERATION, IT IS SUBMITTED THAT GYAM SINDHU GIRLS COLLEGE AN INSTITUTION HAVING CHARITA BLE OBJECTS, REQUESTED THE ASSESSEE TO PROVIDE PLACE FOR CONSTRUCTION OF CLASS ROOMS FOR IMPARTING EDUCATION TO GIRL STUDENT AT AFFORDABLE CHARGES. T HE ASSESSEE THEREFORE, APPROACHED SMT. MADHU ADUKIA TO PROVIDE HER PREMIS ES AND SHE AGREED TO THE PROPOSAL. ACCORDINGLY AN ADVANCE OF RS. 10 LACS WAS GIVEN TO SMT. MADHU ADUKIA FOR CONSTRUCTION OF CLASS ROOM ON HER PREMIS ES WHICH WAS GIVEN BY HER FREE OF CHARGE TO THE ASSESSEE. THE ADVANCE WAS GI VEN WITH AN UNDERSTANDING THAT THE SAME WILL BE REPAID AND IT WAS REPAID BY SMT. MADHU ADUKIA IN F.Y. 2012-13. THUS, THE ADVAN CE SO GIVEN WAS FOR THE OBJECT OF THE TRUST AND NOT FOR ANY BENEFIT TO THE TRUSTEE OR AN INVESTMENT/DEPOSIT OTHERWISE THAN THE MODES PRESCRI BED U/S 11(5). THEREFORE THERE IS NO VIOLATION OF SECTION 13(1)(C)/13(1)(D) OF THE ACT. 2.5 THE LD AR FURTHER SUBMITTED THAT SEC. 164 DEAL S WITH THE CHARGE OF TAX WHERE THE SHARES OF THE BENEFICIARY IS UNKNOWN. SEC TION 164(2) DEALS WITH THE CHARGE OF TAX ON THE INCOME OF THE TRUST WHICH IS D ERIVED BY IT FROM THE PROPERTY HELD WHOLLY FOR CHARITABLE OR RELIGIOUS PU RPOSE. THE PROVISO TO THIS SECTION WHICH IS RELEVANT FOR THE PRESENT PURPOSE R EADS AS UNDER: ITA NO. 903/JP/16 RAJKALA CHARITABLE TRUST VS. ITO(EXEMPTION), WARD -2, JAIPUR 6 PROVIDED THAT IN A CASE WHERE THE WHOLE OR ANY PA RT OF THE RELEVANT INCOME IS NOT EXEMPT UNDER SECTION 11 OR SECTION 12 BY VIRTUE OF THE PROVISIONS CONTAINED IN CLAUSE (C) OR CLAUSE (D) OF SUB-SECTION (1) OF S ECTION 13, TAX SHALL BE CHARGED ON THE RELEVANT INCOME OR PART OF RELEVANT INCOME A T THE MAXIMUM MARGINAL RATE. FROM THE PLAIN READING OF THIS PROVISO, IT IS EVIDE NT THAT WHERE THE WHOLE OR ANY PART OF THE RELEVANT INCOME IS NOT EXEMPT U/S 11 OR 12 BECAUSE OF THE PROVISIONS OF SECTION 13(1)(C) OR 13(1)(D) TAX IS C HARGEABLE ON THE RELEVANT INCOME OR PART OF THE RELEVANT INCOME AT THE MAXIMU M MARGINAL RATE . THEREFORE, IN CASE THERE IS VIOLATION OF SECTION 13 , THE ENTIRE INCOME OF THE TRUST IS NOT LIABLE TO TAX AT MMR BUT ONLY THE RELE VANT PART OF THE INCOME WHICH VIOLATES SECTION 13 ATTRACTS THE MMR. IN THE PRESENT CASE, EVEN IF IT IS HELD THAT THERE IS VIOLATION OF SECTION 13, THE ENT IRE INCOME OF THE TRUST IS NOT LIABLE TO TAX AT MMR BUT ONLY THE RELEVANT PART OF THE INCOME WHICH VIOLATES SECTION 13 ATTRACTS THE MMR. IN THE PRESENT CASE, EVEN IF IT IS HELD THAT THERE IS VIOLATION OF SECTION 13 THEN ONLY THE AMOUNT OF RS. 20 LACS GIVEN TO M/S RAJKALA INDUSTRIES PVT. LTD. AND RS. 10 LACS GIVEN TO SMT. MADHU ADUKIA OUT OF THE INCOME OF THE TRUST IS CHARGEABLE TO TAX AT MMR IN AS MUCH AS OUT OF THE TOTAL INCOME OF RS. 1,46,09,448/-, ONLY RS. 30 LACS VIOLATES THE PROVISIONS CONTAINED IN SECTION 13(1)(C) OR 13(1)(D). EVEN TH IS AMOUNT CANNOT BE SUBJECT TO TAX IN VIEW OF THE PRINCIPLE OF LAW AS DECIDED B Y THE KARNATAKA HIGH COURT, AFFIRMED BY SUPREME COURT AND FOLLOWED BY THE JURIS DICTIONAL ITAT JAIPUR BENCH REFERRED BELOW SINCE THERE IS NO INCOME CHARG EABLE TO TAX AFTER APPLICATION OF SECTION 11 AND 12 AND THE AMOUNT ADV ANCED TO SMT. MADHU ADUKIA AND RAJKALA INDUSTRIES PVT. LTD. HAS NOT GEN ERATED ANY INCOME TO THE ASSESSEE. HENCE THE ACTION OF THE LOWER AUTHORITIES IN TAXING THE GROSS RECEIPT AT MAXIMUM MARGINAL RATE WITHOUT CONSIDERING THE PR OVISIONS OF SECTION 11 & ITA NO. 903/JP/16 RAJKALA CHARITABLE TRUST VS. ITO(EXEMPTION), WARD -2, JAIPUR 7 12 IS BAD IN LAW. THE ABOVE PRINCIPAL OF LAW IS AL SO SETTLED BY THE FOLLOWING DECISIONS: DCIT VS. WOKING WOMENS FORUM (2015) 235 TAXMAN 516 (SC) DECISION DT. 18.09.2015 CIT VS. FR. MULLERS CHGARITABLE INSTITUTION (2014) 227 TAXMAN 369(SC) DECISION DATED 19.9.2014 CIT VS. FR. MULLERS CHGARITABLE INSITUTIONS(2014) 363 ITR 230(KAR.) CIT VS. ORPAT CHARITABLE TRUST (2015) 230 TAXMAN 6 6 (GUJ.)(HC) DIT (EXEMPTION) VS. SHETH MAFATLAL GAGALBHAI FOUND ATION TRUST 249 ITR 533 (BOM.) THE HONBLE ITAT JAIPUR BENCH IN CASE OF M/S SANTOK BA DURLABHJI TRUST FUND VS. ITO IN ITA NO. 169/JP/2012 FOR A.Y. 2008-09 DAT ED 5.11.2014. JAMSETJI TATA TRUST VS. JDIT (EXEMPTION)(2014) 101 DTR 305/148 ITD 388 (MUM.)(TRIB.) 2.6 THE LD. DR IS HEARD WHO HAS VEHEMENTLY ARGUED T HE MATTER AND SUBMITTED THAT THERE IS CLEAR VIOLATION OF PROVISIO NS OF SECTION 13(3) OF THE ACT DESERVING DISALLOWANCE OF EXEMPTION CLAIMED BY THE ASSESSEE U/S 11(1)(D) OF THE ACT. THE LD. DR FURTHER SUBMITTED THAT IN RESP ECT OF ADVANCE OF RS. 17,76,269/- TO SMT. MADHU ADUKIA WHO IS TRUSTEE IN THE ASSESSEE TRUST, THE MATTER IS NOT IDENTICAL TO THE FACTS BEFORE THE HON BLE ITAT IN A.Y.2011-12 AND THEREFORE, THE SAME NEEDS TO BE DECIDED AFRESH. 2.7 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE CO-ORDINATE BENCH IN ASSESSEES OWN CASE IN A.Y 2011-12 HAS EXAMINED THE MATTER AT LENGTH AND HELD THAT WHERE T HERE IS A VIOLATION OF SECTION 13, THE ENTIRE INCOME OF THE TRUST IS NOT C HARGEABLE TO TAX AT MAXIMUM MARGINAL RATE AND IT IS ONLY THAT INCOME WHICH HAS VIOLATED SECTION 13 WHICH SHALL SUFFER TAXATION AT MAXIMUM MARGINAL RATE AS P ER PROVISO TO SECTION 164(2) OF THE ACT. NO SUBSEQUENT AUTHORITY HAS BEE N BROUGHT TO THE NOTICE OF THE BENCH WHICH LAYS DOWN A DIFFERENT PROPOSITION I N LAW. HENCE WE SEE NO ITA NO. 903/JP/16 RAJKALA CHARITABLE TRUST VS. ITO(EXEMPTION), WARD -2, JAIPUR 8 REASON TO DEVIATE FROM THE SAID RULING OF THE COORD INATE BENCH WHICH HAS BEEN PASSED AFTER TAKING INTO CONSIDERATION THE DECISION OF HONBLE SUPREME COURT IN WORKING WOMENS FORUM AND OTHERS. 2.8 IN RESPECT OF ADVANCE OF RS. 22,16,000/-TO M/S RAJKALA INDUSTRIES (P) LTD., THE ASSESSEES SUBMISSION REGARDING ADVANCE OF RS. 20 LACS HAS ALREADY BEEN ACCEPTED BY THE AO TO THE EXTENT THAT RS 20,00,000 IS THE OPENING BALANCE AT THE BEGINNING OF THE YEAR UNDER CONSIDERATION AND I T IS ONLY AN AMOUNT OF RS. 2,16,000/- WHICH PERTAINS TO THE YEAR UNDER CONSIDE RATION. AS FAR AS RS. 20 LACS IS CONCERNED, THE SAME WAS SUBJECT MATTER BEFORE CO ORDINATE BENCH IN A.Y. 2011-12 AND IT WAS HELD THEREIN THAT THERE IS NO IN COME GENERATED ON THE SAID AMOUNT OF RS. 20 LACS IN A.Y. 2011-12 AND THERE IS NOTHING WHICH CAN BE BROUGHT TO TAX IN THE HANDS OF THE TRUST IN A.Y. 20 11-12. REGARDING BALANCE AMOUNT OF RS.2,16,000/- WHICH PERTAINS TO THE YEAR UNDER CONSIDERATION, THE SAME HAS ALREADY BEEN OFFERED TO TAX IN THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION AND THERE IS NOTHING FURTHER WH ICH CAN BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEES TRUST. 2.9 NOW COMING TO THE ADVANCE OF RS. 17,76,269/- AD VANCED TO SMT. MADHU ADUKIA IS CONCERNED, THE LD. AR HAS SUBMITTED BEFOR E HE AO THAT THE ADVANCE OF RS. 7,76,269/- HAS BEEN CONSIDERED IN A.Y. 2011- 12 WHERE THE AO HELD THAT IT IS IN CONTRAVENTION OF SECTION 13(2). HOWEVER, THE CIT(A) AFTER CONSIDERING ALL THE RELEVANT FACTS AND THE DOCUMENTS HELD THAT THIS AMOUNT IS ONLY AN ACCOUNTING ADJUSTMENT AND THERE IS NO CASE OF ANY I NCOME OF THE TRUST TO BE USED OR APPLIED FOR THE BENEFIT OF THE TRUSTEE AND ACCORDINGLY HE HELD THAT THERE IS NO VIOLATION OF SECTION 13(1)(C) IN RESPE CT OF THAT AMOUNT. THE SAID SUBMISSION HAS NOT BEEN CONTROVERTED BEFORE US NOR THE REVENUE HAS ITA NO. 903/JP/16 RAJKALA CHARITABLE TRUST VS. ITO(EXEMPTION), WARD -2, JAIPUR 9 CONTESTED THE SAID FURTHER IN AY 2011-12. REGARDIN G THE BALANCE ADVANCE OF RS. 10 LACS GIVEN TO SMT. MADHU ADUKIA DURING THE Y EAR UNDER CONSIDERATION IS CONCERNED, IT WAS SUBMITTED THAT GYAN SINDHU GIRLS COLLEGE RUN BY GYAN SINDHU SIKSHAN SANSTHAN WHO PROVIDES COLLEGE EDUCA TION TO THE GIRLS STUDENTS AT AN AFFORDABLE CHARGE APPROACHED THE ASSESSEE TRU ST TO CONSTRUCT CLASS ROOMS FOR IMPARTING EDUCATION TO ITS STUDENTS. THE ASSES SEE IN TURN APPROACHED SMT. MADHU ADUKIA TO PROVIDE HER PREMISES AT RAJKALA COMPLEX, MAIN MARKET, CHIRAWA AND TO CONSTRUCT CLASS ROOMS AT THAT PREMIS ES. SMT. MADHU ADUKIA AGREED TO THIS PROPOSAL AND ACCORDINGLY SHE GAVE H ER PREMISES WITHOUT ANY CHARGE BUT FOR CONSTRUCTION OF CLASS ROOMS THEREON , THE ASSESSEE ADVANCED RS. 10 LACS TO SMT. MADHU ADUKIA WITH THE UNDERSTANDIN G THAT THE AMOUNT SO ADVANCED SHALL BE REFUNDED BACK BY HER AFTER THE C OMPLETION OF THE CONSTRUCTION. THE CONSTRUCTION OF THE CLASS ROOMS WAS COMPLETED IN THE F.Y. 2012-13 AND THEREAFTER THE ENTIRE AMOUNT WAS REPAID BY SMT. MADHU ADUKIA IN F.Y. 2012-13. THE COPY OF THE REQUEST LETTER OF GY AN SINDHU GIRLS COLLEGE TO THE ASESSEE TRUST, THE COPY OF THE RESOLUTION OF T HE ASSESSEE TRUST IN THIS CONNECTION, THE PHOTOGRAPHS OF THE CLASS ROOMS CONS TRUCTED AND THE SAID PREMISES AND THE COPY OF THE ACCOUNT OF SMT. MADHU ADUKIA WAS SUBMITTED BEFORE THE AO. THE SAID SUBMISSION AND DOCUMENTATI ON FURNISHED BEFORE THE AO HAS NOT BEEN CONTROVERTERD BY THE REVENUE EITHER DURING THE ASSESSMENT OR APPELLATE PROCEEDINGS. THE ONLY REASON MENTIONE D BY THE AO IN NOT ACCEPTING THE ASSESSEES SUBMISSION IS THAT AS TRA NSFER (OF MONEY BY WAY OF ADVANCE TO CONSTRUCT THE CLASS ROOMS) WAS NOT MADE DIRECT TO THE GYAN SINDHU GIRLS COLLEGE WHICH MIGHT SIMILAR OBJECTS BUT TO TH E TRUSTEE FOR BUILDING ROOMS ON HER OWN LAND. IN THIS REGARD, AS WE HAVE NOTED ABOVE, IT IS NOT IN DISPUTE THAT THE CLASS ROOMS WERE ACTUALLY CONSTRUCTED IN F .Y. 2012-13 OUT OF THE SAID ADVANCE, THE CLASS ROOMS WERE CONSTRUCTED ON PREMIS ES PROVIDED BY SMT. ITA NO. 903/JP/16 RAJKALA CHARITABLE TRUST VS. ITO(EXEMPTION), WARD -2, JAIPUR 10 MADHU ADUKIA WITHOUT ANY CHARGES TO GYAN SINDHU GIR LS COLLEGE AND THE ADVANCE HAS SUBSEQUENTLY BEEN REFUNDED. THE INTENT OF SUCH AN ADVANCE IS CLEARLY FOR PROMOTING AND SUPPORTING THE GIRLS EDUC ATION AND WHICH HAS BEEN DEMONSTRATED THROUGH BUILDING OF CLASS ROOMS. MERE LY BECAUSE THE MONEY HAS BEEN ROUTED THROUGH SMT MADHU ADUKIA, IT CANNOT BE SAID THAT SHE HAS BENEFITTED OUT OF SUCH ADVANCES IN ANY MANNER. FUR THER, THERE IS NO INCOME WHICH HAS BEEN GENERATED IN THE HANDS OF THE ASSESS EES TRUST OUT OF SUCH ADVANCES WHICH CAN BE BROUGHT TO TAX. 2.10 IN LIGHT OF DISCUSSIONS, THE AO IS DIRECTED TO ALLOW THE EXEMPTION U/S 11 TO THE ASSESSEE TRUST AND THE ADDITIONS MADE BY THE AO ARE HEREBY DELETED. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11/01/ 2017. SD/- SD/- (KUL BHARAT ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 11/01/2017 PILLAI VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE ITO (EXEMPTION) WARD-2, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- M/S RAJKALA CHARITABLE TRUST, JHUN JHUNU 3. VK;DJ VK;QDR@ CIT III, JAIPUR 4. VK;DJ VK;QDRVIHY@ THE CIT(A)-III, JAIPUR 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 903/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR. ITA NO. 903/JP/16 RAJKALA CHARITABLE TRUST VS. ITO(EXEMPTION), WARD -2, JAIPUR 11