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2016 (2) TMI 460 - ITAT DELHIRegistration granted under Section 12AA and registration under Section 80G rejected - extending loan to the trust by the trustees - Held that:- Nothing wrong in extending loan to the trust by the trustees. In the case in hand, the trustees or their relatives have extended loan and transferred land at arm’s length price as trustees and their families to fulfill the desire of charitable activity have extended loans or transferred the property to the trust. By these actions of the trustees or their relatives, the trust is not at disadvantage or the transactions are not prejudicial to the interests of the trust. Thus, we find that the finding of the ld CIT that trust has not maintained its affairs in transparent and logical manner and transaction made by the trust for purchase of land were highly disproportionate to the known funds available with the trust are completely devoid of merit and deserve to be rejected. Further, interpretation of the fact and circumstances of the assessee as a colorable transaction by the ld CIT DR, is also without correct appreciation of facts and circumstances. The ld CIT DR contended that in view of the purchase of land and extending loan by trustee shows that the trust and family members of the trust are acting as one entity is not convincing. In India, generally, the families keep the affairs of the trust with them so that they can advance the purpose of charitable nature for which the trust is established. But, if the family or any trustee abuse his power and authority and take undue and unlawful advantage from the trust, in that circumstances, it may be called as a colourable device, but in the facts of the case till the stage there is nothing, which could constitute a colorable transaction. A colourable transaction is a transaction, which is apparently a valid transaction but really unlawful and illusory. We don’t find any such circumstances in the present case. Thus, in our opinion, the transactions carried out by the assessee are not colourable transactions and the activities of the trust are genuine till the relevant period of time. Further, the learned Commissioner of Income Tax has not given any finding as regard to the fact that the objects of the assessee were not charitable in nature. - Decided in favour of assesseee
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