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2015 (6) TMI 346 - ITAT CHENNAIExemption claimed u/s. 11 denied - Managing Trustee enjoyed benefits out of the income derived by the trust which is against the provisions of Section 13(1)(c)/(d) - Held that:- In the present case, the Assessing Officer has out rightly held that the assessee is not entitled to the benefit of Section 11 without ascertaining the reasonableness of the amount paid for the services rendered. We find that, the construction contract has been awarded to the firm M/s. Sri Vekkaliamman Builders on the basis of open bid. Since, the firm quoted lowest rates, the contract was awarded to the firm. The CIT(Appeals) has given a categoric finding that in cases of civil construction contracts, especially were no proper books are maintained the Act recognizes normal profit margins @ 8%. Whereas, the firm M/s. Sri Vekkaliamman Builders has earned a profit of 5.8% which is very reasonable. We are of the considered opinion that since, the contract was awarded on competitive basis and the profit earned is reasonable, the provisions of Section 13(2)(c) are not violated. We do not agree with the submissions of the ld. DR that the Trust has advanced a sum of ₹ 19,25,657/- as on 31-03-2009 which is against the provisions of Act and thus disentitles the assessee to claim exemption u/s. 11 as the CIT(Appeals) has given a well reasoned finding that the sum advanced by the assessee to M/s. Sri Vekkaliamman Builders in not advance simpliciter but business advance. The aforesaid advances do not come within the ambit of advances u/s. 13(1)(d) of the Act. The amounts were advanced for the on-going construction work in the normal course of business activity. - Decided against revenue.
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