Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2020 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (9) TMI 1266 - AT - Income TaxExemption u/s 11 - benefit of exemption claimed by the assessee u/s 11 and 12 disallowed by AO following the assessments made in the assessee’s own case for the earlier years wherein the exemption claimed was disallowed for allegedly violating the provisions of section 13(1)(c) - HELD THAT:- Section 13(1)(c)(ii) show that in case any income or property of the trust is used either directly or indirectly for the benefit of trustee or any person referred to sub-section (3) of section 13, the benefits granted to the trust u/s. 11 shall be forfeited. However, the first proviso to section 13(1)(c) provides an exception. According to first proviso benefit derived by the trustee or the person mentioned in sub-section (3) shall not debar the trust from availing the benefit of section 11 and 12, if : (i) the trust is created or established prior to the commencement of the Act; and (ii) the benefit extended to the trustee or the person referred to in sub-section (3) is in compliance with the mandatory terms of the trust. In the present case, the assessee has placed on record a copy of the Trust Deed at pages 40 to 48 of the paper book. The Trust Deed is in Marathi language. The English translation of the Trust Deed is at pages 49 to 53 of the paper book. A perusal of the trust deed shows that the trust was created in the year 1930 i.e. much prior to the enactment of Income Tax Act, 1962. Thus, the first condition to fall within the scope of proviso to section 13(1)(c)(ii) of the Act is satisfied. Benefit to be granted to the assessee or the person referred to in sub-section (3) in application or uses of the property or income of trust is concerned, the use or application of the property should be in compliance of the mandatory terms of the trust - From perusal of English translation of the Trust Deed it appears that the trustees were in possession of the residential part of the property on second floor. As per the assertions of ld. AR, the legal heirs of the author of the trust were in possession of part of property on ground floor as well. Admittedly, there is a clear mandate in the trust deed that part of the property which is in possession of author of the trust shall be for the sole purpose of occupancy by the author of the trust or his legal heirs. The part of the property which is subject matter of dispute are 3 shops on ground floor of the building. From the perusal of English translation of Trust Deed the details of the property in possession of the author of the trust at the time of execution of Trust Deed is not discernible. Under such circumstances, we are of considered opinion that this issue needs a re-visit to the Assessing Officer. Representative of both the sides concur on the point that the part of property referred to in the Trust Deed has to be clearly identified. AO is directed to ascertain the part of property which was in the possession of author of the trust at the time of execution of the trust in the year 1930, qua which mandate has been given for the exclusive use by the author of the trust and his legal heirs. In case the shops under question are part of the property which was in possession of the author of the trust deed at the time of execution, then the assessee clearly falls within the exception as mentioned in proviso to section 13(1)(c)(ii) of the Act. As the issue involved in the year under consideration as well as all the material facts relevant thereto are similar to A.Y. 2010-11 and A.Y. 2011-12, we respectfully follow the order of the Tribunal for A.Y. 2010-11 and A.Y. 2011- 12 and restore this issue to the file of the Assessing Officer for deciding the same afresh as per the same direction as given.
|