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2019 (1) TMI 647 - AT - Income TaxExemption u/s 11 - Treating of the transaction of purchases of land as voluntary contribution in the form of donation - Held that:- It is undisputed that the seller initially wanted to gift the said plot of land to the assessee trust. Since permission of gift was not received from the concerned government authorities, the sale deed was executed. The sale consideration is purportedly paid by post-dated cheques which were never presented for encashment. Thereafter, the seller did not claim the outstanding amount of sale consideration. In the balance sheet of the assessee in the relevant year, the amount is not shown as payable to the seller of the land. These facts clearly establish that the transaction of transfer of plot of land is in substance the gift which has been given the form of sale. We uphold the finding of learned CIT(A) that it is in effect the donation of the plot by the alleged seller to the assessee trust. Accordingly, ground No.1 of the assessee’s appeal is rejected. Adoption of the value as per circle rate at ₹ 1,11,12,000/- - Held that:- It is an admitted position that the assessee society is registered trust under Section 12AA of the Income Tax Act, 1961. By adopting the circle rate of property, the Assessing Officer applied Section 56 of the Income Tax Act, 1961 to the assessee trust which is not at all applicable to the trust in the particular scenario when the section 56 (2)(vii) is applicable to individuals and HUF only. Besides section 56 (2)(x) will also be not applicable as the same is w.e.f. 01.04.2017 and the Assessment year before us is A.Y. 2015-16. In fact, Section 56(2)(x) of the Act is not applicable to the educational institutions. Therefore, the Assessing Officer wrongly invoked Section 56 of the Act and wrongly adopted circle rate of property in the present case. Thus, Ground No. 2 of the appeal is allowed. Donation as received in kind i.e. in property - income u/s 2(24)(iia) for the purpose of Section 11 - Held that:- AO has applied the circle rate to the land which is also not as per law and we have allowed Ground No. 2 of the assessee’s appeal. In fact, the revenue’s case was that the assessee received land without any consideration which amounts to donation/gift. AR relied upon the decision of Shri Sachyaya Mataji Trust Osian, Jodhpur [2014 (5) TMI 1178 - ITAT JODHPUR] which is an apt decision in present assessee society’s case. In the present case also, it is an admitted fact that the assessee received the donation in kind i.e. land and the same could not be applied, accumulated or invested, therefore it cannot be treated as income. The donation received in kind did not come under the definition of income u/s 2(24) of the Act, therefore, it could not be the income of the trust u/s 12(1) of the Act and the acceptance of donation in kind does not come under the purview of income u/s 2(24)(iia) for the purpose of Section 11 of the Act
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