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2019 (2) TMI 633 - AT - Income TaxCharitable activity - violation of Section 13(1)(c) and 13(1)(d) - assessee advanced money for purchase and construction of school building at Perungudi - Held that:- The Memorandum of Understanding dated 06.04.2006 clearly indicates that the assessee advanced money for the purpose of acquiring land and construction of building for the school. Even though it was paid to M/s Futura Construction Pvt. Ltd., it reached M/s Nischa Deep Enterprises Pvt. Ltd., who is the owner of the land. Therefore, this Tribunal is of the considered opinion that there is no violation of either Section 13(1)(c) or 13(1)(d) of the Act. Hence, the CIT(Appeals) has rightly allowed the claim of the assessee. A similar view was expressed by this Tribunal in Dy.DIT(E) v. Vels Institute of Science, Technology & Advanced Studies [2015 (11) TMI 857 - ITAT CHENNAI]. Advance made to Shri C.M. Babu - Held that:- It is not dispute that the assessee advanced amount for purchase of land. Merely because there was delay in completion of sale deed, this Tribunal is of the considered opinion that it cannot be said that there was any violation of Section 13(1)(c) or 13(2)(b) of the Act. Therefore, when the assessee advanced money for acquisition of property in connection with charitable object carried on by the assessee, this Tribunal is of the considered opinion that it has to be construed as application of income. Therefore, there is no question of violation of any provisions of the Act. Advance paid to employees of charitable trust - Held that:- When the assessee advanced money to the employees of the trust, it cannot be construed as violation of any of the provisions of Section 13 of the Act. The advance made to employees of the trust, in fact, enables the assessee-trust to carry on the charitable object effectively and efficiently. Unless the employees of the trust were motivated by advancing interest-free-funds, this Tribunal is of the considered opinion that the assessee may not be able to carry out the charitable object as expected by the trustees. Therefore, there is no violation of Section 13(1) of the Act. Advance made to other societies, who are having similar object, it is not in dispute that the advance made from the surplus funds of the current financial year. What is prohibited under the Incometax Act is advancing of money from the accumulated funds of the earlier year. It is not the case of the Revenue that the assessee has transferred the accumulated funds contrary to the purpose for which it was accumulated. In those circumstances, this Tribunal is of the considered opinion that when the assessee advanced money to similar societies who are carrying on similar object of charitable institution like assessee, there is no violation of Section 13(1) of the Act. Investment in M/s VGP Golden Beach Resorts Pvt. Ltd., the CIT(Appeals) has restricted the disallowance to the extent of the investment made in VGP Golden Beach Resorts Pvt. Ltd. Of course, the investment in VGP Golden Beach Resorts Pvt. Ltd. is in violation of Section 11(5) of the Act. Therefore, as rightly found by the CIT(Appeals), the disallowance has to be restricted only to the extent of investment made. Claim of depreciation - Held that:- It is not in dispute that the assessee claimed the cost of the asset as application of income under Section 11 of the Act. The Apex Court in Rajasthan And Gujarati Charitable Foundation Poona [2017 (12) TMI 1067 - SUPREME COURT] found that the assessee is eligible for depreciation under Section 32 of the Act even though the cost of asset was allowed as application of income. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. Revenue appeal dismissed.
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