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2022 (2) TMI 938 - AT - Income TaxExemption u/s 11 - violation of section 13(3) r.w.s. 13(1)(c) and 13(2) - addition on account lease rent holding that the rent received is very low as compared to lease registration document - HELD THAT:- We note that the lease agreement was duly approved by the charity commissioner and bids for the lease have been obtained after due advertisement. On the touchstone of Hon’ble Bombay High court decision in the case of Verendra Vs. Appropriate authority [2008 (9) TMI 515 - BOMBAY HIGH COURT]this now cannot be disputed by revenue Hence if the expenditure has been approved by appropriate authority, the AO cannot take the divergent view. Moreover, we also note that ld. CIT(A) has given the finding that the bid for the lease was obtained by due advertisement in news papers. There is also due provision for security deposit of ₹ 5 crores. In this regard assessee has also submitted valuation by a Government approved valuer report in this regard. Hence, these factors duly corroborate that the lease rent in this case is not only approved by the charity commissioner, but also supported by the other facts, which show that the lease was awarded after due advertisement and making provision for appropriate security deposit. Hence, in the background of aforesaid decision and the facts of the case, we do not find any infirmity in the order of ld.CIT(A) in this regard. Trustees are related to the party to whom lease has been awarded - We note that this issue will not arise once, it is held that it cannot be said that lease rent is undervalued. In any case, ld.CIT(A) has given the detailed finding, how the AO’s finding in this regard is not correct. The revenue has not brought any cogent material to rebut these findings. Disallowance of reimbursement of expenses to/from PDNHRC - We note that similar issue has already travelled to the Hon’ble Bombay High court in the case of PDNHRC [2019 (2) TMI 1454 - BOMBAY HIGH COURT]. In the said case of Hon’ble High Court has held that these reimbursements do not attract TDS. Once, the payment has been subject matter of examination by the Ho’nble Bombay High Court, AO has no jurisdiction to make any comment whatsoever. Moreover, the CIT(A) has given due finding that these are due reimbursement. This fact is also arising out of the detailed observation of the Hon’ble Bombay High court referred in the order of Ld.CIT(A) above. Disallowance on account of religious expenditure - We note that it also comprised of ₹ 3,58,200/- given to ISKON. Ld. CIT(A) has given the detailed finding as to how these expenditures were for food programme and not meant for religious activity. No cogent material was brought to our notice rebutting the same. Hence, we do not find any infirmity in the order of ld.CIT(A) in this regard. On the basis of same transactions for a long time from earlier years, AO has not taken any adverse inference against the assessee. Without change in facts on law the AO is not justified to take a divergent view as held by various courts including the Hon’ble Supreme court as referred above. Apart from the above three expenditures, the other aspect of AO’s observation that the assessee is involved in profit motive is not at all sustainable and correct. These are only surmise and conjectures of the AO dehorse facts. In fact, Ld. Counsel of the assessee has pointed out that there is no element of suppression of profits as the assessee has actually incurred losses for the past several years. Further, the ld.CIT(A) has given due finding that assessee is duly utilizing the fund for the objects of the trust. No cogent rebuttal was made by the revenue in this regard. - Decided against revenue.
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