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2023 (11) TMI 930 - ITAT MUMBAIExemption u/s 11 - Assessment of trust - income of the assessee from sale of property during the year under consideration - assessee taken advances from certain specified persons - amount taken from the assessee as a loan was converted into advance on the basis of the MOU and the said fund has been further advanced to other companies wherein the trustees and the relative are directors - as alleged funds of the trust were diverted and used for the benefit of specified person as covered within the provision of section 13(1)(c)(ii) & section 13(2)(a) r.w.s. 13(3)(cc) - appellant was chargeable to tax on notional income held as chargeable income HELD THAT:- As learned Charity Commissioner directed the purchasers to pay enhanced consideration considering the rates of the property as per the Ready Reckoner published for the year 2021 by the Government of Maharashtra. Thus, from the above, it is evident that the sale of flats to Mrs. Arundhati Shelgikar, Mogra family, and the developer were approved by the learned Charity Commissioner in the financial years 2019-20 and 2020-21 at a higher consideration than initially agreed amongst the parties. Thus in view of the provisions of the Bombay Public Trust Act, 1950, we do not find any merits in the findings of the AO that even prior to the aforesaid orders passed by the learned Charity Commissioner the flats were sold by the assessee in the year under consideration and the advance received can be added in the hands of the assessee as income from the sale of property. Further, the agreed cost of renovation of the Mandir and hall of Rs. 1 crore and Rs. 50 lakhs was also treated as the sale consideration by the AO without any basis. We are of the considered view that the AO not only considered the incorrect amount of sale consideration in respect of the flats sold by the assessee but also erred in taxing the advance in the year under consideration, particularly when the sale can only be considered to be valid after the sanction by the learned Charity Commissioner in view of the provisions of Bombay Public Trust Act, 1950, which in the present case was granted in the financial years 2019-20 and 2020-21. Since the flats were not sold by the assessee in the year under consideration, therefore, no addition can be made in this year. No infirmity in the impugned order passed by the learned CIT(A) in deleting the addition made by the AO. However, it will be open to the AO to consider the issue of taxability of the sale consideration, as per law, in the year in which the sale transaction was concluded pursuant to the order passed by the learned Charity Commissioner. Accordingly, the impugned order passed by the learned CIT(A) on this issue is upheld and the appeal by the Revenue is dismissed. Loan given by the assessee to Specified persons/M/s Ramgopal Ganpatrai & Co. Pvt. Ltd - We find that no information has been brought on record to dispute the findings of the AO that the trustees of the assessee were having shareholding of 12.92% and 12.97% (conjointly more than 20%) in the said company. As per the AO, since the trustees of the assessee had more than 20% shareholding in M/s Ramgopal Ganpatrai & Co. Pvt. Ltd., the grant of loan to the said company has violated the provisions of section 13(1)(c). Exemption u/s 11 is applicable to a trust that is wholly charitable or wholly religious and since the assessee is partially charitable and partially religious trust, the benefit of section 11 is not available to the assessee - It is evident from the record that the submission now made by the learned DR before us was not the basis of the AO for the denial of exemption under section 11 of the Act to the assessee in the present case. As decided in Mahindra and Mahindra Ltd [2009 (4) TMI 207 - ITAT BOMBAY-H] AO has no jurisdiction to go beyond the order passed by the Assessing Officer. He cannot raise any point different from that considered by the Assessing Officer or CIT(A). His scope of arguments is confined to supporting or defending the impugned order. He cannot set up an altogether different case. As only consequence of the case which falls within the four corners of section 13 is the denial of exemption under section 11 of the Act. Section 13(2)(a) of the Act also does not authorise the Revenue to compute the notional interest, in case no such interest is charged by the trust. Thus, in a case when no real interest was accrued or received nor the same was recorded by the assessee in its books of accounts, we find no merits in the findings of the learned CIT(A) in upholding the addition made by the AO by computing the notional interest and adding the same to the total income of the assessee. Accordingly, AO is directed to delete the addition - Assessee appeal allowed.
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