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2024 (5) TMI 1018 - ITAT DELHIAssessment of trust - Genuineness of payment as commission to consultants and counsellors - disallowance of expenses on computers to students - Assessee trust diverted its income during the year in favour of sister entity - HELD THAT:- Appellant / assessee is a charitable trust registered u/s 12A. Appellant assessee is engaged in field of education and running the “Fostima Business School”. Appellant/assessee has entered into memorandum of understanding dated 11.7.2011 with M/s. Fostima Integrated Learning Resources Private Limited (FILR). Appellant trust availed exemption of its income u/s 11 by complying with stipulated conditions u/s 12AA r.w.s. 11 and 13 of Income Tax Act, 1961. AO disallowed sum under head of Business Support Services paid to FILR being violative of section 13(3) of Income Tax Act, 1961. AO nowhere demonstrated as to how the business support expenses incurred by appellant trust was not commensurate with the market value of the services availed from FILR an entity covered u/s 13(3) and thus the appellant trust by filing services violated the conditions under section 13(2)(g) of the Income Tax Act, 1961 and diverted its income. The statement of assessable income, balance sheet and statement of profit and loss accounts of FILR shows income. How the business support expenses were not commensurate was not sustainable. Salary expenditure of Rs. 36,60,000/- to faculty members was disallowed due to non filing of qualifications and experience and elaborate the services rendered by persons. In fact appellant assessee trust had engaged in highly technical qualified persons in whole time management activities of trust as well as regular time teachers in business school. The details of educational qualification and experience in absence of any other evidence to the contrary cannot be said to be not just fair and reasonable. As per note payment of Rs. 15,05,000/- as commission to consultants and counsellors was justified. Keeping in view invoice, quotations and student wise list the disallowance of expenses of Rs. 20,50,000/- on computers to students is not just fair and reasonable. In view of above material facts the impugned orders are not legal and sustainable.
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