TMI Blog2012 (6) TMI 714X X X X Extracts X X X X X X X X Extracts X X X X ..... r 2034, which nobody knows as to what would happen in future. Moreover, aassessee was in an advantageous position to get a land at such a lower rate of Rs. 150/- per month and was authorized to carry out the construction on the leased land at its own cost. In addition, the need for the examination of the signatures of witnesses was denied in the absence of any dispute and the fact of passing contradictory order by the AO, by allowing depreciation to the assessee @ 10% i.e. admitting the ownership of the building with the assessee was acknowledged. Order of the CIT (A) was upheld in deleting the addition - Decided in favor of assessee. - IT APPEAL NOs. 454 & 455 (AGRA) OF 2010 - - - Dated:- 8-6-2012 - BHAVNESH SAINI, A.L. GEHLOT, JJ. ORDER Bhavnesh Saini, Judicial Member Both the appeals by the Revenue are directed against different orders of ld. CIT(A), Ghaziabad dated 10.09.2010 for the assessment years 2006-07 and 2007-08. Since common issues are involved in both the appeals, both were heard together and we dispose of the same through this consolidated order. 2. We have heard the ld. representatives of both the parties, perused the findings of the author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Saraswat. The AO, therefore, found that the land on which school is running did not belong to the assessee. It was stated that the land has been leased out by the owner, Smt. Sudha Saraswat W/o Shri Anil Sarswat (Secretary of the assessee) to the Society. Copy of the lease deed was filed, which is appended with the assessment order and executed on 24.12.2004. the AO noted that as per valuation report in respect of the construction of school building on the leased land, the total expenditure upto 31.03.2006 on the building construction was Rs. 95,68,578/- only and since the land did not belong to the assessee-society, therefore, according to the AO, benefit was passed on to the relative of the Secretary of Society u/s. 13(3) of the IT Act. Therefore, show cause notice was issued as to why exemption be not denied to the assessee. Reply of the assessee is incorporated in the assessment order, in which the assessee briefly explained that the land is taken on lease from Smt. Sudha Saraswat and no benefit has been provided to her. The land was taken on lease for 30 years with a renewal option to the assessee-society after expiry of the 30 years as per clause -5 of the lease deed. Any con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iliated with Agra University and NOC has been taken. The ld. CIT(A) considering the submissions of the assessee and material on record, found that the AO's view is guided by the Hypothecated situation about the future which is 30 years from now and nothing is brought on record how the benefit is accrued to the director at present. It was also noted that even after 30 years lease is not extended, the building and construction will be removed and no benefit accrue. Further, the lease deed is amended to avoid controversy. Therefore, the order of the AO was set aside and the appeal was allowed and it was directed that the income of the assessee be assessed on returned income. 6 . The Revenue has preferred the appeal on the grounds mentioned above. The ld. DR relied upon the order of the AO and the grounds of appeals and submitted that no opportunity was given to the AO under Rule 46A to examine the supplementary lease deed and further signature of the witness were not examined. It was an arrangement between the family members. Therefore, the AO rightly denied exemption u/s. 11 and 12 of the IT Act. 7. On the other hand, the ld. counsel for the assessee reiterated the submissions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... antageous situation. Right is given to the assessee society to get the extension of the lease deed and in that event, lessor /owner is bound to extend the period of tenancy by enhancing the rent at 10%. Further option is given to the assessee that in case assessee society does not want extension of the lease, the assessee would be at liberty to remove all construction or structure, superstructure and in case the same is not removed by the assessee society, it will go back to the owner of the property. It is well settled law that in case of termination of tenancy, the owner is entitled to get back the possession of the demised property and in case the tenant has not removed the articles from the property, the land lord / owner with all rights vested in him, can remove all articles and things from the tenanted property in order to get back the possession of the tenanted property as was let out. Even if it is provided in the lease deed that the superstructure would revert to the lessor is of no consequence because the property in question belongs to the assessee society only and in no event, the lessor/owner can take forcible possession of the building or superstructure. At the most i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperty does benefit to the assessee-society and as such, no benefit is extended to any relative of the Secretary of the Society u/s. 13(3) of the IT Act. The assessee also rightly contended before the ld. CIT(A) that the AO has allowed depreciation at the rate of 10% on the building and superstructure while computing the income of the assessee, would prove that the depreciation has been granted to the assessee being the owner of the superstructure and as such, the AO admitted ownership of the assessee over the building in question and as such, the AO passed contradictory order in this case. Further, the re-drafting of clause 5 of the lease deed has merely explained that in the event of expiry of the lease term, the superstructure will be removed by the assessee immediately, which is already provided in the original clause No. 5. It was explained in the supplementary deed that in case it is not possible to remove the existing structure then the lessor shall pay to the society the value of superstructure as would be valued by the registered valuer. Therefore, explaining clause No. 5 through supplementary deed would not be inadmissible in nature and as such, would not violate Rule 46 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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