TMI Blog2015 (6) TMI 346X X X X Extracts X X X X X X X X Extracts X X X X ..... m. The CIT(Appeals) has given a categoric finding that in cases of civil construction contracts, especially were no proper books are maintained the Act recognizes normal profit margins @ 8%. Whereas, the firm M/s. Sri Vekkaliamman Builders has earned a profit of 5.8% which is very reasonable. We are of the considered opinion that since, the contract was awarded on competitive basis and the profit earned is reasonable, the provisions of Section 13(2)(c) are not violated. We do not agree with the submissions of the ld. DR that the Trust has advanced a sum of ₹ 19,25,657/- as on 31-03-2009 which is against the provisions of Act and thus disentitles the assessee to claim exemption u/s. 11 as the CIT(Appeals) has given a well reasoned f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer held that the Managing Trustee enjoyed benefits out of the income derived by the trust which is against the provisions of Section 13(1)(c)/(d). The Assessing Officer disallowed the exemption claimed by the assessee u/s. 11 of the Act. Aggrieved against the assessment order, the assessee preferred an appeal before the CIT(Appeals). The CIT(Appeals) after considering the submissions of both the sides, held that there is no violation of provisions of Section 13(1)(c) or (d). The CIT(Appeals) allowed the appeal of the assessee. Now before us, the Revenue has come in appeal assailing the order of the CIT(Appeals). 3. Shri Guru Bhashyam, appearing on behalf of the Revenue relying on the grounds of appeal and the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm is very reasonable. Moreover, the construction contract was awarded to the firm on the basis of competitive open bid. The firm offered the lowest price, the contract was awarded to M/s. Sri Vekkaliamman Builders. 5. We have heard the submissions made by the representatives of both the sides and have perused the orders of the authorities below. It is an admitted fact that the firm of the Managing Trustee, M/s. Sri Vekkaliamman Builders had carried out the construction of building of the trust. It is also an admitted fact that the aforesaid firm had earned a benefit of ₹ 17.30 Lakhs from the aforesaid contract. A perusal of Section 13(1)(c) would show that the Act puts restriction on the use of income or any property of the trust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13, the income or property of the trust or any part of such income or property shall be deemed to have been used or applied for the benefit of the person referred to in sub-section (3), if any amount is paid by way of salary, allowance or otherwise during the previous year to any person referred to in sub-section(3) out of the resources of the trust or institution for services rendered and the amount so paid is in excess of what may be reasonably paid for such services. In the present case, the Assessing Officer has out rightly held that the assessee is not entitled to the benefit of Section 11 without ascertaining the reasonableness of the amount paid for the services rendered. We find that, the construction contract has been awarded to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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