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TMI Blog2015 (6) TMI 346X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee filed its return of income for the AY. 2009-10 on 30-09-2009 declaring its income as 'NIL' after claiming deduction u/s. 11 of the Act. During the course of assessment proceedings u/s. 143(3), the Assessing Officer observed that Shri Karthikeyan, Managing Trustee of the assessee-trust and is in the business of building construction under the name and style of 'M/s. Sri Vekkaliamman Builders' took the construction contract from the assessee for construction of a building. Shri Karthikeyan allegedly earned a profit of Rs. 17.30 Lakhs from the aforesaid contract. The 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of the assessee submitted that the order of the CIT(Appeals) is well reasoned and detailed. The provisions of Section 13(2)(c) do not put complete embargo on any salary, allowances or otherwise earned during the previous year out of the sources of the trust for services rendered by the person to such trust or institution. It is only the excess over the reasonable amount for the services rendered that can be objected. In the present case, the proprietorship firm of the Managing Trustee carried out construction of building, but the benefit earned by the firm 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has a substantial interest." A reading of Clause (cc) of sub-section 3 would show that it includes any trustee of the trust or manager. The Assessing Officer declined to grant benefit of Section 11, as in the present case construction of building has been carried out by the firm of a Managing Trustee and thus, derived direct benefit from the assessee-trust. A further perusal of clause(c) of sub-section(2) of Section 13 would show that without prejudice to the generality of the provisions of clause-(c) and clause-(d) of sub-section(1) of Section 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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