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2015 (8) TMI 14 - MADRAS HIGH COURT

2015 (8) TMI 14 - MADRAS HIGH COURT - [2015] 378 ITR 654 (Mad) - Exemption under Section 11 denied - construction activity on the land belong to the trustee and used by the trust - whether application of income for the benefit of trustee u/s 13 (1)(c) - Held that:- Department while accepting that the Trust has not paid any rent or any compensation to the trustee for the land used by the assessee trust which belongs to one of the trustees, the income for construction of the building on the land b .....

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) (3) (c) of the Act. It is only when there is an application of income or any part of the property or building directly or indirectly put to use for the benefit of person referred to above, the provision will get attracted we do not find such application in the facts of the present case. We are in agreement with the decision arrived at by the Commissioner Appeals on this point.

Yet another plea raised by Department is that the acquisition of ownership of the building to the trustee i .....

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in terms of Black Law Dictionary, relied upon by the counsel for the department, will not further the case of the department because as the definition of 'Owner' also has a restrictive meaning as in this case. We extract the said portion hereunder :

"Owner. The person in whom is vested the ownership, dominion, or title of property, proprietor. He who has dominion of a thing, real or personal, corporeal or incorporeal, which he has a right to enjoy and do with as he pleases, even to sp .....

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er forms of Indian Classical Dance. The other Trustee of the Assessee Trust is Sri.A.D.Sathyanarayanan, husband of Smt.Urmila Sathyanarayanan. The land in question belong to Sri.A.D. Sathyanarayanan as an individual and in order to extend his goodwill for the benefit of his wife's endeavour to promote the classical dance, he permitted the Trust to construct a building by utilising the funds of the Trust for the purpose of promoting Bharatanatiyam and other Indian Classical dances. 2. The ass .....

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ge made to the assessing order, the Commissioner allowed the appeal in favour of the Trust. The Tribunal reversed the said finding. Hence, the present appeal by the assessee. 3. The finding of the Tribunal is that, "6. ... ... .... Even though the trust is not paying any rent or compensation to the trustee for the land used by the assessee trust which was belonging to one of the trustees, since the assessee trust is using its income for construction of the building on the land belonging to .....

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t be completely ruled out." 4. In this appeal, we are now concerned with the issue relating to the denial of benefit on account of the alleged violation of Section 13 (1) (c) of the Act. 5. It is the specific case of the appellant that there is an agreement dated 13.02.2013 whereby as and when the Trust decides not to use the premises which has been constructed for the aforesaid purpose, the individual Sri.A.D.Sathyanarayanan would pay the trust the value of the building so constructed. The .....

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artment that there is violation of Section 13 (1) (C) is not justifiable. 6. We are unable to countenance the finding of the Tribunal that the present act would fall under the definition of the term 'Trustee' enjoying the benefit directly or indirectly because the land in question has been parted away by the individual to the Trust. The trust has put up the construction with a clause that it shall return back the building to the individual and receive the compensation for the value of th .....

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tion has been created or established after the commencement of this Act and under the terms of the trust or the rules governing the institution, any part of such income enures, or (ii) if any part of such income or any property of the trust or institution (whenever created or established) is during the previous year used or applied, directly or indirectly for the benefit of any person referred to in sub-section (3); ... ... ... .... ... (3) The persons referred to in caluse (c) of sub-section (1 .....

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also not in dispute. The issue that is raised by the Department is that while accepting that the Trust has not paid any rent or any compensation to the trustee for the land used by the assessee trust which belongs to one of the trustees, the income for construction of the building on the land belonging to one of the trustee would amount to income for the benefit of the trustee which will fall under Section 13 (1)(c) of the Act unmindful of the agreement which states that in the event of the trus .....

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